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Ethylene Glycol Market Review In The First Half Of 2019: Supply And Demand Game Ethylene Glycol Disastrous Price Drop Again

2019/7/15 11:09:00 0

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Ethylene Glycol Prices Ethylene Glycol Prices

First, price (review):

Fig. 1 price comparison trend of ethylene glycol in East China

Source: lung Chung

In 2019, with the approaching of the Spring Festival holiday, the starting rate of polyester began to decline. However, ethylene glycol in China has gone down for 4 months. In the absence of new negative pressure, the market is in a stalemate, domestic ethylene glycol in the vicinity of 5100 yuan / ton narrow oscillation. After the Spring Festival, the inventory of East China glycol kept accumulating, and the spot market dropped slightly. During the two sessions, the manufacturing industry was faced with a drop in fees, and traders are now in the process of forming logic, and short-term ethylene glycol has risen to around 5400 yuan / ton. However, the uncertainty of the cost reduction time, businesses quickly pull out after the current rally, the spot market prices fell rapidly. The pressure on high inventories has not been alleviated, and the market sentiment is pessimistic under the premise of abundant spot cargo. However, in the face of declining prices, the profitability of various process glycol production enterprises gradually weakened, forming a comprehensive deficit by the end of May. Faced with huge cost pressures, ethylene glycol production enterprises in the two quarter of a comprehensive drop in weight, coal glycol glycol load once dropped to 49.14%. In addition, a number of foreign devices also appear to be negative or early maintenance, supply side gradually reduced. The supply side's reduction has restrained the decline of the market, and the market price is hovering between 4200-4400 yuan / ton.

Table 1 Comparison of monthly average price of ethylene glycol in East China

Unit: yuan / ton

	One month	Two month	Three month	Four month	Five month	Six month
Two thousand and eighteen average price	Seven thousand nine hundred and eighty-one	Seven thousand nine hundred and ten	Seven thousand two hundred and thirty-six	Eight thousand and seventy-four	Seven thousand two hundred and sixty-six	Six thousand nine hundred and seventy-four
Two thousand and nineteen average price	Five thousand one hundred and six point six one	Five thousand and thirty-four	Five thousand one hundred and thirty-one	Four thousand six hundred and sixty-six	Four thousand three hundred and fifty-four	Four thousand three hundred and forty-three
Year-on-year	-36.02%	-36.36%	-29.09%	-42.21%	-40.08%	-37.73%

Source: lung Chung

Two, profit section

Fig. 2 domestic Comparison of cash flow patterns for ethylene glycol processes

Source: lung Chung

The overall supply of ethylene glycol has increased, the demand for polyester in the lower reaches has not been as fast as that of supply, and the total inventory of East China's main port has been rising repeatedly. The first half of the year has fallen short of expectations, and the market has declined rapidly, and the cash flow of various processes glycol has shrunk dramatically. As of June 28th, the cash flow from coal to ethylene glycol was -953 yuan / ton; the cash flow of methanol to ethylene glycol was -1560.7 yuan / ton; the ethylene production of ethylene glycol was -88 US dollars / ton; the cash flow of naphtha to ethylene glycol was US $-23.7 / ton.

Table 2 ethylene glycol in China Cash flow comparison of various processes surface

Unit: yuan / ton, US dollar / ton.

	Coal making	Methanol production	Ethylene system	Naphtha system
Two thousand and eighteen First half of the year	Two thousand two hundred and fifty-five point one two	Twenty-two point two two	-22.83	Three hundred and twenty-eight point seven nine
Two thousand and nineteen First half of the year	-608.36	-1317.17	-191.41	Twenty point nine six
Year-on-year	-126.98%	-6027.86%	-738.41%	-93.63%

Source: lung Chung

Three, supply chapter

Fig. 3 domestic Comparison chart of ethylene glycol supply

Source: lung Chung

Two thousand and nineteen In the first half of the year, domestic ethylene glycol production capacity was 10 million 931 thousand tons, of which 5 million 541 thousand tons of ethylene, 920 thousand tons of methanol and 4 million 470 thousand tons of coal. According to long Zhong information statistics, in 2018, the domestic capacity growth rate was obviously 25.31%, and the new production capacity was mainly concentrated in the second half of the year (2 tons of Shell 480 thousand phase, 2 tons of Hua Lu Heng Sheng 2 tons, 300 thousand tons of red Quartet, 300 thousand tons of coal gasification in Guizhou and so on). In the first half of 2019, due to the serious loss of enterprises and weak market conditions, the new installations were postponed to the second half of the year, with an expected growth rate of 11.07%. In the past 2019-2020 years, the new coal production of ethylene glycol project is expected to produce capacity of about 10000000 tons / year. Overcapacity is unavoidable. Ethylene glycol prices may linger for a long time.

