Fundamentals Remain Sluggish. Ethylene Glycol Is Vulnerable.

Less than a week has passed since the Spring Festival, and the market for glycol has been on vacation for a week.

As of January 29th, East China spot trading was around 5050 yuan / ton. This week, the East China wharf stock rate increased, polyester factories entered the maintenance period. The last week before the festival, traders entered the holiday mode. The enthusiasm of the market was not high. Short term ethylene glycol was expected to maintain a narrow pattern.

Cost side support weakened

The recent price range has been upheaval, because the uncertainty and uncertainty of the fundamentals are not significant. OPEC's output reduction and Venezuelan political turmoil have provided support for oil prices.

First, OPEC and Russia and other major oil producing countries began a new round of production reduction in January this year.

Two, Venezuela's internal political turmoil is intensifying. As an important member of OPEC, its political situation and US sanctions may lead to further decline in crude oil exports.

In January, oil prices rebounded in the form of a V rebound when oil prices were cut ahead of Saudi Arabia's early cut in crude oil production, the Fed's interest rate hikes were expected to cool, and trade frictions between China and the United States. However, with the fundamentals dominating the crude oil market, oil prices had been shaking up recently, and the support for ethylene glycol had also weakened.

Port inventory and start-up load remain high

By the end of January 25th, the comprehensive utilization rate of ethylene glycol was 81.33%. Among them, the MEG utilization rate of ethylene is 87.34%, and the coal utilization rate of MEG is 72.36%. The port inventory in East China is 820 thousand tons, which is at a historical high in the past five years.

Among them, Zhangjiagang port stock is 582 thousand tons, Jiangyin port stock is 33 thousand tons, increased by 10 thousand tons respectively; Ningbo port stock increased 6 thousand tons to 77 thousand tons. Taicang port stocks fell slightly, down 31 thousand tons.

From the above data, we can see that the start-up load of ethylene glycol is relatively high. As the Spring Festival draws near, the port stock is also gradually increasing.

Demand support weakened

At this stage, polyester and terminal start off, the device starts to stop and repair.

Demand is facing further weakness. By the end of January 25th, the comprehensive utilization rate of polyester was 77.31%, down by 1.2%, and the operating rate of Jiangsu and Zhejiang looms was 31%, which was 25 percentage points lower than last week. Polyester fiber filament, polyester staple fiber and polyester chip production rate is 30%, 10%-30%, 10%-20% respectively. Production and sales rate has dropped to a low level.

Summary: at the end of the current terminal replenishment, enter the parking period.

Polyester end inventory is low, polyester load is slightly lower, and there is a trend of storehouse during holidays. Ethylene glycol load and inventory remain at a high level, while the late port volume is still increasing, and the short-term storage is hopeless, which is a strong suppression of price formation. From the perspective of production profit, the profit of coal and ethylene glycol production is negative, and the profit is hit low. The overall judgement of the current weak pattern is difficult to change, and the short term will be dominated by a narrow range of shocks.