Since June, international crude oil prices have shown a trend of first restraining and then rising. The main contract price of NYMEX crude oil futures once rebounded from close to $50 per barrel to above $60 per barrel. Analysts said that under the background of storm warning, the comments of Federal Reserve Chairman Powell “pigeon” faction superimposed on the U.S. over-expected inventory reduction, the strong third quarter operation is still the main theme of crude oil price operation.

Oil prices stopped falling and rebounded

After falling sharply in late May, the main contract price of NYMEX crude oil futures hit a new low of $50.79 per barrel on June 5, and then rebounded, closing at $60.39 per barrel on July 12.

“International crude oil prices consolidated after the end of the fall in early June, during which the Iranian nuclear issue continued to escalate, and the U.S. return to the depot reduction cycle has provided a potential driver for the rise in oil prices. In addition, last week, the U.S. National Hurricane Center issued a tropical storm warning, which reportedly resulted in the closure of some offshore drilling platforms in the Gulf of Mexico, combined with the U.S. unexpected inventory reduction stimulus, oil prices soared all the way to a recent high. Gao Mingyu, chief analyst of CITIC Anxin Futures Energy, and Li Yunxu, senior analyst, said.

In addition, EIA data show that in the week of July 5, commercial crude oil stocks decreased by 94.99 million barrels to 459 million barrels, crude oil production is expected to increase by 100,000 barrels to 12.3 million barrels per day, crude oil exports increased by 58,000 barrels per day, while imports excluding strategic reserves decreased by 283,000 barrels per day. U.S. crude oil inventories accelerated their decline after returning to seasonal trend in June. Analysts said the steady decline in inventories showed the impact of the sharp drop in oil prices at the end of last year on upstream investment, i.e. the number of active drilling rigs declined gradually, production entered a relatively stable period, and output growth declined year-on-year.

Short-term oil prices will run more frequently

From the macro and geographic perspective, Gao Mingyu and Li Yunxu said that the weakening of crude oil demand growth has long been a consensus and fully traded. The possible improvement of the recent international trade situation and the rise of global easing expectations provided a relatively mild environment for oil prices, and the possibility of a sharp fall in the fourth quarter of last year was greatly reduced. The Iranian nuclear issue and US-Iran relations are still escalating. Although the impact on Iranian crude oil exports has been difficult to have a marginal effect, there is still room for fermentation of premium caused by geo-risk.

For the game pattern among oil-producing countries, after 2016, it has completely changed from “prisoner’s dilemma” to “coward’s game”. Saudi Arabia’s best choice is to limit production and ensure price. The game balance determines that the relative stability of OPEC production will be a new normal for a period of time. The possibility of increasing production is low and the supply side is low. The risk of a “black swan” is not high.

For future markets, Li Yanjie, a futures analyst at CITIC Construction Investment Futures, said that overall, OPEC production declines, hurricanes and geo-risk rises resonate, supporting oil prices in the short term or continue.

Gao Mingyu and Li Yunxu believe that although the third quarter crude oil price rise is worth looking forward to, from both the macro and the U.S. market, the driving force of the rise is more from the repair of the earlier pessimistic expectations, the market may not be smooth. Strategically, it is suggested to do more on the low side and grasp the band market.

In May 2019, the price of PVC futures rose to 7160, followed by adjustments. With the end of the small off-season in June, demand began to pick up in early July, inventory fell to a moderate level, and PVC prices were again facing support.

According to the statistics of institutions, the output of PVC decreased by 0.2% from January to May 2019, which is deviated from the expected cumulative annual increase of 7% at the end of 2018. From the historical perspective, the output in January-May 2017 increased by 12.4% year-on-year, the output in January-May 2018 increased by 6.5% year-on-year, the output growth in 2019 was declining year-on-year, and the elasticity of the supply side continued to decrease. In 2019, the growth of PVC supply side was much lower than expected, mainly due to two factors. The first is that in November 2018 and April 2019, two sets of devices that were accidentally accidental have not been restarted, and the reduction at the supply side is greater than the increase in capacity of some devices. The second is due to the impact of safety production, environmental protection inspection and the improvement of safety awareness of enterprises. In May 2019, the amount of maintenance losses exceeded the same period last year. The productivity utilization rate of the plant has been increased to over 80%, and the space for continuous output expansion is small. On the whole, the supply side is lower than the market expectation, which has a positive supporting effect on the price.

