The hottest glycol will enter the destocking cycle

Ethylene glycol will enter the de stocking cycle

ethylene glycol will enter the de stocking cycle

March 13, 2019

due to the low price, ethylene glycol enterprises are in a low profit state, the domestic and foreign operating load has decreased, and the current downstream enters the peak consumption season, ethylene glycol may enter the de stocking cycle, and the price center is expected to move up

the impact of macro factors still exists

recently, there has been intensive macro and policy information, which has a great impact on bulk commodities. During the national two sessions, the government issued a policy to further reduce the value-added tax, and the value-added tax on ethylene glycol will be reduced from 16% to 13% for Chinese coatings. In the long run, with the reduction of value-added tax, ethylene glycol futures will decline. The tax reduction will lead to a tax difference in the short term, which will stimulate traders to take goods, and the business situation of enterprises will improve after reducing the burden. Therefore, the policy has specially equipped a series of new materials for medical devices, laboratory supplies, diagnostic instruments and drug packaging, and increased the weight of indicators such as excess capacity in the political performance evaluation system, which has an impact on the market. 1. Please carefully browse this manual before use. How does it need further observation. In addition, the Sino US trade negotiations are still in progress. Although a series of optimistic news came out of the market, the two sides still did not reach a substantive consensus, which also increased some uncertainty for the follow-up trend of bulk commodities

the supply and demand pattern is gradually improving

the imbalance between supply and demand is an important reason for the continuous weakening of ethylene glycol prices in this round. Due to abundant domestic and international supply and relatively weak downstream consumption, ethylene glycol in East China continues to increase. As of March 7, the port inventory of ethylene glycol in East China had reached 1.109 million tons, an increase of 609000 tons or 121.8% from the low point at the end of August last year, a new high in recent five years. Excess supply in the market is an important factor to suppress the price of ethylene glycol. However, from the current situation, the supply and demand pattern of ethylene glycol has changed

in terms of supply, due to the low price of ethylene glycol, the current business situation of ethylene glycol production enterprises is poor. The production of ethylene glycol from methanol and ethylene is at a significant loss, and the profit from naphtha to ethylene glycol is also at a relatively low level. In this case, the enthusiasm of ethylene glycol production enterprises has decreased significantly. As of last week, the operating load of domestic ethylene glycol production enterprises was about 76%, down nearly 10% from the end of February. As the current price is unfavorable to ethylene glycol production enterprises, the willingness of enterprises to limit production and ensure price is gradually strengthened, and the price of ethylene glycol is expected to find a new balance upward

in terms of imports, in addition to domestic oversupply, the continuous increase in imports is also an important reason for the continued weakness of ethylene glycol prices. In January, domestic imports of ethylene glycol were 1.098 million tons, up 36.65% month on month and 21.47% year-on-year, hitting a record high in a single month. However, at present, ethylene glycol is in a low profit state as a whole. Many ethylene glycol units in South Korea and Southeast Asia have plans to reduce the load, and the commencement of the units to be put into operation may also be postponed. In this case, the current price difference between East China and imported goods has further expanded to a high level above 200 yuan/ton. With the shortage of international import supply in the future, this price difference is expected to further expand, and domestic imports of ethylene glycol may be restrained

in terms of demand, after the Spring Festival, the background of the other two natural person shareholders of Yinxi cobalt industry, the downstream of ethylene glycol, is also closely related to the cobalt metal and automobile industry. Polyester has entered the peak consumption season, and the operating load of polyester production has rebounded significantly. As of March 7, the operating load of polyester chip production enterprises was 84.74%, an increase of 17.74 percentage points over the end of last year; The operating load of polyester filament production enterprises was 93.87%, an increase of 10.94 percentage points over the end of last year. With the gradual recovery of end consumption, the demand for ethylene glycol is expected to increase

future forecast

to sum up, although the inventory of ethylene glycol is still high, the operating load of domestic and foreign enterprises shows a downward trend, and the market supply decreases. At the same time, the downstream polyester has entered the peak consumption season, and the market demand has rebounded steadily. In this case, the oversupply of ethylene glycol is gradually alleviated, and it is expected to enter the de stocking cycle, and the price focus is expected to gradually move up. However, there are many uncertainties in the current macro level, and the disturbance of policies may disrupt the rebound trend of ethylene glycol. It is suggested that investors can buy light positions and follow up after the macro level is stable