Glycol: high inventory pressure, the market is difficult to pick up

During the Spring Festival, the international crude oil rose sharply, and the glycol market rose on the first working day after the festival. However, some early maintenance devices were restarted successively during the festival, and the overall operating rate of domestic devices rose significantly. In addition, under the pressure of high port inventory, the glycol market quickly recovered.

Cost, the supply shortage and political tension stimulation, the international crude oil keeps rising during the Spring Festival, glycol increasing cost pressure, ethylene glycol and naphtha system since last October for losing money, by the end of January 2022, cash flow - 87 dollars/tons, in the case of poor profitability, glycol market easily affected by the cost side, As a result, the eastern China market closed higher on the first working day after the holiday, but then international crude oil fell more than 2% due to the Iran nuclear deal negotiations, and market prices fell again based on the weak glycol fundamentals.

On the supply side, ethylene glycol units of Zhejiang Petrochemical, Fude Energy and Sinochem Quanzhou were restarted one after another before the Spring Festival. During the holiday period, ethylene glycol units of Yongcheng were restarted. The 300,000 tons/year ethylene glycol unit of Wooneng was stopped for maintenance on February 9 and is scheduled to be restarted a week later. The 600,000-ton/year glycol unit of Shanxi Meijin is scheduled to be put into production at the end of February, with additional production capacity still being released later, increasing pressure on the supply side. At present, the inventory of east China main port is 80,500 tons, an increase of 52,500 tons compared with the previous period.

In terms of demand, most of the terminal factories resumed production after the 15th day of the first lunar month, and most of the manufacturers have stock before the holiday, so they are not in a hurry to purchase at present. Before and after the Spring Festival of this year, the maintenance of polyester devices is not strong, and the starting point is around 83%. Besides, due to the recent low terminal starting point, the accumulation of polyester inventory, under the condition of poor production and marketing, it is difficult to have too much support for glycol market.

On the whole, in the short term domestic ethylene glycol device starts will basically stable, later there is still a new capacity in the market, as the terminal have resume work order increase, the raw material inventory consumption, purchase intention will restore, demand side gradually warmed up, but the glycol fundamentals remain weak, high inventories to suppress market sentiment, the market has rebounded significantly, Keep an eye on port inventory changes and downstream demand.