Terminal demand has not improved, polyester enterprises may take the initiative to reduce the start-up rate. In addition, although the port ethylene glycol inventory in eastern China has declined in the past two weeks, the overall inventory is still at a historic high. Ethylene glycol prices are expected to continue their bearish trend.
Restricted by its own fundamentals, the price of ethylene glycol futures has shown a downward trend of oscillation since its listing on December 10 last year.
Maintaining high plant start-up rate
This year, the start-up rate of domestic ethylene glycol plant has remained relatively high. Although the Spring Festival holidays occurred during this period, it did not have much impact on the start-up of ethylene glycol plant. At the end of April, the ethylene glycol plant was centrally overhauled, and mainly coal-based plants. As of April 26, the weekly start-up rate of ethylene glycol plant was 81.59%, which was 0.97 percentage points lower than that of the same period last year, and 5.59 percentage points higher than that of the same period last year. As of April 30, the weekly start-up rate of coal-based ethylene glycol plant was 55.01%, which was 5.35 percentage points lower than that of the same period last year, with a slight decrease of 0.99 percentage points.
Polyester market “peak season is not prosperous”
After the downstream construction resumed at the end of February this year, the start-up rate of polyester factories and Jiangsu and Zhejiang looms remained at a high level. In April, the average starting rate of polyester chip cycle was 89.06%, which was 1.98 percentage points higher than that in March; the average starting rate of polyester staple fiber cycle was 83.42%, which was 3.13 percentage points lower than that in March; and the average starting rate of polyester filament cycle was 83.4%, which was 0.9 percentage points higher than that in March.
However, a high start-up rate does not mean an increase in demand. Although the current polyester market is in the traditional peak season from a time point of view, the trading situation has not significantly warmed up. In April, the average weekly production and marketing rate of polyester chips was 79.88%, up 10.63 percentage points from March; the average weekly production and marketing rate of polyester staple fiber was 88.2%, down 0.8 percentage points from March; the daily production and marketing rate of polyester filament was 110.91%, the lowest was 72.27%, down 7.09 percentage points and 1.73 percentage points from March, respectively.
Active start-up, but no significant improvement in terminal demand, resulting in a high level of inventory of various varieties in the polyester market. In April, the average inventory of polyester chips was 7 days, an increase of 0.5 days compared with March; the average inventory of polyester staple fiber was 6.9 days, a decrease of 1.1 days compared with March; the average inventory of POY, FDY and DTY of polyester filament was 13.7 days, 13.3 days and 19.8 days, respectively, an increase of 0.82 days, 0.55 days and 1.05 days compared with March.
Port Inventory Keeping New High
Since the beginning of the year, the ethylene glycol inventory of ports in East China has risen rapidly. On February 11, after the Spring Festival holiday, it exceeded 1 million tons, reaching 1.02 million tons, surpassing last year’s inventory peak. After that, inventory continued to accumulate and reached a peak of 1282,000 tons on April 11, an increase of 497,000 tons over the beginning of the year. As of May 5, the inventory of ethylene glycol ports in East China was 1.177 million tons, still at the highest level in recent two years.
Ethylene glycol inventory has been at a high level since this year. Historically, inventory in East China exceeded 1.1 million tons from February to March 2014, with a peak of only 1.76 million tons. Persistent high inventory leads to pressure on the futures price of ethylene glycol, which is also one of the important reasons for the weak operation of the futures price of ethylene glycol in recent years.
In summary, although the polyester market is in the traditional peak season, the terminal demand has not improved. Later, polyester enterprises may take the initiative to reduce the start-up rate to cope with the pressure of rising inventory. Under the negative pressure, the price of ethylene glycol in the future is difficult to get rid of the disadvantaged pattern.