Lower Demand Stable Ethylene Glycol Anti Falling Capability

During the first two sessions of the month, the news of manufacturing tax reduction in April came out.

Ethylene glycol market buys more short selling futures, and it drives ethylene glycol out of a strong market.

However, high inventory and polyester production and marketing can not continue to suppress, and the market was quickly returned to its original form.

Will ethylene glycol face a new wave of weakness?

High inventory of ethylene glycol

East China glycol inventory comparison chart

Source: lung Chung

As most domestic ethylene glycol manufacturers adopt the point to point delivery mode, the domestic ethylene glycol resources directly flow into the downstream polyester enterprises.

However, under the condition of abundant contract volume, the purchasing mentality of polyester is not good enough, resulting in a large number of imported resources backlog in the East China quay reservoir area.

As of March 21st, data showed that the MEG port in East China's main port area has a stock of about 1 million 216 thousand tons, an increase of 41 thousand tons compared with last Thursday, a record high.

High inventory has become a problem that glycol has to face.

Source: lung Chung

At present, the overall cash flow of polyester can still be achieved in all aspects of the industrial chain.

With the arrival of the traditional peak season of polyester, the overall load of polyester has been steadily increased to 88.61%, which is basically the same as last year.

On the other hand, polyester production capacity has expanded to 55 million 550 thousand tons, up 8.99% from last year's statistics.

The rigid demand of polyester for ethylene glycol is still optimistic.

2016-2019 year comparison of polyester weighted finished goods inventory

Polyester products inventory also showed optimism.

Among them, the stock of filaments and large factories is between 15-20 days, and the stock of small factories is about 10 days.

The situation of staple fiber is better, most of which are in low inventory stage, and some enterprises have negative stock.

Overall, polyester stocks have strong elasticity, which is not a factor we are worried about.

On the whole, the supply of ethylene glycol is abundant and high inventory is a problem that we have to face. The contradiction between supply and demand is still sharp, and we do not have the logic of rising.

However, the rigid demand is stable, and the downstream polyester stock is flexible, plus the cash flow of ethylene glycol itself has already suffered large losses and has a very strong ability to resist falling.