Author: Pang Xiao Source: China Chemical Industry News November 18, 2019

Recently, a market consulting agency pointed out that the price of Asian ethylene glycol fell to its lowest point in the past two months. Market sentiment may continue to be affected by the upcoming new supply. An Xunsi data shows that as of the week of November 1, the spot price of ethylene glycol in the Asian market closed at 541 to 545 US dollars / ton (CFR, China's main port), the lowest level since September 6.

In the context of squeezed profits, some ethylene glycol producers in Asia and the Middle East have reduced the operating rate of ethylene glycol plants, leading to a decline in China's ethylene glycol imports in September. A trader in Asia stated: \"Based on current ethylene glycol prices, major suppliers do not have too high profit margins. We can see from China’s latest import data that production is weak in the case of weak profits. Businessmen are cutting output.\"

In the months before the end of the first quarter of next year, three new ethylene glycol plants will be put into production in the Asian region. Malaysian National Petroleum Company Bianjialan Refinery and Petrochemical Company (PRef-Chem) will put into operation its 750,000-ton/year ethylene glycol plant by the end of the year. Hengli Petrochemical may put its 900,000 tons/year ethylene glycol plant into operation before the end of November. In the first quarter of 2020, Zhejiang Petrochemical also plans to put into operation a set of 750,000 tons/year ethylene glycol plant.

Over the past two months, the expected increase in regional supply has been dampening buying sentiment. At present, the spot price of ethylene glycol in the Asian market is higher than the forward, indicating that there is a spot premium since the end of October. A major ethylene glycol importer said that in light of expectations that new supply will hit the market, interest in buying goods in December has waned, and market sentiment may be more pessimistic in the coming weeks.

The ethylene glycol market also faces a slowdown in downstream polyester demand. Some major polyester plants in China are reducing production in response to rising inventories and falling profit margins. According to data from An Xunsi, on November 1, the average operating rate of China's polyester plants fell from 89% a month ago to 86%. In early November, China's filament yarn inventory level increased from 2 to 20 days in early September to 10 to 24 days. Various factors have affected China's exports of manufactured goods, including textiles and clothing. These finished products are mainly made of polyester yarns and fibers. A polyester manufacturer in China stated: \"The end of the year is usually the off-season of the polyester industry because downstream processors have completed export orders.\"