How Long Can The Coal Plant Keep Overhauling Glycol?

Since September 2018, domestic ethylene glycol has been dropping steadily, falling from the highest 8225 yuan / ton to the current 4475 yuan / ton, or 41.95%.

The contradiction between supply and demand is the main culprit in the long term downtrend. Especially since 2019, the East China wharf stock has been accumulating, the spot quantity is ample, and the market has been declining continuously.

Can the supply and demand contradiction be alleviated when the coal glycol plant has entered the repair period recently?

Can inventory be released?

Can the declining ethylene glycol market be supported?

Participants are still pessimistic.

Short term trend survey of ethylene glycol Market

Source: lung Chung

The sampling survey of ethylene glycol production enterprises, trading enterprises and downstream polyester enterprises is still pessimistic for most of the market trend.

Among them, manufacturing enterprises believe that even if all processes are in a loss, the overhaul of coal enterprises is increasing. However, the market of ethylene glycol has continued to decline and the market pessimism has continued. The ethylene glycol production enterprises only have about 40% of the shocks, and the rest are pessimistic.

Wharf inventory is difficult to release. Under the premise of ample quantity, pessimism is heavier, and nearly 80% of traders are empty.

Polyester demand side has weakened expectations, coupled with high storage and suppression of market mentality, but the market has fallen below the cost line of most production enterprises, and the cash flow of polyester enterprises is generally good. The proportion of polyester production enterprises in the latter stage is about 60%.

Reduced profitability of various processes

Comparative analysis of cash flow of ethylene glycol in different processes

Source: lung Chung

Geopolitics and the US sanctions against Iran have been improving. The trend of international crude oil has been strong in recent years, and the price pulling of naphtha is more obvious.

The decline in ethylene glycol under the pressure of supply and demand has led to a total loss of ethylene glycol production process. This is the first time in history, especially the integrated device has lost 62.18 US dollars / ton at present.

With the increasing loss of enterprises in recent years, reducing supply by lowering the burden may be the only way out.

Overhaul of coal plant

Recent coal glycol maintenance plan

Source: lung Chung

With the continuous shrinking of the cash flow of ethylene glycol, the pressure of production enterprises is increasing. A number of devices have been overhauled to cope with the current loss situation. According to the current data, the maintenance of coal glycol unit involves 1 million 580 thousand tons, and the current load has dropped to 59.82%.

There will still be 1 million 140 thousand tons of maintenance plan in the future.

In addition, the workload of Hua Lu Heng Sheng has dropped to 8, and the operating rate of Xinxiang Yongjin has also decreased to varying degrees.

On the whole, market supply of coal to ethylene glycol has obviously shrunk.

High storage pressure still exists.

Comparison chart of East China ethylene glycol terminal inventory

Source: lung Chung

Although the port inventory data has declined recently, the scope is relatively small, and the pressure on the 1 million 240 thousand ton high inventory market is still very obvious.

In addition, judging from the recent pre arrival port situation, during the May 1st period, there were about 200 thousand tons of pre arrival volume and reduced shipments during the holiday period.

The fundamentals of ethylene glycol are changing quietly, especially the large area maintenance of coal glycol, which will lead to the shrinkage of domestic supply side.

The overhaul of coal plants mostly started in late April, and the market began to appear in early May.

In terms of imports, import volume will shrink in May due to frequent delays in Hong Kong.

The polyester end is still profitable at present, the load is at a high level, and the demand side of ethylene glycol is still stable.

Considering the abundant supply of goods, the purchasing attitude of polyester factories is not active, which is the main reason for the weakening of the market. With the overhaul of coal plants, the contradiction between supply and demand will be eased, and the ethylene glycol market should not be overly pessimistic.