How Long Will The Ethylene Glycol Rebound?

Last weekend, the ethylene glycol fell slightly after the rise, East China closed close to 4375 yuan / ton. Although port inventory is at a high level, the East China main port is short of pre arrival in the near future, and the whole sector is still in the inventory stage, and the trade risk is easing up. The geopolitical risk is increasing. Therefore, we believe that ethylene glycol market is still strong.

Raw materials rebound to boost market

Last week, crude oil shock rose, on the one hand, the local macroeconomic favorable environment appeared. The first call of the US dollar eased the negative impact on demand caused by trade friction. On the other hand, the rising geopolitical tensions brought by the tension between the US and Iraq and the probability of the US Federal Reserve cut interest rates increased the oil price. Last Friday, overnight, compared with Friday night, WTI rose 4.37 to 56.65 dollars per barrel, and Brent rose 3.14 to 64.45 dollars / barrel. Therefore, from the cost side, the rebound of ethylene glycol is closely related to the sudden strength of raw materials.

The supply side has not changed significantly.

The overall supply of ethylene glycol market has not changed significantly, and the load remains low.

The integrated plant only has shutdown and maintenance of Maoming petrochemical company. Other factories basically still adopt the way of compressing MEG capacity to increase EO load and try to adjust the proportion of market output. The domestic coal glycol plant recently overhauled and reduced the load relatively concentrated. The overall load of the industry is expected to be at the current level of 48%, and the space to continue to fall down is limited. Based on this expectation, it is expected that there will not be any incremental domestic supply side in the near future. By June 20th, the average load of ethylene glycol in China was about 64.13%.

Demand side performance is commendable.

In the near future, the performance of downstream polyester is commendable. Take Jiangsu and Zhejiang markets as an example. As of last Friday, the overall load of Jiangsu and Zhejiang increased by 89% and loom load was 77%. Affected by the rise of crude oil and the easing of the expected trade war, the terminal is expected to have larger demand volume in the future market, and after the polyester factory is low, it will continue to bullish the raw material end, and mentally keep up the stocking of raw materials and products. At present, the stock of terminal raw materials is relatively large, reaching a high level in the past year.

On the commencement of the operation, the resumption of the ammunition machine started much more. Now it has resumed to a high level in the year to drive the raw materials inventory to be digested, and the loom link is still in the early stage of product inventory due to the high inventory of previous products.

So in the short term, the main port volume of ethylene glycol is less than 100 thousand tons this week, and port inventory continues to decline. In recent years, PET production and sales have improved significantly, polyester products have been substantially reduced and cash flow profits have been maintained by polyester factories. However, the overall height of the rebound still depends on the implementation of terminal orders and the digestibility of grey cloth. (source: Zhuo Chuang information, Mingyuan shares)