From January to May 2019, the apparent consumption of PVC increased by 0.9% year-on-year, mainly due to the net import pattern from January to May. Some imports filled the gap of demand. From the data of supply and demand, output is subtracted and demand is added. Overall, the tight supply and demand pattern exceeds market expectations.

From the PVC inventory data, the PVC inventory began to decline from March 22, 2009. The latest data is more than 30% higher than the same period last year. From the details of inventory, the same-rate increase of inventory is mainly concentrated in several key warehouses in East China, some of which are temporarily non-transferable. The total inventory excludes this part of the inventory, which is not much different from the same period last year, and the inventory has dropped to the medium level since 2016. Traders and terminals do not have a high number of days available for inventory, and have a limited repressive effect on prices.

From the seasonal perspective, the terminal start-up rate declined slightly in June and began to rise slowly at the end of June and the beginning of July, indicating that the demand side began to prepare for the start-up of the peak season of Golden Nine Silver Ten.

Overall, the tight supply and demand pattern of PVC has not changed, which is conducive to the continuous decline of social inventory, and will further weaken the role of price suppression. Seen from the seasonal demand situation, the gradual rise of demand side will support the price to a certain extent.

It was reported that the benchmark crude oil price rose moderately in New York on July 8, but fell in London. Prices of light and low-sulfur crude oil in the United States rose before world oil demand, U.S. oil production and OPEC’s monthly report.

The short-term energy outlook of the U.S. Energy Information Administration (EIA) is scheduled for July 9, and the monthly OPEC oil market report is scheduled for July 11. Traders await the oil market report of the International Energy Agency (IEA) on July 12.

EIA’s Oil Situation Report shows that the United States produced 12.2 million barrels a day in June.

Baker Hughes said the number of oil rigs in the United States dropped to 788, down from 888 in November 2018. The latest number of rigs was announced on July 3 due to the Independence Day holiday in the United States.

Energy prices

On July 8, the price of light, low-sulfur crude oil delivered on the New York Mercantile Exchange in August rose 15 cents to $57.66 a barrel. Contract prices rose 17 cents to $57.76 a barrel in September.

Natural gas prices on the New York Mercantile Exchange fell nearly 2 cents in August to $2.40 per million British heat units.

In August, the price of ultra-low sulphur diesel fell by one cent to $1.89 a gallon. New York Mercantile Exchange restructured gasoline blend prices fell 3 cents to $1.90 a gallon in August.

Brent crude fell 12 cents to $64.11 a barrel in September. In October, prices fell 2 cents to $63.82 a barrel.

July’s gas and oil contracts rose $2.50 to $579.25 a ton on July 8. On July 8, the average price of OPEC crude oil rose by $1.17 to $64.72 a barrel.

Price Trend

According to the price monitoring of business associations, as of July 11, the average price of domestic methanol market was 2144 yuan/ton, and the domestic methanol market had a narrow fluctuation.

II. Market Analysis

Products: Northwest methanol market is stable. In Inner Mongolia, the shipment of manufacturer is still acceptable. Some manufacturer stop selling, and the inventory of manufacturer keeps low and medium level. At present, the mainstream price in Guanzhong area is 1880-1930 yuan/ton. The overall shipment this week is general. Most orders have not been issued due to the lack of transport vehicles. With the decline of futures and weak downstream demand, most traders are not optimistic about the recent market. North China’s methanol market is generally trading, Shandong Province is mainly stable, enterprise ex-factory prices fall by about 20 yuan/ton, factory shipments are general, market demand is weak; Shanxi Linfen region has a low inventory of enterprises, enterprise ex-factory prices rise by 20-30 yuan/ton, mainly affected by yesterday’s bidding, Jincheng region by the price decline in surrounding areas but small. The area of Hebei is stable, with some ports in Tianjin. The methanol market in South China was weak, and futures were consolidated horizontally. The spot market in South China is not well supported. Spot prices have fallen. The offer price has reached 2 260 yuan/ton. A small amount of offers in some reservoirs are as low as 2 250 yuan/ton. There are not many inquiries in the venue and the atmosphere of business is general.

