The Stock Increase Is Terrible And The Demand Is Difficult To Sustain. It Is Difficult To Compete With Foreign Low Price Suppliers.

Since the end of April, the international crude oil futures have rebounded sharply, and the profits of the global naphtha glycol have been declining. At present, the ethylene production in Asia and Europe has become the global marginal production route. Although the recent resumption of terminal work has boosted the market, it is difficult to overcome the strong overcapacity of overcapacity, which has led to a weak market.

　　 The latest development of the five major projects: the oil grade glycol plant is ready to go out.

In 2019, there was not much new production of ethylene glycol in China. In addition to Zhejiang Petrochemical and Hengli petrochemical, which was announced at the end of the year, only 400 thousand tons of Rongxin chemical industry and 100 thousand tons of Tianye, Xinjiang, were put into operation, with a total capacity of 2 million 140 thousand tons. Despite the low level of crude oil and the start up rate of ethylene glycol from domestic coal to freezing point, there are still many installations planned to enter the market in 2020, with a total capacity of up to 8 million 300 thousand tons. In these projects, the capacity of the oil head glycol unit accounts for nearly 40%, including Zhejiang Petrochemical two, Hengli Petrochemical two, Sinochem Quanzhou, Zhongke refining and Gure petrochemical and so on. Others are delayed ethylene glycol projects, such as Xinjiang Tianye, Hubei three Ning, Shanxi Mei Jin, Shaanxi Weihua and so on. It is estimated that by 2021, China's ethylene glycol will reach 20 million tons.

　　 1. Sino joint venture Guangdong refining and Chemical Co., Ltd.

In June 16th, with the 6 sets of key equipment such as atmospheric vacuum distillation, light hydrocarbon recovery, kerosene hydrogenation and so on, one after another was driven by materials, the Sinopec Zhonghai refining and chemical integration project was officially launched and put into operation in the east island of Guangdong province. This project is the largest refining and chemical integration project put into operation by Sinopec during the "13th Five-Year" period. It is the most integrated refining and chemical project with the highest localization rate of domestic production equipment. It is estimated that the annual output value will exceed 60 billion yuan, which can achieve annual profits and taxes of about 26000000000 yuan, and pull over 200 billion yuan downstream industries. It will become a "new engine" for the economic development of Zhanjiang, and will give strong impetus to the economic construction of the big bay area of Guangdong, Hongkong and Macau.

Zhongke refining and chemical industry is one of the important projects of Maoming Zhan. It is the largest refining and chemical integration project launched by the Sinopec during the "13th Five-Year" period. The project has 10 million tons / year oil refining, 800 thousand ton / year ethylene project and related auxiliary projects, which is of great significance for Sinopec to accelerate the construction of Maoming base, with the incremental stock and the optimization and adjustment of oil refining structure. The project is expected to open the whole process of oil refining in late July and complete the whole chemical process at the end of August, involving ethylene glycol production capacity of 400 thousand tons.

2 、 Fujian Gure Petrochemical Co., Ltd.

The Gure million tons of ethylene and downstream deep processing equipment of the Fujian refining and chemical integration project was approved by the environmental protection department of Fujian province in January 2016 ([2016]2). Due to the adjustment of process route and other reasons, the project carried out the environmental impact assessment work. The project changed from the original 16 sets of main units to 11 sets, including 800 thousand tons / year steam cracking plant, 550 thousand tons / Annual cracking gasoline hydrogenation unit, 350 thousand ton / year aromatics extraction unit, 140 thousand ton / year butadiene extraction unit, 300 thousand ton / year ethylene vinyl acetate resin plant, 10/70 million ton / year ethylene oxide / ethylene glycol plant, 600 thousand ton / year styrene plant, 350 thousand ton / year polypropylene plant, 100 thousand ton / year thermoplastic elastomer unit (SBS), 200 thousand ton / year propylene oxide plant and 260 thousand tons / hydrogen peroxide installation Place.

In March 17, 2020, the world's largest scrubbing tower of 10/70 million ton / year EOEG plant was successfully delivered to the project site in March 17, 2020.

At the end of May, the dry torch tank of ethylene plant was started to be hoisted. The installation of convection section of all cracking furnaces was planned in June, which laid the foundation for ensuring the overall progress of the ethylene plant.

