Since entering 2017, ethylene glycol has entered a downward channel, and has broken down layer by layer. The market has dropped from about 8,180 yuan/ton to the current level of about 5,800 yuan/ton, with a cumulative decline of 2,380 yuan/ton, and a decline of nearly 30%; as ethylene glycol enters the delivery period near the end of the month, some short positions are covered and external bulk trends are warming, the ethylene glycol market shows a recovery trend, with a cumulative increase of 150 yuan/ton for two consecutive days. After a long-awaited rebound, the long-falling market confidence was ignited, giving bulls unlimited room for imagination. However, just as the industry was looking forward to a rebound high of 6,000 yuan/ton, the market poured another basin of cold water, and continued to plummet in recent days. The gains from the early rebound were quickly exhausted, and the one-week decline reached an astonishing 6.34%.
The author is receiving more and more similar questions:
“What’s going on? Polyester filament has gone up so much. How come the price of ethylene glycol has dropped so much recently?”
“Let’s see how much further the market can fall.”
“Can ethylene glycol rise to 6,000?”
After a long period of decline, although there were several weak market rebounds, they were only short-lived. Today, ethylene glycol once again broke through and fell, and the main contract of ethylene glycol electronic trading once fell by more than 3.80%.
The downstream fundamentals are good, so why is it difficult to boost the ethylene glycol market?
Since April, the polyester filament market has experienced booming production and sales, with the market steadily rising for nearly half a month. According to monitoring data from China Silk City Network, the prices of various polyester filament products have increased to varying degrees. For example, POY150D/144F has increased by 550 yuan/ton in the month; FDY68D/24F has increased by 250 yuan/ton; FDY100D/36F prices have increased. 200 yuan/ton.
In addition to price increases, the market has also ushered in a wave of concentrated stocking downstream. In April, the average production and sales of mainstream polyester manufacturers rebounded to around 130%, a significant rebound from the 80% production and sales in March. Downstream demand is picking up, and polyester manufacturers are actively purchasing goods. Polyester manufacturers have destocked about 5 days from the end of last month. However, the improvement of the downstream polyester market has not brought about the rise of ethylene glycol market. The increase of downstream polyester purchases of ethylene glycol is limited. According to industry insiders, the main restriction point of the polyester end on ethylene glycol this year is —The proportion of raw material contract supply increased. As a result, the initiative to purchase spot goods in the market is lost.
Then who dug such a big “hole” for ethylene glycol?
Upstream crude oil has experienced a sharp correction, and it is difficult to find support from the cost side
At present, commodities led by crude oil have entered a downward channel, becoming an important driving force for the decline of ethylene glycol. Recently, international spot crude oil prices have basically given up nearly half of the gains in the previous three weeks. U.S. crude oil fell by more than 6% in a single week, recording six The biggest weekly decline in weeks, today once again fell below the $50 integer mark, closing at $49.63/barrel. OPEC and non-OPEC oil-producing countries such as Russia reached an agreement in November last year to reduce production capacity for six months. When the agreement expired, there were constant rumors that the production reduction agreement was expected to be extended. At this time, the rise in U.S. oil production has impacted OPEC’s efforts to reduce production, and the short-term downturn in crude oil will continue. Related chemical products that are closely related to crude oil, such as styrene, aromatics and other chemical products, fell significantly during the same period. Affected by this, ethylene glycol could not escape the bad luck of decline.
The atmosphere of bulk funds is bearish, restricting the market from continuing to rise
In addition, it is affected by the financial atmosphere. Judging from the various signals currently released by the central bank, the tightening of funds in the first half of the year continues, and the financial pressure on futures and commodities cannot be ignored. Most of the industry players have a short-selling mentality, which is a relatively negative pressure on the market in the later period.
The mismatch between demand and supply suppresses the upward market trend
From the perspective of supply and demand, according to data, my country’s import volume in the first quarter of this year reached 2.1327 million tons, and the output was also 1.4275 million tons. The overall domestic supply reached 3.5602 million tons, an increase of 814,200 tons compared with the same period last year. From the demand side, the operating rate in the first quarter of this year reached 77.85%, a significant increase from last year’s 68.36%. It is estimated that the demand for ethylene glycol will increase by only about 405,000 tons. The substantial increase in supply suppressed the market trend.
Recently, ethylene glycol has begun to act based on the stock market. Judging from several large fluctuations in the stock market, ethylene glycol mostly follows the adjustment of the stock market, and the market is hardly optimistic. Today’s stock market hit the limit of 1,000 shares, which is another negative blow to ethylene glycol.
To sum up, the current financial situation is the trigger for the deep decline of ethylene glycol. The current weakness of entities is difficult to reverse the established pattern of commodities. The financial attributes of domestic commodities have improved, and the operation mode of combining futures and cash has become inevitable. In the short term, The cold spring market for domestic ethylene glycol is expected to continue. Therefore, when judging the market trend in the near future, we should focus on the trend of funds. However, we should not ignore the fundamentals. The price of ethylene glycol will always return to the supply and demand side. Therefore, if the later fundsWith some stabilization, ethylene glycol has the possibility of seeking an upward breakthrough.
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