Industry chain: formaldehyde: formaldehyde market is running steadily. The offer of each enterprise is temporarily stable, the market starts at a low level, the overall market delivery is not smooth, the inventory is still under control, but there is still some pressure, the downstream market demand is weak, the overall turnover is general. Dimethyl ether: Dimethyl ether shows a trend of regionalization, with different ups and downs in the north and south. Yesterday, Yima Kaixiang fell to a single set of production, coupled with a slight increase in liquefied gas, boosted the price of dimethyl ether in the northern market. The price of dimethyl ether in Hebei, Henan and Hubei increased by 20-50 yuan/ton to 3030-3210 yuan/ton. The enthusiasm of terminal entry into the market was good, and the production enterprises had a balanced production and sales. Southwest China continued its downturn, with mainstream transactions falling to 3000-3100 yuan/ton. Demand in the off-season was sluggish, and manufacturers were under greater pressure to buy goods. Acetic acid: The domestic market of acetic acid in East China and North China continues to be weak. Due to transportation constraints in Northwest China, production enterprises continue to concede profits and deliver goods, which promotes the transaction in North China to decline. The downstream of the decline mainly focuses on acetic acid wait-and-see, and the market is obviously weak. East China mainstream is still tense, only part of North China’s supply price is slightly lower, the market is stable and weakening. Overall, in addition to the stable market in South China, the acetic acid market is still weak.

3. Future Market Forecast

Business Cooperative Perspective: Business Cooperative Methanol Analysts predict that the short-term domestic methanol market or maintain a weak pattern.

Asian crude oil futures fell on Tuesday morning after a survey showed that OPEC’s compliance with the cut-off agreement was low in June, while market participants continued to focus on continuing geopolitical tensions in the Middle East, according to Prussian Energy Information on July 9.

At 11:05 a.m. Singapore time (03:05 GMT), the September Brent crude oil futures on the Intercontinental Exchange (ICE) fell 24 cents (0.37%) from Monday’s closing price of $63.87 a barrel, and the August light low-sulfur crude oil futures contract on the New York Mercantile Exchange fell 20 cents (0.35%) to $57.46 a barrel.

According to a survey by S&P Global Platts Surve, OPEC’s compliance with its production quotas fell sharply in June as Saudi Arabia and Nigeria’s output increased this month and Iraq continued to ignore its oil production cap, leading the organization to cut its profit margins within the scope of supply agreements. Drop.

The survey found that OPEC’s overall daily output was 30.9 million barrels, unchanged from May. Although most of this month’s decline came from Iran and Libya, it was offset by surges in Saudi Arabia and Nigeria, resulting in a decline in production compliance.

Last week, OPEC and 10 non-OPEC allies, led by Russia, extended their 1.2 million barrels/day cut agreement to March 2020 to boost oil prices.

UOB Bank said in a report Tuesday: “Prices of crude oil are limited until the major energy reports are released.”

OPEC’s monthly oil market report is scheduled to be released on Thursday, while the International Energy Agency will release its monthly oil report on Friday.

Meanwhile, analysts say the ongoing tensions in the Middle East continue to attract market attention.

According to shipping sources, a British flag tanker operated by BP cancelled a crude oil shipment after tensions between Britain and Iran escalated.

Last week, Shell chartered a Suezmax tanker called “British Heritage” and loaded 140,000 tons of crude oil in Basra for shipment to Northwest Europe or the Mediterranean. However, industry sources said Monday that the shipment has now been cancelled.

Last week, the Gibraltar government said it had seized the supertanker Grace 1, which allegedly transported crude oil from Iran to Syria in violation of EU sanctions. After the incident, a senior Iranian official said Iran should arrest a British tanker as a warning.

“As the risk of tanker attacks increases, oil transportation is being diverted or delayed,” analysts at the Australian New Zealand Bank said in a report Tuesday. Investors are concerned about the disruption of production in the region, and this risk premium is reflected in prices.

In addition, Pratts analysts estimate that U.S. crude oil stocks have fallen by 4.2 million barrels to 464.3 million barrels in the week ending July 5.

Last week, total distillate inventories increased by 1.4 million barrels to 128.2 million barrels, while U.S. gasoline inventories decreased by 1.2 million barrels to 229.4 million barrels.

The American Petroleum Association will release preliminary data on last week’s U.S. inventory levels later Tuesday, while the U.S. Energy Information Agency will release clearer data later Wednesday.