3. Sinochem Quanzhou Petrochemical Co., Ltd.

Sinochem Quanzhou refining and chemical integration project (phase two) 1 million tons / year ethylene and oil refining and expansion project 20/50 million tons / year EO/EG device held an intermediate handover ceremony, marking the completion of the construction of the device, officially entered the production commissioning phase.

The EO/EG device imported foreign advanced technology, started construction of civil engineering in December 2018, and implemented the intermediate handover in June 15, 2020. The construction period is 18 months. Compared with the similar construction period in China, the project team continues to struggle for the 830 production.

The EO/EG device is one of the core devices of the ethylene project. The self produced ethylene consumed by 40%~50% is indispensable in the production and start-up process. Whether the EO/EG device can be completed smoothly will directly affect the progress of the whole ethylene project.

4, Wanhua chemical group Limited by Share Ltd

As the core of the two phase project of Wanhua Yantai Industrial Park, the million tons ethylene project is the first million ton ethylene project to be landed in Shandong Province, with a total investment of 16 billion 800 million yuan and an area of 2400 mu. The main construction is an annual production of 1 million tons of ethylene plant, an annual output of 450 thousand tons of LLDPE installations, an annual output of 400 thousand tons of PVC installations, an annual output of 150 thousand tons of EO installations (40 thousand tons of ethylene glycol), an annual output 30 and 650 thousand tons PO/SM Installation, annual production of 50 thousand tons butadiene plant and related ancillary works. Wanhua chemical million tons ethylene project is planned to go into operation in the second half of 2020.

5. Zhejiang Petrochemical Company Limited (phase two)

The newly built main projects mainly include 20 million tons / year oil refining, 4 million tons / year para xylene, 1 million 400 thousand tons / year ethylene and downstream installations, and supporting projects include storage and transportation engineering, public and auxiliary projects and environmental protection projects. The construction period of the project is 2020-2022 years, and the planned investment is 20 billion yuan in 2020.

In September 22, 2019, Zhejiang Petrochemical Co., Ltd. 40 million tons / year refining and chemical integration project (phase two) 2# 800 thousand tons / year ethylene glycol unit started.

In May 2020, Rongsheng Petrochemical Industries Co executives said at the exchange meeting that the two phase of the project has been completed by 80%~90%, and the installation of underground pipelines has also been completed. The main installations of atmospheric and vacuum distillation units and two sets of ethylene are being installed. The company expects that the two phase of the fourth quarter of this year will be put into operation.

Causes of ethylene glycol dilation

Policy is good, domestic ethylene production capacity continues to expand. In order to develop China's petrochemical industry and solve the problems of low level of industrial integration, lagging development of high-end petrochemical products, and structural shortage of supply, the NDRC issued the plan for the layout of petrochemical industry in May 2015. The plan puts forward that China will focus on the construction of Dalian Changxing Island, Hebei Caofeidian, Jiangsu Lianyungang, Shanghai Caojing, Zhejiang Ningbo, Guangdong Huizhou, and Huizhou and seven petrochemical industrial bases. As the downstream of ethylene, from 2009 to 2019, the supply gap of ethylene glycol in China was large, and ethylene glycol was imported from Saudi Arabia and other countries every year. During the period, the dependence of import was maintained at 60%. Under the situation that supply exceeds demand, the profit of ethylene glycol per ton in China is as high as 3315 yuan per ton. Therefore, considering the response to the national call and profitability, most ethylene units in domestic large-scale refinery projects are equipped with ethylene glycol units. Since 2019, the major refinery projects have been gradually landing, including 1 million 800 thousand tons of Hengli and 750 thousand tons of Zhejiang petrochemical plant. The total output of 2 million 550 thousand tons has been put into operation, and the capacity growth has reached 23%, which is in the same period from 2016 to 2019.

Shale gas revolution triggered global ethylene glycol capacity expansion. In recent years, with the development of shale gas development in the United States, natural gas production in the United States has been rising. As the associated gas of natural gas, the separation of ethane is also increasing year by year. Specifically, from 2010 to 2019, natural gas production in the United States increased from 1 trillion and 66 billion cubic feet to 2 trillion and 539 billion cubic feet. The separation of ethane increased from 317 million 180 thousand barrels to 666 million 254 thousand barrels. With the increase of ethane output, the price of ethane has declined, and the economy of ethane has also been reflected. Therefore, in the United States, a large number of ethane is used to produce ethylene, and ethylene production capacity has expanded significantly. At present, 78% of ethylene production in the United States comes from ethane cracking technology. Ethylene glycol as the downstream of ethylene, ethylene production expansion also drives ethylene glycol capacity expansion. In 2019, global ethylene glycol production capacity expanded by 1 million 870 thousand tons, of which the United States accounted for 82%.

