Review of Ethylene Glycol Market in 2024
The narrow range oscillation price of ethylene glycol will rise in 2024
The price of ethylene glycol will rise in 2024. According to data from Shengyi Society, as of December 31st, the average price of domestic oil to ethylene glycol was 4688.33 yuan/ton, an increase of 8.84% compared to the average price of 4307.5 yuan/ton on January 1st. The spot market for ethylene glycol for the whole year of 2024 operates within the range of 4300-4800 yuan/ton, with an annual amplitude of 10.7%. Strong annual performance mainly relies on factors such as reduced overseas supply and lower port inventory.
Annual price comparison shows that the price of ethylene glycol has relatively increased compared to the low operating range in 2023, with the annual market average price rising from 4153 yuan/ton to 4578 yuan/ton; The annual price center of gravity has shifted upward. From the annual amplitude data, it can be seen that the annual price fluctuations in 2023 and 2024 have significantly narrowed compared to the previous period. The annual price operation of ethylene glycol in 2024 is characterized by narrow fluctuations and price increases.
The main logic of ethylene glycol price fluctuation trading in 2024
In 2024, ethylene glycol can be roughly divided into seven market bands, among which stage one (2023.12-2024.3) laid the main tone for the rise of the center of gravity of ethylene glycol prices. The main influencing factors in each stage are as follows:
Stage 1: The Red Sea attack at the beginning of the year affected the Middle East’s supply of goods and the maintenance of Saudi facilities, leading to a reduction in imports and an expected strengthening, which pushed up the price center of ethylene glycol;
Stage 2: Hidden inventory is high, port shipments are weak, and ethylene glycol prices continue to weaken in March and April;
Stage 3: The effect of reducing implicit inventory and imports begins to manifest in explicit inventory, coupled with the maintenance of domestic facilities, leading to a gradual strengthening of ethylene glycol prices;
Stage 4: After the price rises, domestic supply rebounds, while domestic demand shows downstream price for volume exchange. Downstream polyester prices decline, and the game between upstream and downstream intensifies. Downstream tolerance for high priced ethylene glycol weakens, leading to a sharp drop in ethylene glycol prices in September;
Stage 5: Macro sentiment during the National Day holiday, with ethylene glycol experiencing a significant rebound once again;
Stage 6: After the holiday, the sentiment weakened and rebounded again, but the decline was limited due to the impact of low inventory levels;
Stage 7: The clearance of port inventory is accelerating, and the expectation of weak imports is strengthening. The port inventory of ethylene glycol is gradually being cleared to a multi-year low, and the price of ethylene glycol is fluctuating upwards at the end of the year.
Basic supply and demand of ethylene glycol in 2024
Supply side: Domestic new production increase can be limited, while new production increase can be significant
The new production capacity of ethylene glycol in 2024 is not much. Excluding the 600000 tons of Xinjiang Zhongkun and 400000 tons of Shanxi Yuneng Group that were put into operation at the end of 2013, the new production capacity in 2024 will only be 300000 tons of ethylene glycol new production capacity of ChemChina. The total production capacity of ethylene glycol in 2024 is about 2860 tons, with a growth rate of only 0.3%.
The peak period for the expansion of domestic ethylene glycol production capacity is from 2020 to 2023, during which the domestic production capacity will increase rapidly by 4-5 million tons per year. The annual production capacity has increased from around 10.7 million tons in 2019 to around 28.5 million tons in 2023.
In 2024, there will be a significant increase in the absolute value of domestic ethylene glycol production, with a production increment of around 2.7 million tons. The ethylene glycol production in 2024 will be close to 19.5 million tons, an increase of 16.1% compared to around 16.8 million tons in 2023. During the peak period of capacity expansion (2020-2023), the average domestic production increment over the past four years is 2.925 million tons, and the production increment in 2024 will be 2.7 million tons, still in the peak period of production increment. Among them, the output growth rate of coal to ethylene glycol is greater than that of non coal to ethylene glycol.
Supply side: Domestic operating rate increases
There may not be much new production of ethylene glycol in 2024, but there will be a significant increase in production. The specific manifestation is that the growth rate of ethylene glycol production capacity tends to zero in 2024, while the growth rate of production remains relatively high. The main reason for this difference is the increase in the utilization rate of ethylene glycol production capacity in 2024, which is 68%, an increase of nearly 8% compared to 2023.
Supply side: Decreased overseas import volume
The import volume of ethylene glycol has been declining for five consecutive years. The total import volume of ethylene glycol in 2024 is about 6.55 million tons, a decrease of nearly 600000 tons compared to the same period last year, and a decrease of 4 million tons from the high point of 10.55 million tons in 2020. In 2024, the domestic dependence on ethylene glycol imports will continue to decline to around 25%, the lowest level in over a decade. The dependence on ethylene glycol imports has been declining from 73% in 2012. On the one hand, due to the squeezing of domestic production capacity, integrated oil production and some self owned coal mining enterprises have international competitive advantages in cost; On the other hand, it is also due to low prices, weak profits, frequent maintenance and unexpected failures of overseas facilities, as well as unstable situations and poor sea transportation.
