1. Preferential promotion of polyester filament, limited production and marketing promotion
2. The price of polyester staple fiber increases with narrow width, and the downstream demand is weak.
3. Polyester power on load remains high, but negative load reduction is expected to be strong.
4. Ethylene glycol is suppressed by the demand side and the supply side, the market trend continues to be weak, and the profit of each process ethylene glycol has declined to varying degrees. Basically, they are all below cost, which generally drags down market confidence and causes the downstream to take goods cautiously. The short-term MEG market is full of weak sentiment, but at present, the price has been in a relatively low position, the market has relatively limited space for a sharp decline, and the probability of low-level oscillation is relatively large.
Details:
I. Basic Analysis of polyester
1. Preferential promotion of polyester filament, limited production and marketing promotion
Polyester products are used to connect upstream raw materials and end consumption products. Polyester industry peak season “golden nine silver ten” is close to the end, peak season is not prosperous, polyester filament as the main downstream products, the terminal demand for its gradually weakened, downstream factories through many preferential promotions to improve production and marketing, but the overall trend is still weak operation.
2. The price of polyester staple fiber increases with narrow width, and the downstream demand is weak.
In the aspect of short fiber, due to the cost loss in the early stage, although the factory has been boosted by the macro news and the price has been increased by a narrow range, the downstream demand is weak and the terminal is weak, which leads to the factory’s inventory rising, the market mentality is poor and the consumer confidence is insufficient.
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3. Polyester power on load remains high, but negative load reduction is expected to be strong.
The start-up load of polyester is still at a high level. According to the operation rate of polyester plant, new production, plant maintenance and other plans, the estimated output in October is about 4.4 million tons. However, due to the weak performance of the downstream weaving and terminal clothing home textile industry, there is great uncertainty in the long-term high start-up of polyester plant under the condition of low production and sales and low profit. Therefore, under the expectation that polyester plant may reduce production actively in the fourth quarter, polyester production is expected to be lowered, further weakening the support of glycol demand end.
II. Basic analysis of glycol supply and demand
1. Under the expectation that the new unit will be put into operation, the favorable support for the decrease of the starting load of domestic glycol is limited.
From the perspective of domestic supply, in October, domestic glycol factories began to overhaul one after another. In recent years, the operating load of ethylene to glycol is around 56.07%, the operating rate of coal to glycol is around 58.61%, and the comprehensive operating rate of glycol is 58.15%, which is significantly lower than the previous period.
In the fourth quarter of 2019, it is expected that new devices in glycol market will be put into operation gradually. With the production time of the unit approaching, the glycol market is facing the turning point of stock removal and accumulation, and the pressure at the supply end is increasing. The supply reduction brought by the maintenance of the unit is difficult to form an effective good support.
2. The port inventory falls to a low level, and the arrival volume is very important.
In terms of port inventory, as of October 17, MEG port inventory in East China’s main port area decreased steadily, with 611000 tons of port inventory, down 28000 tons from the previous period. According to CCF statistics, it is estimated that the total arrival volume of MEG in East China next week will be around 198000 tons, which is neutral and stable.
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In 2019, it is planned to put 5.65 million tons of ethylene glycol capacity into production at home and abroad. The target exporting countries of foreign devices are mainly concentrated in China, and the supply pressure is still large.
3. The decline of glycol profit, dragging down market confidence
The price of glycol is at a low level, and the domestic operation situation is relatively low. After the trend of short market consistency, the dynamic changes of glycol market price and profit have attracted much attention. At present, glycol gross profit has declined to varying degrees. Basically, they are all below cost, which is a drag on market confidence as a whole.
From the current situation of MEG supply and downstream demand, although the polyester factory’s intention of replenishment has declined, the level of port delivery has fallen, and the progress of port inventory de stocking has slowed down significantly; however, in October, it still showed a large amount of de stocking, mainly reflected in the polyester factory’s raw material inventory de stocking. In the fourth quarter of MEG, there will still be a large amount of inventory de stocking without considering the new devices. In addition, when the new unit is put into operation, in the fourth quarter of 2019, an additional 110000-220000 tons (50% – full load) will be added, and the balance of MEG supply and demand will be maintained at the level of – 60000-50000 tons in the fourth quarter, so the probability of MEG inventory not accumulating in the fourth quarter is relatively large.
Ethylene glycol is suppressed by the demand side and the supply side, and the market trend continues to be weak. The profit of each process ethylene glycol has declined to varying degrees. Basically, they are all below cost, which generally drags down market confidence and causes the downstream to take goods cautiously. The short-term MEG market is full of weak sentiment, but at present, the price has been in a relatively low position, the market has relatively limited space for a sharp decline, and the probability of low-level oscillation is relatively large.
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