On July 14th, due to the impact of a typhoon on domestic loading and unloading in both coastal and Zhejiang provinces, the East China market experienced a shortage of spot goods. The inventory at the main ports in East China once again hit a new historical low, and the liquidity of spot goods in the region tightened. The pricing of diethylene glycol was dominated by the sellers, and the market price center continued to strengthen. The mainstream spot price in East China closed at 9330 yuan/ton,+130 yuan/ton, breaking the price high of the past decade; The South China market is limited by the supply and demand structure within the region, coupled with the background of local equipment restart, and the price discount has reached a new high of nearly 1500 yuan/ton. Cross regional arbitrage has been strongly opened up, and the market closed at 7900 yuan/ton and -100 yuan/ton; CFR China closed at $1103/ton and $-23/ton.
Fundamental analysis:
Supply: Domestic facilities, Shenghong and Hengli have implemented maintenance plans for one set of facilities, while CNOOC Shell and Gulei Petrochemical have restarted; Imported from abroad, there is a shortage of short-term arrivals, and some ships pass through the Strait of Hormuz; Due to the impact of the typhoon, the supply of goods from Jinyang and Zhejiang Petrochemical has been delayed. As of July 13th, the inventory of diethylene glycol ports in East China was 4300 tons, a decrease of 2300 tons from the previous statistical cycle. This week (July 14-20), Zhangjiagang’s diethylene glycol is scheduled to arrive at the port with 7050 tons. The downstream demand side has shown lukewarm performance, and combined with the recent shipment situation at the main port, there is a certain expectation of inventory accumulation at the main port in East China.
Demand: The overall load of downstream polyester and unsaturated resin is stable, and there is a significant discount from the southern region to the eastern region. The supply will be supplemented by the southern region. According to statistics, as of July 9th, the average operating rate of unsaturated resin factories in China was 32%, a decrease of 1% from the previous period. Manufacturers purchase raw materials on demand. According to statistics, from July 10th to July 12th, a total of 903 tons were shipped from the two storage areas in Zhangjiagang, with an average daily shipment of about 301 tons. On July 13th, a total of 232 tons were shipped from the two storage areas in Zhangjiagang, a decrease of 71 tons from the previous day.
Market expectation: Looking ahead, in terms of imports, due to the impact of Typhoon Bawei, the loading and unloading of nearshore cargo has been delayed. July and August are a period of high typhoon weather, which may drag down the pace of import recovery. Pay attention to changes in shipping schedules. In terms of domestic production, Shenghong Petrochemical and Hengli Refining will gradually carry out maintenance within July, while CNOOC Shell and Gulei Petrochemical will restart one after another; The demand is basically stable; Under the background of tight pressure in the main port during the week, the expected price of diethylene glycol remains strong. However, with the gradual replenishment of cargo, the expectation of a high price drop has not changed. However, considering the situation between the United States and Iran, there may be difficulties in connecting supply in the future, and it is difficult to anchor a low price. In the current price background, we are currently considering a cautious bearish trend and focusing on the sustainability of subsequent supply repair.