Weak Demand Performance Dampened the Glycol Market in China

Since October end, the offers for Ethylene Glycol (EG) witnessed a paradigm shift in the pricing trajectory in China. Currently, the comparison of Ethylene Glycol with the volatility of the Crude Oil market, the persistently falling offers in the international market, suppressed the offers for Mono-Ethylene Glycol for the short term, mainly due to bearish sentiments in the domestic market. Earlier this week the International Energy Agency (IEA) stated that the surge of omicron variant is likely to curb the global oil demand, against the soaring production, which is not a supportive factor to the Ethylene Glycol market.

The pressure from the supply side on the Ethylene Glycol is not strong. However, several market participants expected that in the near term the offers of EG will likely gain gradual support for a short period. The main concern is whether the Hengli Petrochemical 900,000 tonnes/year Ethylene Glycol facility will shut for maintenance. However, in follow up considering that Zhenhai Refining & Chemicals and Zhenjiang Petrochemicals Ethylene Glycol installation is likely to be commissioned in the first half of 2022 and proportionally support the domestic supply of Ethylene Glycol. Whereas from the demand perspective almost all domestic trade orders have been completed, and the overseas order has spread irregularly.  The operating rates at the downstream Polyester industries had curtailed amidst the prevailing offseason in the Chinese domestic market. In repercussion, the current running inventories at the Chinese ports have soared by 6000 tonnes to 643,000 tonnes comparatively to the last quarter.           

As per ChemAnalyst the combination of the factors in the forthcoming period, driven by the downward sentiments of International Crude Oil prices, the offered quotations for the Ethylene Glycol will likely fluctuate weakly in a downtrend. In addition, the adequate supply outlook is likely to drive the demand fundaments in the Chinese domestic market. Whereas several market players were anticipating the emergence of new contradictions related to the domestic market.