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The prospects for the 2020 Asian ethylene glycol market are not strong

Views:0     Author:Site Editor     Publish Time: 2020-01-10      Origin:Site

Source: China Chemical Industry News Time: 2020-01-06

Affected by the commissioning of some new large-scale installations and the decline in Chinese imports, the Asian ethylene glycol (MEG) market will face a difficult year in 2020. A large amount of new capacity was put into production, but the increase in demand has not kept pace, which will lead to a decline in the operating rate of ethylene glycol plants in Asia.

The capacity will increase substantially:

It is estimated that from the end of 2019 to 2020, the newly established ethylene glycol capacity in Asia will reach 3.3 million tons per year, which will bring pressure to the market with low profit margins.

In China, Hengli Petrochemical's 900,000-ton/year ethylene glycol unit and Zhejiang Petrochemical's 750,000-ton/year ethylene glycol unit have been put into trial production in the second half of December 2019, and will begin commercial operation in 2020. According to sources, Hengli Petrochemical's second 900,000-ton/year ethylene glycol unit will also be put into use in 2020.

Market participants said that in Southeast Asia, the commissioning of a 750,000-ton/year ethylene glycol joint venture between Petronas (Petronas) and Saudi Arabian Petroleum (Saudi Aramco) may be delayed due to some mechanical problems.

An ethylene glycol trader in Asia said: \"These large ethylene glycol projects officially put into production this year have not yet included the small ethylene glycol projects in China that use coal as a raw material. 2020 will be a difficult year because There will be many large and small ethylene glycol units put into production at the same time.\"

An Xunsi's supply and demand data shows that the ethylene glycol capacity in Northeast Asia will increase by 18% in 2020, reaching 19.83 million tons per year.

The operating rate will drop significantly:

A market participant said: \"Under the global economic downturn, the downstream demand expansion of ethylene glycol will definitely lag behind the rapid growth of supply, and in 2020 suppliers will be forced to reduce the level of equipment operating rate.

In view of the increasing supply, in the case of weak demand, ethylene glycol producers in Northeast Asia may have to reduce the operating rate of the device to balance the market. According to supply and demand data from An Xunsi, the operating rate of ethylene glycol units in Northeast Asia is expected to fall from 75% in 2019 to 66% in 2020.

China's imports will decline:

China is the world's largest ethylene glycol importer, and its average annual import volume has been stable at more than 7.5 million tons in the past five years. However, the increase in ethylene glycol supply in the domestic market may lead to a decline in China's ethylene glycol imports in 2020.

A glycol producer in China said: \"China's ethylene glycol self-sufficiency rate is rising. China's ethylene glycol imports are likely to decline in 2020. This may force overseas producers, especially Middle Eastern producers to consider The Chinese market does not need as much goods as before, how should they transfer their goods.\"

According to data from An Xunsi, from January to October 2019, China imported 8.23 ​​million tons of ethylene glycol, down from 8.3 million tons in the same period in 2018. China's imports have declined, while India's ethylene glycol imports have increased. From January to September 2019, India’s ethylene glycol imports increased by 13% year-on-year to 566,000 tons.

In the ongoing negotiation of 2020 ethylene glycol fixed-term contracts in Asia, Chinese end users have stronger bargaining power and demand greater discounts, and suppliers are not eager to compromise.

A Chinese trader said that if overseas producers still want to maintain their market share in China in 2020, they must provide more discounts.

In the week ending December 6, 2019, ethylene glycol inventories at Chinese ports fell from a high of 1.38 million tons in April 2019 to a two-year low of 429,000 tons, mainly due to reduced global supply and delayed imports. the arrival.

However, as the Chinese New Year holiday approaches, affected by the reduction in shipments, ethylene glycol stocks in Chinese ports will gradually increase. The Chinese market will be closed for a week due to the Lunar New Year, so interest in buying ethylene glycol goods in January was suppressed.

In August 2019, the spot price of Asian ethylene glycol fell to a 10-year low due to the collapse of crude oil prices, increased ethylene supply, weak demand and reduced cost pressures. As China's port stocks began to decline, the spot price of Asian ethylene glycol began to gradually recover in mid-November 2019, but given the bleak market outlook, the price increase trend is limited.


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