On the 21st, the ethylene glycol market took a turn for the worse, and electronic futures suffered a sharp decline. The market once approached the lower limit of the day, and closed around the lower limit in late trading. From yesterday’s sharp rise in the ethylene glycol market to the current sharp decline in ethylene glycol, the market seems to have experienced a cycle from heaven to hell. The author can’t help but sigh: This style of painting has changed too fast!
In a weak atmosphere, the market showed favorable policies
Since June this year, downstream polyester companies have concentrated on replenishing their raw material purchases. At the same time, the production and sales rate of polyester filament has continued to surge, reaching a production and sales level of 200%, which has promptly digested part of the inventory of polyester yarn factories and stimulated the spot supply of ethylene glycol. The market was once prosperous, transaction volume increased significantly, and port inventory also declined significantly. According to statistics, the increase during the period exceeded 1,000 yuan;
With the positive dilution, polyester yarn production and sales cooled down in late September, polyester industry inventories rebounded slightly, and ethylene glycol port inventories also increased again. The ethylene glycol market atmosphere returned to bearish, and the market fell all the way to around 7,200 points.
However, in this weak atmosphere, the market burst out with positive policies. On September 18, a document from the Jiangsu Maritime Safety Administration flowed into the market, “Notice of the Jiangsu Maritime Safety Administration on the Implementation of Special Safety Supervision Measures during Specific Periods.” The document clearly stipulated that in October Measures such as suspending ship operations in Jiangsu from October 11 to October 28. As the news gradually spread, the market reacted strongly to this, believing that this measure will affect the import and arrival of ethylene glycol and inventory changes, and the overall market demand has increased significantly. , spot trading on the market is booming, and electronic trading has also risen rapidly in the past two days.
The market is experiencing a “black swan”: commodities have plummeted, and ethylene glycol cannot survive alone
Although spot trading in the ethylene glycol market has been booming in the past two days, the originally weak atmosphere has turned bullish. But I never thought that a “black swan” would appear recently.
The U.S. Federal Reserve announced on September 20 that it would start reducing its balance sheet totaling US$4.5 trillion from October this year to gradually tighten monetary policy. According to a report released by the Federal Reserve that day, the Federal Reserve is likely to raise interest rates once more this year and three times next year.
The Federal Reserve’s decision is hawkish and is expected to raise interest rates in December, which will put pressure on chemicals in the long run. This incident also directly led to the annihilation of all chemicals in commodity futures. Methanol fell by nearly 4%, and rubber and PVC fell by more than 3%. Although ethylene glycol had good support, it was also difficult to support. As of the close, the decline reached 3.86%.
The industry’s sudden good news encounters the “black swan” environment. How will ethylene glycol go in the future?
The author believes that the decline in the electronic trading of ethylene glycol is too large in the short term, the market’s short-selling financial power is prominent, and the bulls’ counterattack is weak. The electronic trading limit was hit on the 21st. It is expected that the electronic trading will continue to be weak and volatile in the short term.
However, according to documents from the Jiangsu Maritime Safety Administration, if the documents are implemented, Jiangsu, as a major port in East China, will see a significant decline in ethylene glycol inventory, and the tight supply of delivery goods will support prices. On the other hand, the supply has been interrupted for nearly 15 days, and the dependence on ethylene glycol imports is still high. In addition, the market is in the traditional peak season of Gold, Nine and Silver, and downstream polyester factories will also face challenges when demand starts in the later period. Therefore, in the medium to long term, the market may experience a good upward trend due to the imbalance between supply and demand.
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