From the perspective of import sources, the proportion of imports from countries such as the Middle East, the United States, and Canada has increased. The Middle East and North American sources of goods have cost advantages in raw materials, and high cost equipment in Asia’s near ocean regions is gradually being squeezed out of the Chinese market.
Supply side: The total supply of ethylene glycol will increase in 2024
In 2024, domestic production of ethylene glycol will increase, imports will decrease, and the total supply will exceed 26 million tons, an increase of 2.1 million tons compared to 2023.
Supply side forecast for 2025: high supply elasticity with added supply pressure
It is expected that the supply elasticity of ethylene glycol will be relatively high in 2025, and there will be new supply pressure. One of the main criteria is the increase in production capacity, which is an increase compared to 2024. In 2025, the plan is to add 1.6 million tons of ethylene glycol to production. It is expected that by the end of 2025, the total domestic production capacity of ethylene glycol will reach 30.23 million tons, with a capacity growth rate of 6%.
In addition, the possibility of a rebound in overseas imports is one of the important factors contributing to supply elasticity. Affected by uncontrollable factors, imports from the Middle East and North America will decrease in 2024. For example, the transportation of ethylene glycol in the Middle East has become difficult due to the Red Sea attack, and Saudi Arabia has indeed reduced production due to economic reasons; In North America, exports to Asia have decreased due to the blockage of the Panama Canal and difficulties in local construction. Excluding the pressure of domestic production capacity on import demand, there is still potential for a rebound in imported goods from the Middle East and North America, which have cost advantages.
Demand side: The total demand for ethylene glycol will increase in 2024
The total demand for ethylene glycol is increasing year by year. The main downstream is polyester, accounting for over 90%. In 2024, polyester consumption of ethylene glycol was 24.9 million tons, an increase of 2.6 million tons compared to last year; Other fields (such as antifreeze) consume 1.7 million tons of ethylene glycol, totaling 26.6 million tons, with a demand growth rate of 12%
Overview of Major Downstream Polyester Fundamentals
In 2024, the production capacity and output of polyester, the main downstream product of ethylene glycol, will double increase, and the operating rate will remain high. The polyester production in 2024 is about 74.5 million tons, an increase of 7.9 million tons compared to 2023, with a year-on-year growth rate of 11.8%; In 2024, the total polyester production capacity will reach 85.4 million tons, with an additional 5.55 million tons of production capacity (excluding obsolete capacity), and a capacity growth rate of about 7%. The annual average operating rate of the national polyester industry in 2024 is around 86%, which is at a relatively high level in recent years.
Polyester exports will continue to grow in 2024, but the growth rate will slow down. In 2024, the import volume of polyester is expected to be 930000 tons, the export volume is expected to be 12.36 million tons, and the net export volume is expected to be 11.43 million tons, an increase of 10.6% year-on-year, with exports accounting for 15% of polyester production. In detail, among the categories of polyester export products, the growth rate of bottle flakes is relatively high, short fibers are neutral, and the export of long fibers has significantly slowed down. Among them, the cumulative export volume growth rate of bottle flakes and short fibers in 2024 exceeds 20%, maintaining a good growth momentum, while the export volume of polyester filament is expected to decline by 4.5% year-on-year.
Demand side: Ethylene glycol demand will continue to grow in 2025
The demand for ethylene glycol will continue to grow in 2025. In 2024, a total of 5.55 million tons of new polyester production capacity will be added (excluding obsolete production capacity). In 2025, there will still be new production capacity entering the polyester industry, with a production plan of 5.14 million tons. It is expected that the polyester production capacity will reach around 90.5 million tons by the end of 2025, with a capacity growth rate of 6%.
From the perspective of terminal demand, the domestic demand for textiles will be weak in 2024, with an increase in export quantity but a lower amount, mainly due to changes in consumption power caused by the shift in export destinations. In 2024, the market share of the European Union and ASEAN will gradually increase, while the export share of the United States will decrease. The trend of increasing quantity and decreasing price may continue with the arrival of the new US government in 2025, and it is expected that the quantity of textiles will maintain relative growth in 2025, but the magnitude will be limited.
Forecast of Ethylene Glycol Market in 2025
In 2025, the price of ethylene glycol will still be dominated by supply and demand. The main market game space lies in domestic supply variables and import quantity variables. Although the dependence on imports has significantly decreased and the influence of overseas factors on prices has decreased, based on the increase in domestic supply, the ethylene glycol market will play a game around the changes in production caused by port inventory and domestic manufacturer profits. The probability of a unilateral market trend caused by a single element decreases, and the probability of maintaining a narrow range oscillation since 2023 is higher. Overall, in 2025, the ethylene glycol supply side will have stronger new production capacity than in 2014, and there is room for improvement in operating rates after profit recovery. The expected growth rate of downstream polyester demand is expected to slow down, and there is great uncertainty in terminal demand. In 2025, the focus will be on centralized maintenance, the stage of domestic production with supply-demand mismatch, and the possibility of import recovery, which will bring market pressure due to the increase in port inventory.
It is expected that by 2025, the price of ethylene glycol will mainly fluctuate within a narrow range, with the overall price center slightly shifting upwards, and the price range being between 4600-5000 yuan/ton.
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