On July 10, the PX commodity index was 56.00, unchanged from yesterday, down 45.31% from its peak of 102.40 points in the cycle (2013-02-28), and up 22.94% from its low of 45.55 points on February 15, 2016. (Note: Period refers to 2013-02-01 to date).

According to statistics, the domestic market price trend of p-xylene was temporarily stable on the 10th. Pengzhou Petrochemical Unit operated steadily in the field. Urumqi Petrochemical Unit started 50% of the operation, Fuhai Created Aromatic Hydrocarbon Unit started a line, CNOOC Huizhou Refinery and Chemical Unit overhauled, Hengli Petrochemical PX Unit put into operation, and other units operated steadily temporarily due to the introduction of new units. Domestic market supply of p-xylene is normal, and market price trend of p-xylene is temporarily stable. The opening rate of PX plant in Asia is about 80%. On July 9, the closing price of p-xylene in Asia increased by 10 US dollars/ton. The closing price is 841-843 US dollars/ton FOB in Korea and 860-862 US dollars/ton CFR in China. More than 50% of the domestic units need to be imported. The rise of foreign prices has a positive impact on the domestic market price of p-xylene. The price trend of p-xylene in the market is stable for the time being.

On July 9, the price of WTI crude oil futures rose to $57.83 per barrel, an increase of $0.17. Brent crude oil futures fell to $64.16 per barrel, a decrease of $0.05. The rising trend of crude oil price has a cost supporting effect on the price of downstream petrochemical products. The price trend of Brent crude oil futures is temporarily stable. 。 Recent textile industry volatility, PTA prices declined on the 10th day. The average price of East China is raised near 6600-6800 yuan/ton. As of the 9th day, the domestic PTA start-up rate is about 89%, the polyester industry start-up rate is about 88%, and the downstream production and sales rate remains high. However, the PTA market price declines, and the PX market price is expected to maintain in the later period. Shock.

On July 10, the rare earth index was 386 points, down 4 points from yesterday, down 61.40% from the cyclical peak of 1000 points (2011-12-06), and up 42.44% from the lowest point of 271 on September 13, 2015. (Note: Period refers to 2011-12-01 to date).

The average price of Neodymium in rare earth metals dropped by 10,000 yuan per ton to 415,000 yuan per ton, Dysprosium by 2.4 million yuan per ton and praseodymium by 7.1 million yuan per ton. The average price of praseodymium and neodymium oxides in rare earth oxides dropped 5,000 yuan/ton to 325,500 yuan/ton; the price of dysprosium oxide dropped 25,000 yuan/ton to 192,000 yuan/ton; the average price of praseodymium oxide was 4.05 million yuan/ton; and the average price of neodymium oxide dropped 5,000 yuan/ton to 325,000 yuan/ton. The price of praseodymium and neodymium alloys in rare earth alloys dropped by 10,000 yuan per ton to 415,000 yuan per ton, while the average price of dysprosium-iron alloys dropped by 25,000 yuan per ton to 192,000 yuan per ton.

Recent price declines in rare earth market, domestic rare earth market trading market is general, most commodity prices in the rare earth market are stable, but in the near future, prices of some products in the rare earth market have fallen, prices of dysprosium and terbium metals have fallen, prices of praseodymium and neodymium series products have fallen in the near future, on-site supply is normal, and prices of light rare earth have fallen in the near future. Slippery. The price fluctuation of rare earth market is related to environmental protection supervision in the whole country. Rare earth production has its particularity, especially the radiation hazard of some products, which makes environmental protection supervision stricter. Under the strict environmental protection inspection, rare earth separation enterprises in many provinces have stopped production, resulting in a general market of rare earth oxides. Recently, the rare earth market has turned to the seller’s market. The manufacturers have reasonable control over sales and are reluctant to sell. Especially for some mainstream rare earth oxides, the supply performance is still tense. The price trend of rare earth market has slightly declined. Recently, large enterprise groups on the market are reluctant to sell. The market trend of rare earth is poor. However, major manufacturers are cautious about the pricing of products.

