On March 3rd, the domestic ethylene glycol market saw a significant increase, with spot prices in East China closing at 3850 yuan/ton,+480 yuan/ton; South China closed at 3850 yuan/ton,+400 yuan/ton. The market is concerned about the impact of geopolitical issues on supply, and holders of goods have a strong reluctance to sell. Downstream restarts are limited, and there is insufficient momentum to chase after price increases, resulting in a slightly cautious attitude.
Fundamental analysis:
Supply: As of March 1st, the inventory of diethylene glycol ports in East China was 48000 tons, a decrease of 4100 tons compared to the previous statistical period. This week (March 3-9), Zhangjiagang is expected to receive a ship of 13300 tons. Although the expected arrival volume has increased, the market price center has strengthened after the holiday, and coupled with the gradual resumption of work and production downstream, port shipments may increase, resulting in little change in inventory at the main ports in East China.
Demand: Downstream demand still needs to recover, and the unsaturated resin plant will continue to resume operations within the week. The average operating rate of domestic unsaturated resin factories is 15%, a decrease of 5 percentage points from before the holiday (0% for unsaturated resin during the Spring Festival holiday). The resumption of work and production is slow, and there is pressure on traders to ship. On March 2nd, a total of 891 tons were shipped from the two storage areas in Zhangjiagang, an increase of 26 tons compared to the previous day.
Cost: The differences between the US and Iran in the negotiations are still evident, and the conflict between the US, Israel, and Iran is still ongoing. Geopolitical tensions are pushing up the risk of supply disruptions, and international oil prices are rising.
Market outlook: Downstream recovery is slightly slow, with less recent arrivals than expected and inventory decline in the main ports of East China. Geopolitical tensions pose a risk of supply interruption, while strong oil prices drive commodity sentiment. In the short term, the ethylene glycol market maintains a strong pattern, and downstream purchasing sentiment is gradually recovering.
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