From the highest point of 8302 points to the current level of around 6900 points, the ethylene glycol market suffered a cliff-like decline after the year, and the spot price also plummeted. As of March 6, the internal price of ethylene glycol was adjusted to around 6940 yuan/ton, with monthly It fell by 1,280 yuan/ton, a decrease of 15.6%.
Regarding the sharp decline in ethylene glycol, market participants initially thought it was a reasonable correction of the high price. However, when the price fell to new lows again and again, the expected turned into unexpected, and the bullish sentiment in the market Rapid convergence, large traders are short-selling, and the decline of ethylene glycol is difficult to stop.
The price of ethylene glycol has plummeted. What are the changes in profits behind the price drop?
Currently, the global proportion of naphtha to ethylene glycol is around 50%. At the same time, my country’s dependence on imported ethylene glycol is still very high. Therefore, we use the price of naphtha CFR in Japan as the raw material to calculate the price of ethylene glycol. cost.
Before the Spring Festival: As of January 26, the cash flow from naphtha to ethylene glycol was US$427/ton. Converted according to the then RMB to US dollar exchange rate of 6.8588, the cash flow was 2,928.7 yuan/ton.
Early March: After a month of market decline, ethylene glycol profits have been significantly squeezed. As of March 3, the cash flow from naphtha to ethylene glycol was around US$312/ton, converted into RMB. The cash flow fell back to 2146.2 yuan/ton, and the cash flow fell by 782.5 yuan/ton, a decrease of 26.7%.
If it were to switch to other products, the price would drop so drastically that it would probably fall directly into a loss market. However, for ethylene glycol, which is highly dependent on imports, the recent continuous downward trend has not fundamentally shaken its cash flow dominance. It can be said that the price collapse is not a big deal for it. Diol can still make money while lying down.
Faced with such abundant profits, it stands to reason that ethylene glycol manufacturers will continue production at full capacity. But in fact, there have been continuous production cuts and maintenance of ethylene glycol units on the market recently? Why is this? Could it be that the author’s profit calculation is wrong? Are the production efficiency of ethylene glycol manufacturers not as good as market expectations?
The author asked several friends who are engaged in ethylene glycol trading, and they told me that the profits from ethylene glycol have always been good. Recently, there has been an increase in equipment maintenance. In fact, it is not because there is no money to be made that we have to reduce production and maintenance. There are many reasons for this.
Environmental protection action again, coal-to-ethylene glycol environmental protection is tested
According to the Ministry of Environmental Protection, according to the “2017 Air Pollution Prevention and Control Work Plan for and Surrounding Areas”, Beijing City, Tianjin City, Hebei Province Shijiazhuang, Tangshan, Langfang, Baoding, Cangzhou, Hengshui, Xingtai, Handan, Shanxi Province Taiyuan, Yangquan, Changzhi , Jincheng, Jinan, Zibo, Jining, Dezhou, Liaocheng, Binzhou, and Heze City in Shandong Province, Zhengzhou, Kaifeng, Anyang, Hebi, Xinxiang, Jiaozuo, and Puyang in Henan Province (hereinafter referred to as “2+26” cities) are identified as Beijing-Tianjin Hebei air pollution transmission channel cities.
Affected by this environmental protection action, some coal-based ethylene glycol units have reduced their operation, and the domestic coal-based ethylene glycol load has dropped to between 50% and 60%. Shanxi and Henan are areas with relatively concentrated coal-based ethylene glycol production capacity. This environmental protection action will have a greater impact on coal-based equipment.
The operation conditions of some coal-to-ethylene glycol units are shown in the table below:
EO efficiency improves, oil-to-ethylene glycol unit is converted into production
The price of EO ethylene oxide, which returned after the holiday, has “rising steadily”, and the increases each time are 500 yuan/ton, which is beyond certain market expectations. It has now risen to a new historical price high since 2015. Compared with The ethylene glycol market will be weak after next year, and the market center of gravity will decline sharply one after another, which will bring certain uncertainties to the market. Nowadays, the efficiency of ethylene oxide is obviously better than that of ethylene glycol, and some oil-to-ethylene glycol units have reduced their production and switched to ethylene oxide production.
Although ethylene glycol is still highly profitable, domestic ethylene glycol production load has been reduced due to strict environmental protection controls and market profit-seeking mentality. At present, the fundamentals of ethylene glycol are still flat, the downstream polyester market is not flowing smoothly, and the mentality is tightening. In the short term, ethylene glycol may still be dominated by shocks.
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