Recently, the State Environmental Protection Department has made no reduction in its stringent efforts, which has a greater impact on the rare earth industry. The rare earth industry has a low start-up and a cold market. At the recent press conference on macroeconomic operation held by the Development and Reform Commission, Meng Wei, spokesman of the National Development and Reform Commission (NDRC), answering reporters’questions on rare earth, said that on the basis of in-depth investigation and scientific demonstration, relevant policies and measures would be put forward to give full play to the special value of rare earth as a strategic resource. Due to the increasingly obvious regulatory effect, the supply of raw ore resources in the upstream of the rare earth industry has shrunk, and the trading market of the rare earth industry has declined.

Rare earth analysts from business associations expect that domestic environmental stringency will not diminish in the near future, coupled with domestic rectification of the order of the rare earth industry, Myanmar restricts exports and reduces supply, but rare earth market transactions are limited in the near future, and some prices in the rare earth market are expected to fall.

According to the data of business associations, the domestic sulphur market declined on July 9, with the average ex-factory price of sulphur market in East China falling by 2.08% to 943.33 yuan/ton.

II. Market Analysis

Products: Domestic sulphur market price has been lowered, solid and liquid sulphur in East China of Sinopec has been lowered by 60 yuan/ton, solid sulphur quotation in Shandong has been stable, liquid sulphur has been lowered by 50 yuan/ton, the decline is obvious. At present, the domestic mainstream quotation of solid sulfur is around 770-1000 yuan/ton, and liquid sulfur is around 740-890 yuan/ton.

Industry chain: Weak sorting of sulphur market has a positive impact on the downstream sulphuric acid market. The market demand has warmed up slightly and the price has increased.

III. Price Forecast

According to business associations, the domestic sulphur market is weak in the short term.

According to the monitoring of business associations, the market of hydrogen peroxide continued to fall sharply on July 9. The average price of domestic 27.5% hydrogen peroxide was 850 yuan/ton, a daily decline of 3.41%.

In July, the hot weather, terminal caprolactam manufacturers, papermaking industry purchasing hydrogen peroxide decreased, the demand is not good. The price of hydrogen peroxide in Shandong, Hebei, Anhui and other hydrogen peroxide manufacturers has declined. Shandong Luxi’s quotation fell to 770 yuan/ton, Haineng to 950 yuan/ton, and the price fell by 40-70 yuan/ton. Hebei Zhengyuan’s quotation was lowered to 830 yuan/ton, and the price fell by 100 yuan/ton. Anhui mainstream quotation fell to 1050 yuan/ton, the market is weak and stable.

Li Bing, an analyst of hydrogen peroxide in business associations, believes that the traditional consumption of hydrogen peroxide is off-season in July, and the demand is flat, and the hydrogen peroxide water will rise and bear pressure in the future.

Facing the predicament of overcapacity

It is understood that more than 90% of ethylene glycol is used to produce polyester products in China, and the fluctuation of ethylene glycol price affects the production and operation of downstream polyester enterprises. In mid-June, the reporter of Futures Daily visited several polyester factories and mainstream traders in Zhejiang Province with a delegation from Daijin Commercial Research Institute. He had a detailed understanding of the current production, sales and inventory situation in the upstream and downstream of the industrial chain, as well as the production and operation mentality of enterprises and their views on the future market trend.

A New Capacity Centralized Delivery Industry May Face Reshuffling

At present, the ethylene glycol industry is facing the predicament of overcapacity. Affected by the expansion of production capacity of various production processes of ethylene glycol in recent years, especially the rapid development of coal-based ethylene glycol in China in recent years, while the downstream demand is difficult to improve, coupled with high port inventory, since mid-March this year, the price of ethylene glycol futures has ended rebounding and turned into a unilateral downward trend. The 1909 contract is from 5483 yuan/ton in a year. After the high dropped to the lowest level of 4314 yuan/ton, the low-level narrow-amplitude oscillation pattern appeared recently, which fluctuated around 4400 yuan/ton.

Futures Daily reporter learned from the survey enterprises that, at present, both ethylene-based ethylene glycol enterprises and syngas-based ethylene glycol enterprises are facing the pressure of overcapacity and oversupply in the whole industry. Nevertheless, the production enterprises still maintain high-load operation, exchange market for profit, and cope with the capacity growth of blowout at home and the competition of import sources abroad.

