Limited space for glycol price to fall

Glycol fell sharply in October. Different from the decline caused by the accumulated stock in the first half of this year, the current decline is carried out under the condition of low eg stock and maintaining the de stocking. The main reasons for this contrast are: on the one hand, the attack on Saudi oil facilities in September pushed up the price of glycol significantly, but then Saudi Arabia quickly resumed production, and the impact of the attack on the price overreaction of glycol was repaired; on the other hand, the market was pessimistic about the supply pattern after the new capacity was put into operation in the fourth quarter. The combination of the two makes the eg price go out of the trend of falling sharply in October.


At present, glycol oscillates in low order. The above negative factors have been gradually digested or have not changed the current pattern of continuous de stocking. At the same time, short-term positive factors increased, glycol or low rebound. The main positive factors are as follows: first, glycol is still in low stock in the short term and keeps the situation of depolarization. The main port of East China’s glycol port inventory is about 485000 tons, down 6.01% from the beginning of the week, in a state of continuous de inventory. This week, the average daily delivery volume of the main port is about 141200 tons, which is higher than that of last week. In the later stage, glycol is expected to arrive at the port of 220000 tons, and the inventory pressure will not increase too much under the condition of continuous increase of shipment volume.



Second, glycol profit loss or supply reduction. In October, the overall performance of raw material cost change was weak, only naphtha was strong, while the price of glycol fell sharply from a high level, which made the overall profit of EG industry significantly weaker after the middle of October, except for the improvement of profit due to the weaker cost of ethylene production monomer process, most of the other main flow processes were in different degrees of loss. If glycol price continues to fall, profit loss will force enterprises to increase temporary maintenance and reduce supply.


Third, the short-term trend of crude oil is strong, and the overall chemical cost is rising. Influenced by the continuous progress of the Sino US trade negotiations, the market expects to reach a preliminary agreement in November. OPEC may discuss to continue to maintain production reduction and other favorable factors in December. The trend of international crude oil is relatively strong in the short term. This will increase the cost of the chemical industry as a whole and support the price of chemicals.


Operation strategy: establish multiple orders in the 4500-4600 range, and the profit target range is 4700-4900. Stop loss range is 4400-4500, and the number of positions is 100-200.