Can Ethylene Glycol Rebound When Demand Rebounded?

At the present stage, the supply of glycol is abundant, and the high storage is still the logical point of the short end. The East China spot mainstream paction is about 5105 yuan / ton.

However, when the polyester start-up load is raised to a high level, the rigid demand is stable, plus the favorable macro tax cuts and the support of the glycol cost surface, the downward kinetic energy of the market will gradually weaken, so will ethylene glycol rebound in the short term?

Port inventory increases, device load is stable.

Last week, the port inventory of ethylene glycol in East China was about 1 million 216 thousand tons, and the ratio continued to increase. It is estimated that the port of East China is expected to reach 215 thousand tons of cargo.

Combined with the prediction of supply and demand balance sheet, ethylene glycol still needs to wait until May. The future of high port inventory will depend more on the demand side.

Last week, the overall load of domestic glycol installations increased by 4.86% over the previous week.

In the late stage, most of the ethylene glycol load is sold by coal to ethylene glycol, and the following are the contract goods. The coal glycol unit has higher investment, higher financial cost and the higher cost of parking. Therefore, even if the cash flow condition is not good enough, there is little room for reducing the burden.

Demand is being gradually cashed, and attention should be paid to production and marketing changes.

The demand for recovery of downstream polyester demand has been gradually realized. Last week, pet load increased by 1.8% over the previous week.

The overall production and sale of polyester is almost flat compared with that of the past, and the stock of polyester plant is going to be small.

The price of polyester products has been rising steadily, to a certain extent, stimulating downstream buying.

As of last Friday, polyester filament prices continued to rise, and terminal procurement after the purchase is not strong, polyester end still rely on rigid demand driven, the market wait-and-see atmosphere is strong.

Later, we need to continue to pay attention to changes in production and sales data.

Tax cuts bring benefits, sharp contradictions between supply and demand.

The recent macro side has brought favorable news for tax reduction. From the perspective of production enterprises, the cost of production has been reduced, but it is difficult to form substantial profits from the cost aspect.

From a trader's point of view, the reduction of the total paction cost of the market by tax reduction will increase the liquidity of the market capital and increase the market activity.

But to reverse the decline of ethylene glycol, we need to focus on the overall contradiction between supply and demand. If we do not solve it, we will not have the logic of rising.

To sum up, in the short term, before and after the turning point of ethylene glycol supply and demand pattern, there is little room for recovery in the absence of basic coordination. The probability of ethylene glycol maintenance at the bottom of the interval is larger. In the later stage, if supply and demand are improved, the price trend of ethylene glycol tends to be empty or weakened before the demand is favorable and the new production of ethylene glycol can be released.

(source: CITIC futures, China Everbright futures)