In response, Rongsheng Petrochemical Co., Ltd. (hereinafter referred to as Rongsheng Petrochemical) said that the main consideration of glycol production enterprises is comprehensive profits, rather than single production line profits of glycol. If the production of ethylene glycol is suspended, the sale of ethylene stock will be very difficult, because ethylene liquidity is poor, there are only 20 ethylene vessels in Asia, so it is not cost-effective to sell ethylene alone. In addition, 80% of the profits in the ethylene chain come from polyethylene and 20% from ethylene glycol, unless there is no profit in the downstream of ethylene, shutdown may be considered. He believes that although the current profit of coal-making method is not good, in order to maintain cash flow and customer relationship, enterprises can optimize production, but it is unlikely to stop production.

Industry insiders have analyzed that the current excess supply of ethylene glycol is just beginning, the real challenge has not yet come. Over the next five years, global ethylene glycol production capacity will witness substantial growth. Abroad, there are many large-scale projects in the Middle East and South Asia. Most of these devices use inexpensive ethane as raw material, which has strong international competitiveness. Domestically, in 2019, 6-7 million tons of annual capacity were planned to be put into operation, and in 2020-2025, 15 million tons of annual capacity were planned to be put into operation.

Relevant statistics show that by the end of 2018, China’s total ethylene glycol production capacity of all routes reached 10.54 million tons. By 2022, if all kinds of domestic planned ethylene glycol routes can be put into operation according to actual planning, the production capacity of ethylene glycol will reach 30.58 million tons, while the apparent demand of China’s ethylene glycol will reach 16.68 million tons in 2018, and it is expected to reach 20.24 million tons in 2022.

“With the development of shale oil, the production of overseas natural gas will increase, and this method has obvious cost advantages. In the future, the competition pattern of the ethylene glycol market will be coal chemical industry, large refinery and overseas gas head. The ethylene glycol industry may face reshuffling.” Rongsheng Petrochemical related person in charge said.

“With the global surplus of ethylene glycol production capacity, when we purchase raw materials now, the price range negotiated with foreign suppliers is relatively large.” Rongsheng Petrochemical related person in charge told reporters that at present the bargaining power of upstream petrochemical enterprises is weakening, while the bargaining power of downstream enterprises is gradually increasing.

B Port’s High Inventory Polyester Enterprises Lack of Stock Power

Relevant statistics show that on June 27, the inventory of ethylene glycol ports in East China’s main port region was about 1.251 million tons, down 57,000 tons annually from the previous period. Among them, Zhangjiagang stock is 810,000 tons, which is 49,000 tons less than the previous period; Shanghai and Changshu stock is 169,000 tons, which is 26,000 tons more than the previous period; Jiangyin and Changzhou stock is 103,000 tons, which is 80,000 tons more than the previous period; Taihu stock is 93,000 tons, which is 18,000 tons less than the previous period. Although stocks have declined slightly recently, 1.25 million tons are still at their peak in the past five years.

In the investigation, Zhu Chao, director of polyester Department of Ningbo Shanneng Chemical Company, also confirmed this point. “At the beginning of June, the stock of ethylene glycol ports reached the highest level of 1.43 million tons in recent years, and there was almost no tank capacity at that time. Since June, with the delayed resumption of coal production, the contract of about 60,000 tons in South Asia of Taiwan has been decreasing, and the start-up load of polyester has increased. The phenomenon of depot has appeared in the port. At present, the stock has dropped to 1.25 million tons, but it is still at a historic high level. He told Futures Daily that in early July, with the increase of coal start-up load in mainland China and the resumption of production in South Asia, Taiwan’s stocks will still return to a slow state of accumulation, and port stocks are expected to rise to 1.3 million tons on Thursday.

High inventory affects the market price of ethylene glycol, and the warehousing strategy of downstream enterprises has been adjusted accordingly. “For such a high inventory and high production variety as ethylene glycol, the downstream polyester factory lacks the power of reserve, on the one hand, because there is no shortage of goods in the market, it is easier for the factory to replenish the warehouse; on the other hand, the factory is not optimistic about the future price of ethylene glycol, and will worry about the problem of stock preservation.” Huang Weilin, a researcher at Shanghai Pinellia Investment Management Center, explained.

Reporters learned in the survey that the stock of ethylene glycol in large polyester factories such as Rongsheng Petrochemical Company and Hengyi Petrochemical Company is generally about 20 days, while the stock of ethylene glycol in small and medium-sized enterprises such as Zhejiang Tiansheng Chemical Fiber Company (hereinafter referred to as Tiansheng Chemical Fiber Company) and Zhejiang Jiabao Polyester Company (hereinafter referred to as Jiabao Polyester) is generally maintained for 3-4 days.

