Ethylene glycol market Outlook for 2020

By 2020, the total production capacity of ethylene glycol planned to be put into use at home and abroad will reach 8.768 million tons. Domestic production capacity is planned to increase by about 6.49 million tons (2.94 million tons are syngas production units, 3.55 million tons are integrated units), and foreign production capacity is planned to increase by about 2.278 million tons. According to the production process, the production capacity of synthetic gas production in 2019 is 2.94 million tons, accounting for about 33.5%. Ethylene production capacity is 5.828 million tons, accounting for about 66.5%.

On the supply side, domestic MEG supply will still maintain a high growth rate in 2020, and the supply growth rate is expected to be around 27%. From the perspective of domestic supply, domestic MEG output will continue to grow at a high speed in 2020, with the main growth coming from large-scale petrochemical integration projects, such as Hengli Petrochemical co., LTD., Zhejiang Petrochemical Co., LTD., Zhejiang Petrochemical Co., LTD., And ZHONGhua Quanzhou and Zhongke MEG installations. In addition, coal-to-ethylene glycol units will also provide part of the output, such as Yankuang in Inner Mongolia, Tianye in Xinjiang and other units. Production increases from new installations are expected to be around 2.7-2.9m tonnes. In addition, changes in output caused by plant overhaul are also of concern. In 2019, the price center of ethylene glycol in China fell sharply, and the reduction of production of domestic equipment was obvious, in which the production of syngas was reduced by 100,000 tons per month. With the concentrated release of absolute ethylene glycol production capacity in 2020, the reduction and shutdown of devices due to low price may be intensified. It is expected that production from the EO/EG switch will continue to shrink by 750,000 to 850,000 tons. Overall, the annual production of ethylene glycol in 2020 will be around 965-9.75 million tons.

From the perspective of import supply, the production and release of overseas installations will be concentrated in 2020, with a total of 2.28 million tons of installations to be put into operation. Of course, one of them JUPC3 device planned at the end of 2020 commissioning trial, the overall supply more difficult to reflect. But meglobal's 750,000 mMTpy installation, which will be launched in the fourth quarter of 2019, will largely be released as a new installation. It is estimated that MEG import volume will be around 10.5 million tons in 2020, and MEG external dependence will remain at a small drop. In addition, with the rapid expansion of domestic and foreign supply, the demand side prefers domestic supply when choosing sources of goods. In the future, the price difference between inside and outside us dollars may be linked together for a long time.

In terms of demand, the polyester unit to be put into operation in 2020 will be around 5.08 million tons, the polyester output growth is expected to be around 6%, and the demand increase on MEG will be around 1 million tons. The increase in MEG demand for polyester links is about 100,000 tons. If the polyester output grows by 6% year on year, the annual MEG supply will be oversupplied. If the traditional equipment goes into production smoothly, the MEG supply pressure may intensify in the second half of the year. In addition, the production process of polyester link will be paid attention to, and the supply and demand will improve under the pattern of scissors difference.

In the oil market, institutions are taking a relatively cautious view on oil demand in 2020 as economic indicators decline. In November, the OECD released its economic outlook, cutting its forecast for global economic growth by 0.1 percentage point to 2.9 percent in 2020. By region, the GROWTH rate of the US economy is expected to be 2.3% in 2019 and 2% in 2020. The euro zone is 1.2% in 2019 and 1.1% in 2020; In the UK, it was 1.2% in 2019 and 1.0% in 2020. The OECD warned that uncertainty would continue to grow and undermine prospects for growth, with the world economy growing at its slowest pace since the financial crisis this year, with no improvement next year and only a slight acceleration in 2021.

Until more evidence of demand improvement is seen, the probability of crude oil remaining in the range is relatively high. At present, the WTI price center is basically estimated to be around $55 / BBL, while Brent price center is around $65 / BBL. However, the influence of geographical factors and other factors should be considered in local time. Global inflation remains low, led by crude oil prices, and commodity trends remain cautious based on overall demand expectations.

From the perspective of price, during the continuous release of ethylene glycol production capacity in 2020, the supply shock brought by the commissioning of large refining and chemical projects will be significantly higher than that of coal making plants in previous years. Annual supply and demand pattern, ethylene glycol surplus is expected to be more obvious. Supply pressure, ethylene glycol price lower center of gravity will performance, cash flow will be compressed.