Table 3 ethylene glycol in China yield Comparison table

Unit: 10000 tons

	One month	Two month	Three month	Four month	Five month	Six month
Two thousand and eighteen Annual output	Fifty-seven point three one	Forty-seven	Fifty-nine point nine	Fifty-one point five	Forty-three point four	Forty-four point eight
Two thousand and nineteen Annual output	Seventy-four point four	Seventy point two nine	Seventy-six point five four	Seventy point eight eight	Sixty-five point nine five	Sixty-three Point Zero Five
Year-on-year	29.82%	49.55%	27.78%	37.63%	51.96%	40.74%

Source: lung Chung

Table 4 ethylene glycol in China Import volume Comparison table

Unit: 10000 tons

	One month	Two month	Three month	Four month	Five month	Six month
Two thousand and eighteen Annual import volume	Eighty-three point nine six	Seventy point seven two	Ninety-nine point seven eight	Eighty-four point four five	Ninety-three point three eight	Seventy-three point one zero
Two thousand and nineteen Annual import volume	One hundred point nine eight	Seventy point one four	Eighty-nine point seven four	Ninety-three point six nine	Eighty-six point seven eight	Eighty-five point six seven
Year-on-year	20.28%	-0.82%	-10.06%	10.94%	-7.06%	17.20%

Source: lung Chung

Four. Inventory

Fig. 4 domestic Glycol Port inventory comparison map

Source: lung Chung

Two thousand and eighteen In 2005, the new capacity of ethylene glycol enterprises in China reached 1 million 580 thousand tons per year, and the downstream polyester products were limited. On the basis of this, the import volume continued to increase. During the Spring Festival end weaving industry, the port inventory rose all the way to the highest level of more than 1 million 430 thousand tons. Although the production of polyester enterprises started to increase continuously, consumption of ethylene glycol was still high, but the effect was still high. Long Zhong information reported on June 27th: the MEG port in East China's main port area has a stock of about 1 million 139 thousand tons. Among them, 81.4 tons of Zhangjiagang, a mainstream library daily delivery of about 11519 tons; Ningbo 78 thousand tons; Shanghai and Changshu 124 thousand tons; Taicang 83 thousand tons, the mainstream reservoir area daily delivery 3314 tons; Jiangyin 40 thousand tons.

Five, demand articles

Table 5 domestic polyester production capacity and demand change table

Unit: 10000 tons

	One month	Two month	Three month	Four month	Five month	Six month
Polyester production capacity	Five thousand five hundred and thirty	Five thousand five hundred and thirty	Five thousand five hundred and forty-six	Five thousand five hundred and ninety-six	Five thousand six hundred and twenty-nine	Five thousand six hundred and thirty-nine
Monthly average load	80.71%	80.07%	89.47%	91.42%	88.84%	88.83%
Polyester production	Three hundred and seventy-nine point two	Three hundred and thirty-eight point seven	Four hundred and twenty-five point five	Four hundred and twenty-one point five	Four hundred and twenty-four point one	Four hundred and eighteen point three
Demand for ethylene glycol	One hundred and twenty-eight point nine two eight	One hundred and fifteen point one five eight	One hundred and forty-four point six seven	One hundred and forty-three point three one	One hundred and forty-four point one nine four	One hundred and forty-two point two two two

Source: lung Chung

As of June 30, 2019, China's polyester production capacity was 56 million 390 thousand tons. The first half of the year showed an upward trend. However, from table 5, we can see that glycol was oversupply in 1-4 months. Port inventory is constantly accumulating, and the market price falls and falls again. Most enterprises suffer serious losses and begin to overlook risks. The 5-6 month is relatively good, but the difference between supply and demand is less than 50 thousand, with little effect, high inventory level, the contradiction between supply and demand is difficult to alleviate, and the market is hard to rise.

Six, market outlook

Looking forward to the second half of the year, the supply side, the recent glycol enterprises overhaul is more, but the possibility of long time parking is not large, the probability of late restart is relatively large, the overall supply will begin to resume in July. On import side, the overhaul devices in foreign countries begin to restart in July, and the import will increase in August. Demand side, the three quarter weaving enterprises will face the possibility of high temperature drop, polyester industry will soon enter the off-season. In addition, the proposed new capacity will be put into operation in the 3-4 quarter, and the production will be more concentrated. The supply side is again heavy, and the demand side is in the off-season. On the whole, long Zhong information forecast: the second half of 2019 will continue the low volatility market, the price will be between 4200-4600 yuan / ton.