Since the beginning of the new year, after a short-lived “one-day red” market, ethylene glycol has fallen deeply into a quagmire of decline. The spot price has dropped from 8,220 yuan/ton to the current 7,300 yuan/ton in just half a month. In March, ethylene glycol fell by nearly a thousand yuan, a drop of 11.2%. From the strong growth a year ago to the constant decline after the new year, the market situation is really a bit foggy, and it feels like you can’t see clearly or understand it.
Strangely enough, ethylene glycol used to be like a follower. When PTA rose, it followed suit. When PTA fell, it followed suit. Since last year, the follower has started its own business. In the second half of last year, it put aside PTA and staged one crazy rising market after another. Ethylene glycol was in its prime years ago, and the market forecast for its market outlook naturally continued to improve. However, ethylene glycol, which has always been willful, just doesn’t play by the rules. After the year, ethylene glycol is like a deflated ball, losing its ability to rebound upward. Why is ethylene glycol such a weak market?
The slow digestion of port inventories has become the biggest negative factor. In the week before the Spring Festival, the inventory in the East China port area was 489,000 tons. The average daily shipment from a mainstream warehouse in Zhangjiagang was about 8,500-9,000 tons; the average daily shipment in Taicang and Changshu was about 2,000-2,500 tons. Polyester factories are very active in stocking up before the holiday, and the port inventory has dropped to the lowest level in recent years. After the holiday, polyester manufacturers mostly focus on stocking up before the holiday. The purchasing intensity of ethylene glycol is average, and the inventory of ethylene glycol port continues to rise. As of the week of February 18, the total inventory of ethylene glycol port rose to 622,000 tons, an increase of 130,000 tons from the pre-holiday inventory. The surge in inventory inhibited the rebound of the ethylene glycol market.
Recently, ethylene glycol has experienced a bear market of three days of small decline and two days of sharp decline. Will the Waterloo market of ethylene glycol continue in the future?
The sharp drop in ethylene glycol prices is not caused by the plunge in raw materials. On the contrary, the recent performance of raw materials has been extremely strong. The current price of raw material ethylene has rebounded to US$1,385/ton, an increase of US$175/ton from the price in early February. Raw materials continue to rise, and under the pressure of high costs, the decline of ethylene glycol may gradually slow down.
From the perspective of supply and demand, both terminal and polyester prices have basically returned to pre-holiday levels, but demand performance is still average. Both the procurement of polyester manufacturers and the stocking of terminal weaving are relatively cautious, with few substantial breakthroughs. The trading volume continues to be light, which also creates a negative impact on the market mentality. It is reported that Sinopec’s ethylene glycol production plant has plans to change production due to the recent significant decline in ethylene glycol prices, which has significantly compressed profits. In addition, abroad, ethylene glycol units will gradually enter the maintenance stage from March, and the tightening of supply will also limit the decline of ethylene glycol to a certain extent.
It can be said that the price of ethylene glycol that continued to rise a year ago made it unaffordable for most manufacturers. Now that ethylene glycol has fallen from its high level, the cost pressure on polyester manufacturers has been reduced a lot. With the arrival of the spring and summer peak seasons in the fabric market, fabric market orders will gradually increase in March, and the release of terminal demand may be a major benefit in the future, stimulating the upstream raw material market from the bottom up. Judging from the current situation, although the downward trend of ethylene glycol has not stopped, as the negative factors are gradually consumed, the ethylene glycol market is still relatively optimistic.
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