Zhu Chao said that the cost of ethylene glycol spot warehousing is 1.5 yuan/ton per day, 45 yuan/ton per month, interest on capital is 20 yuan/ton per month, and 400 yuan/ton for half a year. If there is no obvious inventory removal, the cost of holding ethylene glycol is too high in the case of high inventory, so factories and traders are willing to hoard. Not strong.

In addition, the recent decline in profits of polyester enterprises is also an important reason for their lack of enthusiasm for inventory. At present, the inventory of finished products in polyester factories is not high, and the inventory of polyester has been transferred to the weaving market. In terms of enterprise profits, the person in charge of Rongsheng Petrochemical Company said that the production profits of polyester enterprises were better from January to March this year, but after April, although the price of ethylene glycol continued to fall, the profits of polyester enterprises were greatly reduced or even lost due to the soaring price of PTA raw materials and the slowing down of downstream demand for polyester.

C supply side has not yet improved most enterprises look down on the late market

In the survey, reporters learned that enterprises generally believe that the overall supply of ethylene glycol is in the stage of excess, and this situation is continuous, has not improved. In the future, with new production capacity of ethylene glycol and continuous negative feedback downstream, combined with the traditional off-season pressure in June-July, the pressure in the third and fourth quarters of this year may be greater than last year.

Tiansheng Chemical Fiber responsible person described to Futures Daily reporter that, due to the serious expansion of downstream warp knitting capacity in the early stage, this year’s textile market is weak, and the recent two high-yield sales are due to the upstream raw material price increases to drive the downstream enthusiasm for goods, the rest of the time to just need to purchase. For the weaving market, the biggest problem is the high stock of grey fabrics, which is not unacceptable for enterprises. The profits of weaving enterprises can still be maintained, and large-scale parking is not expected in the short term. Therefore, large-scale inventory of weaving products in the future should be expected to strengthen the terminal orders.

Similarly, Jiabao polyester related leaders are not very optimistic about downstream consumption. “July is about to enter the off-season of sales, gray cloth inventory is difficult to reduce, but the terminal can withstand.” The person in charge said that the downstream weaving enterprise capacity continues to expand, in the past according to anticipated needs ahead of time production, now the capacity is large, can meet the order demand at any time, so orders will not be issued in advance, but will be placed only if there is demand. In addition, at present, some export orders are decreasing, while the pre-prepared export products are difficult to be re-exported to domestic market, products are accumulating continuously, and stocks are rising.

In Zhu Chao’s view, it is difficult for short-term spot prices of ethylene glycol to rebound substantially. Although the absolute price of polyester factory products is relatively low, polyester factory is willing to take the initiative to inventory when prices rebound, indicating pessimistic downstream.

However, according to the relevant person in charge of Hengyi Petrochemical, there are opportunities in the domestic and export aspects of polyester products in the future.

Domestic demand is affected by two factors: first, home textiles, from the previous real estate start-up data, more completed in the future, the demand of home textiles driven by real estate will be better than that of clothing; second, the overall material consumption of autumn and winter clothing in the second half of the year is greater than that in the first half, and the demand for polyester will be better than that in the second half of the year.

D. Futures Price Discovery Function

New production capacity has been centralized, while downstream demand has not improved, coupled with high port inventory, and the price of ethylene glycol has been declining all the way, the industry is facing a reshuffle. On December 10, 2018, the timely listing of ethylene glycol futures provided the industry with new hedging tools. In this context, it is particularly important for industrial chain enterprises to use futures tools to manage risks in their operations.

According to Futures Daily reporter, since the listing of ethylene glycol futures, the trading scale has increased steadily, the market structure has become more and more reasonable, and it has emerged in the chemical industry market. In the first half of this year, the average daily trading volume and the average holding volume of ethylene glycol futures were 217,200 and 242,200 hands respectively, accounting for 25% and 21% of the chemical industry sector in the same period. The total number of corporate customers involved in trading was nearly 3,000, and the average holding volume of corporate customers was 49%. In June, the first delivery of ethylene glycol futures was successfully completed. The customers involved in the delivery covered the whole production, trade and consumption chain of upstream, middle and downstream, and the industry customers actively participated. By the end of June, the delivery volume of ethylene glycol futures has reached 150,000 tons. The various systems have been tested by the market and achieved a smooth start, and have gradually matured.

