Ethylene Glycol Market Trend Fierce PTA Price Has Bottoms Up

Due to the impact of the new coronavirus epidemic, in February 3rd, the futures market opened on the first day, while PTA and ethylene glycol both stopped. The downtrend was expected, but the limit seemed a bit beyond expectation.

Since the opening of the festival two weeks ago, commodities have rebounded with the price of crude oil, and PTA and ethylene glycol are no exception. Futures have risen and prices have risen.

PTA has always been the "big guy" in the polyester raw material market, which has engulfed the profits of the entire industrial chain. Compared to PTA, ethylene glycol is a smaller chemical product. Therefore, the price of PTA is higher than that of ethylene glycol. This is a very common thing. However, from the following table, we can see that the momentum of ethylene glycol is now "fiercer than" PTA, and the price has surpassed PTA.

Low inventory is still the strongest support for ethylene glycol.

In fact, since the beginning of December last year, ethylene glycol has quietly "overturned", and the price of the internal market has been overwhelmed by PTA. From December to now, the price of ethylene glycol has always been above PTA. Occasionally, the price of ethylene glycol has dropped, but then it rebounded immediately, without giving PTA a chance to fight back.

The main reason why ethylene glycol is so arrogant is its low inventory.

Since the second half of 2019, glycol has good fundamentals, and has been in the inventory channel, and the inventory effect is remarkable. Low inventory is supporting ethylene glycol market rising continuously. Especially in the two months after the end of the year, the East China port of ethylene glycol was closed due to weather reasons. The ship arrived slowly, the actual arrival volume decreased, and the cash flow in the field became tighter. This made the inventory of the East China main port at the end of the year brush at the end of the new year. However, PTA continues to accumulate inventory due to the continuous supply.

During the Spring Festival, the stock of polyester raw materials is increasing. As of February 14th, the PTA social inventory increased to 2 million 265 thousand tons, and the East China main port inventory increased to 730 thousand tons. However, in recent years, with the restart of PET plant with long pre parking time, some large factories with reduced production capacity have also made production initiatives. The polyester composite load has risen to 62.1%, and the demand for polyester raw materials has been strengthened. On the 21 day, the main port inventory of ethylene glycol in Eastern China dropped slightly to 655 thousand tons, but the PTA social inventory continued to increase to 2 million 390 thousand tons.

The continuous accumulation of inventory has suppressed the upward trend of PTA prices. Ethylene glycol is "the best of luck".

The downstream weaving market has returned to work, and the strongest assisting is on the way. How much is PTA's counterattack?

In the short term, Xiaobian still believes that the odds of PTA's strong counterattack in the short term are not great, but the break even is expected.

During the Spring Festival outbreak, PTA inventory has exceeded 2 million tons, reaching a high inventory level in recent years. During this period, the lowest price of PTA to 4230 yuan / ton, then the stock is on the increase, but the price has begun to rebound slightly, and fluctuated in a range. We can see that the price of PTA has reached the bottom and there is no more room for decline.

Besides inventory, the supply of PTA itself is also one of the important factors determining its price. In the past two years, PTA capacity has been put in large quantities, and supply and demand are unbalanced. By the end of 2019, the new 3 million 700 thousand tons / year capacity had been put into operation successfully. In 2020, there were still more than 10 million tons / year of new capacity. Although most of them could be put in late stage, it is still a great pressure.

Of course, terminal demand is the most important factor. At present, the terminal weaving market has been resuming work in succession. It is estimated that production capacity can be effectively improved from March to mid March. But on the one hand, the epidemic will have more or less influence on the order of weaving factories, and the demand is insufficient. The demand for raw polyester filament is naturally just needed. On the other hand, as the polyester factories have been accumulating during the Spring Festival, according to the statistics of China's silk net, the overall stock of the polyester market is now concentrated for 30-40 days. In terms of specific products, POY stocks are up to 24-30 days. The FDY stock is close to 26-32 days, while the DTY stock is about 31-40 days. The stock of polyester factories has increased sharply, and most of the polyester filament manufacturers have delayed restarting devices and production reduction plans, and the demand for upstream PTA is more cautious.

afterword

It seems that in the short term, glycol should continue to be satisfied. If the terminal weaving capacity is restored faster and the epidemic is ahead of schedule, the odds of PTA counterattack will be relatively large. But in fact, though the whole country has resumed the resumption of production and resumption of production, the epidemic situation is not over yet. The rate of weaving workers is still low, which restricts the upward trend of PTA market to a certain extent.