Ethylene glycol: market summary and outlook in the first half of 2022

Market operation

In the first half of this year, the overall performance of ethylene glycol market was sluggish, and the overall demand in the first half of this year was weak. The peak season was not prosperous, which dragged down market sentiment. Although the cost was high, the ethylene glycol market remained low and volatile.

In the first quarter, under the influence of geographical relations, international crude oil hit new highs repeatedly, and the cost drive was strong. Despite the lack of orders at the terminal and the slow recovery of demand, in the case of soaring raw materials, the panic of factories increased, and the pace of procurement accelerated, boosting the confidence of operators in the recovery of demand. The ethylene glycol market rose rapidly with the cost side.

The domestic epidemic broke out in the second quarter, especially in Jiangsu, Zhejiang and Shanghai. The epidemic was blocked for a long time, and this region is the concentration of ethylene glycol production and consumption in China, so it has a huge impact on chemical fiber textile factories. Enterprises have difficulties in delivering finished products due to insufficient arrival of raw materials and supply chain interruption. At the same time, there is also a loss of orders. The start-up of terminals fell from 63% to about 48%, and the reduction of terminal production also led to a decline in polyester production and sales, Coupled with the high cost and poor polyester profit, polyester factories also began to stop production in April, involving a total capacity of 5.65 million tons. The massive production reduction of terminals and polyester factories also opened a downward channel for the ethylene glycol market.

Supply and demand analysis

In terms of supply, due to the sharp rise of international crude oil at the beginning of the year, the oil production unit suffered a serious loss, reaching $470 / ton at the beginning of March. Under the pressure of cost, factories began to overhaul one after another. In June, the start-up of domestic units fell to around 47%, and the output decreased significantly, but the port inventory continued to accumulate. By the end of June, the inventory of the main port in East China was 1.237 million tons, an increase of 586000 tons over the same period last year. High inventory suppressed market sentiment, And in the long run, the situation of domestic oversupply is still difficult to reverse.

In terms of demand, the demand performance in the first half of this year was poor. Affected by the epidemic, the peak season in March and April was still weak, while the pressure of high polyester inventory continued, superimposed with poor polyester profits. Under heavy pressure, polyester factories had plans to reduce production in the later period. According to the current situation, the domestic epidemic has been effectively controlled and the economy has slowly recovered, but the terminal start-up in summer is low, orders have not increased significantly, and demand is still dragging down market sentiment.

Aftermarket forecast

On the cost side, crude oil and coal will remain at a high level in the second half of this year. Under the condition of serious profit losses in the industry, it is difficult for domestic plant construction to rebound significantly in the short term, while the port inventory is high, and it still needs a long period of digestion in the later period. At present, the terminal demand in summer is weak, and the winter orders in August and September in the later period will be issued, and the demand will pick up to a certain extent, but the recovery is relatively slow in the short term. Comprehensively speaking, In the short term, the recovery of ethylene glycol market is weak, which may remain low and volatile. In the third quarter, with the boost of demand, it may rise.