From the perspective of futures price trend, since the listing of ethylene glycol futures, prices have declined in bands, which objectively reflects the fact that the supply of ethylene glycol market is seriously excessive. Ethylene glycol futures 1906 contract basis difference average value is – 49 yuan / ton, less than 1% of the contract average price. The settlement price of the main contract of ethylene glycol futures dropped from 5084 yuan/ton at the beginning of the year to 4445 yuan/ton at the end of June, a decrease of 13%. Wind data show that domestic spot prices fell by 15% in the same period, and spot prices are highly correlated. All these show that the futures market reflects the changes of the spot market well and the futures price discovery function is beginning to show.

According to relevant persons, since the listing of ethylene glycol futures, the enthusiasm of industrial customers to participate in futures trading has increased. Ethylene glycol production enterprises are actively trying to use futures tools, and China Sea Shell has also applied for the establishment of Ethylene Glycol Delivery Factory Warehouse, and downstream customers are the main participants in the Ethylene glycol futures market. Dai Yumin, general manager of olefin business of Yuanda Energy Chemical Co., Ltd. (hereinafter referred to as Yuanda Energy), told reporters that in the futures market, industrial customers can achieve good inventory management and price management through futures tools.

“In the process of falling prices, upstream enterprises in the industrial chain can lock in profits through hedging, especially in the situation of excessive supply, through the forward water-raising structure can achieve production hedging well; middle-stream traders can flexibly practice base trade, and can make selling and buying hedging for inventory or contracts; Downstream polyester enterprises can optimize the raw material cost by using the far-month contract discount water, and lock in the raw material cost of the order. Dai Yumin believes that since the listing of ethylene glycol futures, prices have shown a downward trend in the band, which fully reflects the market structure of serious excess market supply, and provides a more efficient, safer and larger-scale market channel for the industry. Industrial customers actively participate in the ethylene glycol futures trading, which provides more liquidity for the market, promotes the upgrading of the polyester industry, improves the risk prevention ability of upstream, middle and downstream enterprises, and makes the combination of entities and finance closer.

According to the reporter’s understanding, as one of the main traders in the ethylene glycol market, Yuanda Energy needs a large stock of ethylene glycol to supply the terminal polyester enterprises steadily. However, in the environment of serious oversupply and falling prices in the near future, the stock of standing energy will cause large losses for enterprises. Thanks to the listing of ethylene glycol futures, the company sold hedging on the contract of ethylene glycol futures 1906, which protected the inventory value, reduced or even avoided losses, and enhanced the confidence and ability of service entity industry. During this period, the company also tried to participate in the sale and delivery of Ethylene Glycol Futures 1906 contract.

Yu Yongjun, senior researcher of Ethylene Glycol Futures in Huatai, also said that at present, the middle and lower reaches of enterprises participate in futures more, mainly because they have rich experience in futures participation before Ethylene Glycol Futures listing. Based on the overall futures tool application environment of the industry, the future prospects for industrial enterprises to participate in ethylene glycol futures are very optimistic, and ethylene glycol has the potential to become a star variety of chemical industry.

With the increasing participation and familiarity of enterprises with Ethylene Glycol, the influence of futures prices has become increasingly prominent. Xu Li, CITIC Futures Research Department, told reporters: “The domestic market is still highly dependent on Imported Ethylene glycol. At present, imports are usually purchased by signing long-term contracts with large foreign suppliers. Downstream polyester enterprises are relatively passive in pricing ethylene glycol.”

According to Xu Li, the listing of ethylene glycol futures provides a new pricing option for polyester enterprises. At the same time, it can play a hedging role by means of hedging, and the market information tends to be more abundant and transparent. Industrial customers can judge the trend of ethylene glycol more accurately through futures, which is convenient for inventory management and profit management. For example, companies can protect the price by selling futures when they look at the weak market of ethylene glycol, and they do not need to spend a lot of money to hoard spot when prices are low in the later period, so long as they do more futures, they can achieve profit lock-in. In a word, after walking with two legs of futures and spot, the pace of Ethylene Glycol enterprises is more steady.