Ethylene oxide: cost profit analysis in May

Up to now, the price of ethylene in Northeast Asia is USD 1050 / T. the price of ethylene in Asia continues to decline, the cost support continues to weaken, the profit of ethylene oxide is repaired, the unit operating rate is increased, the on-site supply is increased, and the downstream demand continues to be weak, so the quotation goes down.

This month, the ethylene market in Asia fell violently, the ethylene market in Northeast Asia continued to be weak in negotiation, and the quotation continued to fall, closing at USD 1050 / T CFR Northeast Asia at the end of the month; Relatively speaking, the supply of ethylene market in Southeast Asia is still tight, and the quotation in the later period increased slightly, closing at USD 1150 / ton CFR Southeast Asia at the end of the month.

After the May Day holiday, the market negotiation resumed slowly, there was no new offer in the market, and the logistics problems caused by the blockade and restriction related to coronavirus restrained the downstream demand. In addition, the operating load of the unit itself was not high, which reduced the purchasing power of spot ethylene, and the price began to decline. In the middle of the month, the price of ethylene in Asia fell sharply, the market sentiment continued to be depressed, and the domestic plant capacity was released, resulting in a sharp increase in spot supply, which led to a wide decline in the price of domestic ethylene. Then, in the case of a huge difference between sales and purchases, trading activities are also severely restricted. Ocean going goods cannot enter Asia. Although the supply of spot goods is limited, the uncertainty of China's demand reduction and the restrictive measures imposed by the COVID-19 epidemic have a great impact on ethylene prices. Although the energy cost of Asian ethylene producers has increased, the price of most downstream products has barely increased, and the unit is expected to further reduce its negative in June.

Generally speaking, the ethylene oxide quotation of this month was stable first and then fell. The ethylene oxide that had been deadlocked for more than three months generally fell by 500 yuan / ton at the end of the month. The quotations in some regions were implemented from June 1. The raw material ethylene continued to decline in the month, and the high price was difficult to be transmitted to the terminal, which dampened the market sentiment. In the middle and late period of the month, under the background of the sharp decline of ethylene, the loose cost pressure of ethylene oxide and the repair of profit space, the overall operating rate of the unit rebounded, and the on-site supply was slightly loose. The price difference between related products ethylene glycol and ethylene oxide continued to widen, resulting in serious losses. The demand recovery in the main downstream market was less than expected, the overall operating rate was low, the market gas buying performance was average, the inventory pressure was obvious, and public health events were still restricted, so it was only necessary to follow up. The lack of support from the cost side and the demand side, especially the terminal demand with poor continuous performance, forced the price trend of raw materials. It is expected that the domestic ethylene oxide market will be dominated by short-term weak and stable consolidation, and pay attention to the price trend of raw materials, the performance of on-site supply and demand balance and the latest information guidance of manufacturers.