Weak ethylene glycol prices in August
The price of ethylene glycol was relatively weak in August. According to data from Shengyi Society, as of August 16th, the average price of domestic oil to ethylene glycol was 4571.67 yuan/ton, a decrease of 1.90% from the average price of 4561.67 yuan/ton in the East China market on August 1st. The prices in each region are as follows:
The spot price range for mainstream manufacturers in East China is between 4500-4900 yuan/ton; The spot price of ethylene glycol in the South China market is 4550 yuan/ton, and the mainstream manufacturers in Central China have a spot price range of 4500 yuan/ton for external execution; The spot price for mainstream manufacturers in North China is 4550 yuan/ton.
On August 16, 2024, the basis of the spot contract for ethylene glycol at the port is near low and far high. Next week, the basis quotation will be+40 to+44; The basis of forward contracts is relatively strong, with a base price of 58-62 yuan/ton in September and 63-68 yuan/ton in October.
On August 16th, the price of coal to ethylene glycol remained basically stable, with a domestic price range of 4150-4330 yuan/ton, including tax.
On August 15, 2024, the external price of ethylene glycol was as follows: the landed price in China was 539 US dollars/ton, and the landed price in Southeast Asia was 550 US dollars/ton.
Reasons for the price drop in August:
1. Port inventory rebounds
The destocking of port inventory is clearly one of the main supporting factors for early prices. Entering August, the inventory of ethylene glycol in the main ports of East China has stopped falling and stabilized, rising. As of August 15th, the inventory of ethylene glycol in the main ports of East China was 614900 tons, a slight increase from 576700 tons on July 25th.
The benefits brought by the decrease in explicit inventory at the port in the early stage have been basically realized with the rise in prices. After reaching a new high this year, the expected increase in domestic supply and the anticipated increase in port arrivals have constrained the continued rise of ethylene glycol prices.
2. Due to the impact of macro fundamentals, the price of ethylene glycol in the external market has been narrowly adjusted.
August ethylene glycol plant dynamics
In terms of coal production equipment, multiple sets of coal production equipment are expected to undergo maintenance.
In terms of overseas facilities, the 828000 ton/year ethylene glycol plant in South Asia, USA, has recently been shut down for maintenance due to a utility malfunction, and the restart time is yet to be determined; 1 # 360000 tons are currently operating stably. Two sets of ethylene glycol plants in Canada, one with a capacity of 480000 tons per year and the other with a capacity of 400000 tons per year, are scheduled to be shut down for maintenance in early October, with an estimated time of about a week.
Future expectations
At present, the absolute amount of explicit inventory in ports is still relatively low. Although there has been a slight accumulation of inventory recently, there is not much room for inventory to continue to rise. The main considerations are as follows:
1. Polyester production is recovering, with active procurement at low prices;
2. The overseas supply has been weak, mainly due to the relatively concentrated arrival of contracted goods at the port in the second half of August. However, since September, there has been a shortage of external shipments of ethylene glycol, mainly due to the shutdown of some facilities in Saudi Arabia due to gas shortage since mid to late July, resulting in a significant reduction in Saudi supply;
3. Domestic supply and demand, currently the domestic supply and demand are basically balanced. On the demand side, the off-season of August demand will gradually pass, coupled with the concentrated production plan of bottle flakes in the third quarter, the demand expectation is good.
Therefore, in the short term, the fluctuation of ethylene glycol prices is the main trend, and there will be support for ethylene glycol prices after September.
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