Is The Trend Of Ethylene Glycol Rising Or Reversing?

In recent trading days, the performance of international crude oil was sluggish and continued to explore. In April 28th, WTI continued to decline, but the joint production reduction agreement was about to be implemented, and Brent rebounded. WTI 06 contract 12.34 fell 0.44 U. S. dollars / barrel; Brent 06 contract 20.46 up 0.47 U.S. dollars / barrel, closing price is at a historic low.

However, the trend of crude oil did not produce negative effects on ethylene glycol. In April 24th, after the support of ethylene glycol spot bottom 3200, there was a continuous rebound trend in nearly two or three trading days. Today's morning market rally has expanded again, and the futures contract has gone higher and higher. It is at the forefront of the chemical sector, and the spot price in East China has risen to around 3400 yuan.

At present, the logic of supporting ethylene glycol rise is as follows:

The main port stock has continued to grow.

Reservoir area	Four 20 June	Four 23 June	Four 27 June	Compared with last Thursday	Compared with last Monday	Increase from last Monday
Zhangjiagang	Sixty-nine point eight two five	Sixty-nine point two six	Sixty-nine point eight three	Zero point five seven	Zero Point Zero Zero Five	0.01%
Taicang	Fourteen point one	Thirteen point six	Thirteen point three	-0.3	-0.8	-5.67%
Ningbo	Eleven	Eleven point five	Ten point eight	-0.7	-0.2	-1.82%
Jiangyin	Seven point three	Seven point three	Seven point three	Zero	Zero	0%
Shanghai & Changshu	Eleven point four	Seven point seven	Four point eight	-2.9	-6.6	-57.89%
Total	One hundred and thirteen point six three	One hundred and nine point three six	One hundred and six point zero three	-3.33	-7.6	-6.69%

According to Longzhong data monitoring, the inventory of East China's main port reached a peak of 1 million 150 thousand tons in April 16th. There was a continuous downward trend. In April 27th, the main port stock was at 1 million 60 thousand and 300 tons, a decrease of nearly 100 thousand tons compared with the peak value, and the decline in inventory for half a month.

Domestic ethylene glycol operating rate has always kept low.

After entering the April, the domestic ethylene glycol operating rate has a downward trend. The profit rate of coal glycol production has dropped to more than 4, and the profit level of the non coal starting rate has been higher. However, the impact of the short stop of several large-scale installations has dropped. But in recent days, the start-up rate has been rising rapidly, and the comprehensive operating rate has been dragged down by the coal utilization rate, maintaining at 55. % near the level.

Polyester raw materials in the lower reaches of the market appeared in a round of speculation, and polyester operating rate was not as bad as expected.

After entering the April, polyester raw materials appeared in the situation of round turn speculation. First, the price promotions, attracting some of the fund's involvement in the stock market, made the inventory pressure of the manufacturers greatly reduced, followed by the speculation of the mask materials, making the production and marketing of short fiber products hot, and the price volume rose. At the end of the month, there was also the concept of protective clothing, which made the polyester filament fried for several days. On the basis of the above factors, the polyester start-up rate did not appear to be negative, but the load loop increased significantly in March. Most of the time in April, the polyester operating rate remained at the 80-85% interval, and the demand side was good, providing greater support for ethylene glycol.

On May 1 holiday, part of the funds are withdrawn from the market.

Due to the 5 day of May Day holiday this year, and under the influence of many factors, such as the international macro environment and the futures exchange greatly raising the margin ratio of futures products, the speculators of the futures market have greatly reduced their positions, while the previous ethylene glycol is an empty distribution product, and most of them are buying operations, providing some help for the rise of the market.

So what is the current trend of ethylene glycol? How can it be sustainable? It has become the focus of the market. Personally, it is believed that the above positive factors do not support the reversal trend of the market. The main reasons are as follows.

Falling inventory does not mean turning point.

East China's main port inventory has dropped continuously. The main reason is that tank capacity is tight at present. Many goods can not enter the inventory statistics because there is no tank. From the April shipments, we can see that the daily average delivery volume of a main irrigation area in East China is near 6000 tons, compared with 8600 tons in the same period last year, a drop of 30%.

Sustainability of polyester high opening rate remains to be seen.

The high factor of polyester artificial speculation is relatively large, the terminal digestion is limited, the product inventory is only realized from the factory inventory to the social inventory transfer, which also laid a hidden worry for the polyester Market in May, so the probability of the decline of polyester operating rate in May is greater.

After long holidays, funds will be rearranged.

Before the holidays, funds have been chosen to reduce the positions and raise the purchasing power of ethylene glycol. However, if the funds are rearranged after the festival, ethylene glycol is still an empty distribution product from the point of supply and demand structure.

To sum up, at present, ethylene glycol has a strong rise, which does not mean its reversal trend. Therefore, it should not be too optimistic in operation.