In January, with the support of the cost side and the supply side, the center of gravity of the ethylene glycol market price moved upward, approaching 5,300 yuan/ton, an increase of 230 yuan/ton from the average price in December. However, under forward supply pressure and weak demand, the market rebound space is limited and there are signs of a pullback.
From the supply side, due to the recent maintenance of several domestic devices, the overall operating load has dropped to about 53%, and the supply is lower than expected. At present, Zhenhai Refinery’s 800,000 tons/year ethylene glycol unit has produced qualified products last weekend, and Guangxi Huayi’s 200,000 tons/year ethylene glycol unit has produced industrial-grade products. Sinochem Quanzhou and Ningbo Fude, which were shut down for early maintenance, plan to restart operations later this month. With the restart of the devices, supply pressure will gradually increase. In addition, the pace of port inventory accumulation has slowed down. As of today, the inventory at the main port in East China is 663,600 tons, a decrease of 39,400 tons from the previous statistical cycle.
On the demand side, supported by strong crude oil, the overall focus of the polyester market continued to shift upward last week. The market trading atmosphere was light, terminal loads fell, and enthusiasm for stockpiling was low. At the same time, resistance to high prices increased. Although there has been a slight increase in polyester production recently, as the Spring Festival holiday approaches, polyester and terminal weaving companies have more production shutdowns and holidays in the second half of the year. In the later period, the pressure on downstream factories to start operations increases, and there is a possibility of a decline.
Taken together, although the market price of ethylene glycol has risen recently, all processes are currently at a loss. Therefore, ethylene glycol is prone to fluctuate with raw material prices. With the rebound in oil prices, active drilling data in the United States are increasing rapidly, and the geopolitical premium of crude oil is being pushed. High, the market has completely ignored the negative impact of the current epidemic caused by Omicron. Short-term speculative operations will continue to support the rise in oil prices, and the cost side of ethylene glycol is still supported. However, in the medium to long term, with the gradual restart of early shutdown devices and the commissioning of new production capacity, the domestic operating load will increase. Coupled with continued weakness in downstream demand, it is expected that the ethylene glycol market may still fall back in the early Spring Festival, but the space is limited.
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