Capacity Expansion Inventory High Ethylene Glycol Short Term Bearish

The recent decline in ethylene glycol has been lost. The main reason for the decline is that ethylene glycol has expanded rapidly in recent years. In the next two years, this trend will continue. Especially the expansion of ethylene glycol is faster and the production capacity is expanding. At the same time, the demand of the downstream products is weak. The main downstream products of polyester filament have been weak in recent days, which has given rise to a high inventory. At present, China's stock has been at a historical high of over about 1200000 tons, while domestic manufacturers have not compressed their capacity due to falling prices.

High load operation of plant installations

At present, the load of ethylene glycol plant in China is still maintained at high load. According to statistics, the daily average operating rate of the petroleum glycol plant is 83.49%, the daily operation rate of the methanol glycol plant is 71.32%, the daily operating rate of the coal glycol plant is 80.75%, and the comprehensive utilization rate is 81.33%.

The total production capacity of the domestic ethylene glycol plant has reached 10 million 626 thousand tons. In 2019, 1-3 months, the total monthly output of ethylene glycol was 670 thousand tons.

Although there are some factories and overhauls at home and abroad, the short overhaul can hardly alleviate the pressure of high supply.

Port stocks are at a high level.

As of April 15th, the port inventory of ethylene glycol in East China was about 1 million 282 thousand tons, and the ratio continued to increase.

It is expected that the port of East China will arrive at 272 thousand tons of cargo, including 139 thousand tons of cargo planned for Zhangjiagang, 54 thousand tons for Taicang port, 64 thousand tons for Ningbo, 15 thousand tons for Jiangyin, and 0 tons for Shanghai.

Part of the tank capacity has reached the limit, and the vessels are diverted to the outside of the Yangtze River.

In recent years, the domestic integrated device has been negatively affected by profits, and the port delivery has been upgraded, but the inventory remains high.

Although the coal chemical plant centralized maintenance in April, the loss is about 110 thousand tons, but the inventory relative to 1 million 280 thousand tons is negligible.

Lower polyester demand is better.

At present, the downstream polyester can still maintain 92% of the start-up load. After the halid 200 thousand plant is put into operation, the polyester production capacity technology is revised to 55 million 850 thousand tons. According to this calculation, the daily demand is about 47 thousand and 300 tons. According to the current glycol start up, the daily supply is estimated at about 26 thousand tons, and the inlet is estimated at 25 thousand tons. The overall supply is about 51 thousand tons, and the supply is over 3 thousand and 700 tons (without adding antifreeze fluid and unsaturated resin demand).

Overall, downstream demand is relatively good.

To sum up: Although the demand for downstream polyester is good, but ethylene glycol started high, port inventory explosion, the overall oversupply, coupled with the company said that further down a bit can support the situation, the spot market broke 4700 yuan / ton, short-term view of the downward trend continues, the space in 200 yuan / ton up and down.

(source: long Zhong information, New Century Futures)