Ethylene glycol expansion route

Ethylene glycol has obvious advantages. First, ethylene glycol has the advantage of cost. The cost of ethylene glycol is lower than that of coal derived ethylene glycol, especially ethylene glycol imported from natural gas and ethane. For example, ethylene glycol made in ethane in USA costs only 2353 yuan / ton for cash flow, plus 700 yuan / ton freight to China, which is 3053 yuan / ton on CIF. In contrast, the cash flow cost of China's coal to ethylene glycol is relatively high, reaching 3491 yuan / ton, which is equivalent to 3991 yuan to East China port. The two is that ethylene glycol is astonishing. From 2019 to 2020, ethylene glycol production capacity at home and abroad has reached 4 million 420 thousand tons, accounting for 32% of the domestic ethylene glycol production capacity, while the production capacity of ethylene glycol in China is 4 million 890 thousand tons. The new ethylene glycol can almost replace most of the domestic coal glycol production capacity.

The market can increase the flow of goods. It is in the advantages of ethylene glycol at home and abroad that low dumping has become the main means of expanding the market share of new devices. This led to two results: first, the polyester plant reduced the volume of port picking up and turned to the domestic and foreign ethylene glycol plants. The two is the increase in imports of ethylene glycol. This leads to an increase in port's negotiable stocks. Specifically, from 2020 to March, the total import of ethylene glycol in China was 2 million 800 thousand tons, up 7.6% from 1 to March 2019. From the perspective of the country, the capacity expansion is obvious in the US.

Results of ethylene glycol expansion

Ethylene glycol production capacity expansion, glycol basic index blank. In terms of price, from January 1, 2020 to June 8th, the main futures of ethylene glycol dropped from 4591 yuan / ton to 3709 yuan / ton, or 20%. In terms of inventory, a large number of imports led to high port inventories, and stocks rose from 490 thousand tons to 1 million 380 thousand tons, or 180%. In terms of base, under the pressure of high inventory pressure, the spot pressure is large and the glycol base difference is weakening. The base price has dropped from 287 yuan / ton to -120 yuan / ton. In terms of start-up, the market share of high cost coal glycol has been compressed, and the ethylene glycol load of coal has dropped from 80% to 31%.

It is difficult to compete with foreign low-cost suppliers.

Under the influence of global public health events, the demand for foreign countries is not good enough, and large quantities of imported resources have struck China. At present, the main port storage capacity is tight until June 8th, and the main port inventory in East China reached 1 million 301 thousand tons, showing no signs of mitigation.

According to customs statistics, in 2020 1-4, ethylene glycol accumulated 3 million 690 thousand tons, slightly higher than the same period last year. The main imports are Saudi Arabia, China, Taiwan, Canada, South Korea and Iran. In addition, the US has increased its export to the Chinese market due to capacity growth. Especially in February, when China reduced the import of ethylene glycol to the United States, the amount of imports from the United States increased significantly in March. Although domestic ethylene glycol production capacity continued to increase significantly after 2020, in terms of cost, it was difficult to compete with foreign low-cost suppliers, whether it was oil or coal derived ethylene glycol.

　　 Downstream, ethylene glycol is mainly used for polyester production, and terminal for textile and garment industry. Although the polyester terminal load has recovered to around 88%, it is still on the low side, despite the weakness of terminal orders and high inventory pressure. China's National Bureau of statistics data show that in 2019, China's polyester production capacity exceeded 58 million tons, with an annual output of nearly 50 million tons, the demand for ethylene glycol was about 17 million 250 thousand tons, and the consumption of ethylene glycol in 2019 was basically the same. In 2020 1-4, China's textile and clothing retail sales decreased by 33% compared with the same period last year. In the same period, China's textile and clothing exports fell by 24% over the same period last year.

On the whole, under the pressure of the new crown epidemic, the global economic situation is not good, the downstream demand is sluggish, and the return of the high storage and Tianjin and Yangzi BASF devices, and the restart of the coal enterprises such as Qian Xi coalification, Yangyang Shouyang and Yongjin Puyang, etc., the ethylene market in the country will again be under pressure.