Supply Support, VS Demand Suppression, Ethylene Glycol Dilemma

Yesterday, the domestic glycol market opened up smoothly, and the focus of the spot market remained relatively strong. In the east part of the stock market, the spot traders talked about 4540 yuan / ton, and some purchases continued to be cautious. The actual transaction was limited. At present, the port maintained its inventory level under the limited replenish ship, while the supply side still supported, but the downstream polyester production and marketing continued to slump, and the operating rate dropped to around 87%.

In the short term, ethylene glycol in the market area is strong, can the market rebound?

Device load is still low.

As of July 25th, the overall load of ethylene glycol in China was 65.20%, of which the load of coal to ethylene glycol started at 54.65%. Recently, new maintenance equipment such as Tongliao gold and Anyang Yongjin has been added, and domestic output is still not much.

In the short term, the spot price is not enough to stimulate the negative burden of domestic MEG devices, and even if the maintenance device starts to restart, it will still take a certain time to release the output. Therefore, it is hard to raise the volume of MEG domestic products in the short term. But too high idle capacity will always suppress the MEG rebound in the long run.

Port inventory continues to decline

In recent years, China's main port stocks have dropped at a high level. As of July 25th, the port of ethylene glycol in East China's main port area was about 925 thousand tons, down 18 thousand and 500 tons from the previous week.

It is estimated that next week (July 25th -7 31), the port of East China is expected to arrive at 143 thousand tons, of which 90 thousand tons are planned for Zhangjiagang, 23 thousand tons for Taicang wharf, 20 thousand tons for Ningbo, 10 thousand tons for Jiangyin, and no port for Shanghai.

Downstream demand regress

The production and marketing of polyester and silk products in Jiangsu and Zhejiang experienced a short pulse pickup last Friday. Since Saturday, production and sales quickly dropped to a weak level, and the average production and sales in the vicinity of 3 p.m. were 5-6. The production and sales of mainstream factories were mostly at the 40-60% level. Some of the better factories were near 80-100%, and some factories could reach 200%. With the increase of temperature and the gradual increase of capital pressure, the start-up rate of downstream weaving mills continues to slow down.

To sum up, this week's arrival in Hong Kong is expected to be relatively small. The main port is in good condition and the supply side will continue to be tight. But polyester end price reduction has limited market stimulation, and production and marketing are difficult to quantify. Short term ethylene glycol market is expected to maintain a range of shocks. (source: Guo Ye net, China Everbright futures)