December is destined to be an extraordinary month. As the last month of 2019, a lot of things happened at the beginning of the month! In terms of polyester raw materials, due to strong winds last weekend, some port areas were closed to navigation, and the arrival of MEG was delayed; as of this week, navigation restrictions at the Yangtze River Estuary continue, and the actual arrival volume of ethylene glycol has decreased!
It is unimaginable that not long ago, ethylene glycol futures, The spot market has declined. As the futures price fell, the internal price of ethylene glycol also continued to fall, approaching the low of the year. It is understood that this became the low price of the same period in four years. Coupled with the pessimistic expectations of market participants on the polyester end, it is expected that the downstream polyester market will mostly purchase ethylene glycol on demand, which will further dampen the confidence of the ethylene glycol market.
I never expected that happiness would come so suddenly!
Due to the difficulty in arriving goods at ethylene glycol ports, spot supply continues to be tight, which drives ethylene glycol futures and spot prices to stop falling and rebound, and there will be further Pull-up action.
From a futures perspective, the DCE ethylene glycol contract It has closed up for five consecutive trading days, and in the past two trading days, there has been a strong intraday surge. As of the closing at 15:00 on December 3, the main contract closed at 4,752 yuan/ton. Compared with the previous trading day, It rose sharply by 2.79%; compared with the closing price on November 26, it increased significantly. On the spot side, the upward trend has also continued, and the current spot negotiation price focus in East China has strengthened to around 4750-4800 yuan/ton.
Here, I have to sigh, this market ultimately depends on supply and demand!
In fact, since June this year, the inventory of ethylene glycol port has entered a downward channel. In recent days, as the inventory of East China ports continues to be depleted, the current inventory of ethylene glycol Inventories at the main ports in East China have dropped to the lowest level this year, and have even set a new historical low for many years. It is understood that the current inventory in East China Port is around 425,000 tons, close to the lowest value since 2017.
Of course, happiness comes suddenly, but you can’t be too happy morning. For the ethylene glycol market, it is naturally a “happy thing” to be able to rebound and climb in the recent stage, and it has also boosted market confidence to a certain extent. From a long-term perspective, the driving force for the continued strength of the ethylene glycol market is still insufficient. “Success depends on supply and demand, and failure depends on supply and demand”!
After all, after the situation in the port area recovers, ethylene glycol will still have to be Facing the problem of increased supply. It is understood that in December, 1.3 million tons of ethylene glycol units will be put into operation as planned. This may be delayed, but there are still nearly 3.9 million tons of ethylene glycol units expected to be put into operation next year, and the supply side will naturally increase by then. There has been a further increase.
In addition, from the demand side, starting last week, downstream The number of inspections and repairs by polyester manufacturers is gradually increasing. Recently, the polyester filament and polyester staple fiber equipment of some manufacturers such as Yizheng Chemical Fiber and Ningbo Quandi have entered the inspection stage. In the later period, especially from late December to January, polyester plants have large-scale maintenance plans, such as the Spring Festival parking maintenance plans for many polyester plants in Fujian Baihong, Fujian Jinxing, Xiamen Xianglu, Taicang Shenjiu, Taicang Changle, etc. has been introduced. By then, the start-up of the polyester industry will be significantly reduced, and the market demand for ethylene glycol will inevitably weaken.
In the same way, PTA, as a “good partner” of ethylene glycol, was subject to the pressure of supply and demand in the previous stage, and thus faced downward pressure. Although the tight spot supply of ethylene glycol may change, we still hope that this wave of ethylene glycol market will have a “perfect ending” and don’t fall too fast!
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