Monthly Review of Ethylene: Tight Supply and Overall Price Rising (October 2021)

The domestic market price trend chart this month

Domestic MTO installations are shut down to reduce the load, resulting in a shortage of domestic ethylene supply. As for cargo, the flow of ethylene cargo slows down when foreign trade ships are stuck in port and pilots are hard to find. Due to lack of raw material ethylene, individual downstream was forced to reduce the load. The price of downstream products partly rebounded during the month, supporting the ethylene market. However, this part of the impact gradually weakened in the second half of the year. The price of some downstream products turned from rising to falling, which restricted the price of ethylene.

Review of the main upstream raw materials market this month

Methanol prices in the Mainland rose and fell. Returning from the long holiday, production companies in the northwestern main production area have increased prices and the market just needs support for replenishment, and the market has an active trading atmosphere and prices have risen across the board. Subsequently, futures stopped rising and fell, and the prices of raw materials fell. The market sentiment turned to empty, and some profits were closed. In order to promote shipments, manufacturers continued to cut prices, local trading was light, and the price center continued to fall.

Oil prices rose first and then fell, and the overall price fluctuated at a high level. In the early stage, due to the successive statements of Saudi Arabia and Russia, there is a high probability that they will maintain a moderate production increase strategy. The market expects that the supply will be tight and the price will generally increase. However, as a certain country in Europe and the Middle East began negotiations, the market came out of news that the agreement was actively advancing, driven by risk aversion, coupled with the increase in US crude oil inventories, and jointly promoted a rapid correction of oil prices from high levels.

Domestic thermal coal prices have cooled significantly. Since October, the signal of domestic supply and price stabilization has been released. The coal mines in the main producing areas have actively responded to the policy call, undertaken the task of guaranteeing supply, fulfilled the long-term agreement, and domestic coal production has increased steadily. In addition, since late October, the Shanxi, Shaanxi, and Mongolia regions have all Some coal mines took the initiative to cut prices, driving market sentiment to cool down. In terms of ports, coal inventories have gradually recovered, and port traders have significantly strengthened their shipment psychology, and quotations have been loosened; in coastal areas, end users have more wait-and-see sentiment, the pace of pulling shipments has slowed, the market trading atmosphere has rapidly cooled down, and actual transactions have been relatively quiet.

Market changes of major downstream products this month

PE market prices rose first and then fell. The rise in crude oil prices boosted market confidence; linear futures were trending strong, and petrochemicals raised their ex-factory prices one after another. The bullish sentiment in the market was strong, and traders offered higher prices. In the middle of the day, the trend of futures gradually weakened, the spot market was not shipping smoothly, and the petrochemical and port inventories were slightly accumulated. Manufacturers and holders tried to test low-price offers, but the demand side did not improve significantly, and the terminals are more cautious and wait and see , The market price continued to decline.

East China ethylene oxide continued to rise. In October, equipment maintenance in East China was more concentrated, and local output was significantly reduced; the trend of tight cargo prices was obvious; at the same time, related products of ethylene glycol and ethylene rose strongly to support the upward momentum of ethylene oxide. The regional price difference has widened significantly, especially in Central China and South China.

The ethylene glycol market rose first and then fell. The price of raw materials has risen superimposed by the shutdown of some installations and the slow unloading efficiency of imported ethylene glycol. East China port inventory is in a historical position. The supply of ethylene glycol is expected to decrease. Various favorable factors support the upward price of ethylene glycol in the market. Subsequently, the price of raw coal fell, the overhaul of some of the superimposed devices was restarted, the supply was restored and the downstream polyester production and sales were weak, and the price began to fall continuously.

The price of EVA renminbi is stable and down. After the return of National Day, some terminal enterprises reduced their load and output, and EVA was not motivated to rise higher and gradually stabilized. Quanzhou Petrochemical subsequently switched to low-VA products due to insufficient supply of vinyl acetate. EVA traders were bearish on the outlook for hard materials and sold their products, lowering the focus of market transactions. Subsequently, Quanzhou Petrochemical switched to photovoltaic production, while Yunenghua parked near the end of the month and planned to switch to photovoltaic materials. The mentality of the industry improved, and the prices of individual low-end sources rebounded.

The styrene market showed a downward trend. Driven by the rising cost of international oil prices during the holiday, the tight spot in the styrene area and the downstream replenishment demand after the holiday, prices have risen. But soon, the fundamentals of styrene were not clearly driven and the supply of pure benzene was expected to increase. As well as the exit of futures disk funds, market trading activity declined and prices fell.

The PVC market rose first and then fell. Futures and spot prices in the post-holiday market continued their upward trend in late September until they reached a historical high on October 12: the subsequent rapid decline, and the current downward trend has not stopped. The fundamentals of PVC in October were still in a relatively balanced state. Both supply and demand increased. The large price fluctuations were mainly affected by the futures market. The current futures and current linkages are still close. Although the cost of raw material calcium carbide is still high, the current cost The end support effect is not obvious, and it is expected that the price will hardly rebound significantly in the near future.

Outlook

With the arrival of external sources and the restart of domestic MTO equipment from November to December, the supply of ethylene may increase. On the demand side, if the prices of downstream products continue to be weak, there may be restrictions on the negotiated price of ethylene. However, the short-term MTO device has not been restarted, and the foreign trade ship is stuck in the port, and the pilot is tight, which will continue to restrict the flow of cargo. On the whole, it is expected that the subsequent ethylene price may gradually stabilize first, and then with the increase in supply, there is a risk of downward adjustment in price control.

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