Ethylene after the city of cold snap

In December, Shenghong Refining and Chemical's 1.
1 million tons/year naphtha cracker plant was put into operation, and qualified products
were produced in the first half of the year.
Because the downstream supporting 1 million tons/year ethylene glycol plant has not yet been put into production, the ethylene produced will be exported, and the contradiction between supply and demand in the ethylene market will become more and more prominent, and the future market can be described as a cold snap
.

One of the cold snaps is the release
of new capacity.
Since the beginning of this year, ethylene production capacity has been continuously
added.
In the first half of the year, although only two sets of new plants, Zhenhai Refining Phase II and Tianjin Bohai Methanol to Olefin, due to high crude oil prices, serious losses in the ethylene industry chain, increased cost pressure of refining and chemical integration units, and some ethylene manufacturers turned to export ethylene monomers, resulting in a significant increase in domestic ethylene circulation in the first half of the year, which affected the postponement of the start-up time
of many ethylene plants.
Since then, crude oil and naphtha prices have retreated, ethylene and downstream industrial chain profits have recovered slightly, and planned production plans have been introduced
.
In August, Zhejiang Petrochemical 3#1.
4 million tons/year naphtha cracking plant was put into operation, in addition to Shenghong Refining, Hainan Refining and Guangdong Petrochemical are also expected
to be put into operation.
However, due to the delay in the downstream production time, and due to the slow recovery of the terminal industry, ethylene monomer of refining and chemical enterprises is mainly exported, market competition is intensified, and the ethylene market may go through 2022
.

Cold snap second demand is less than expected
.
From the overall perspective of the terminal of the ethylene industry chain, the demand of the four main downstream forces continued to decline, and the shipment atmosphere was much weaker than the same period
last year.
Polyethylene began to decline due to the peak season of downstream shed film; Polyester companies are subject to poor demand performance, superimposed on the increase in production and maintenance of enterprises, and the lack of upward momentum in the ethylene glycol market, which in turn drags down the ethylene market; The styrene device is basically stopped or load reduced, and it is difficult to form a support for ethylene; Limited demand in industries such as infrastructure and real estate has led to a cooling
of the ethylene oxide market.
In addition, in terms of upstream and downstream production time, in addition to Shenghong Refining, the start-up time of the styrene plant supporting the Guangdong Petrochemical cracking plant is expected to be in January next year, or cause an increase in domestic ethylene spot circulation at the end of December; The commissioning of the Hainan refining cracker will also cause a phased mismatch between supply and demand, which will weaken the upward momentum
of the ethylene market.

The third cold snap is that the industrial chain is profitable
.
In the second half of the year, with the decline of crude oil and oil markets, the profit loss of the ethylene industry was improved, but the losses of downstream ethylene glycol, styrene and ethylene oxide continued, affecting the enthusiasm of
the industry to start work.
In terms of raw materials, although the effect of the price cap set by the West on Russian oil may not be as expected, the EU will promote a complete embargo on Russian crude oil, and OPEC+ production reduction is firm, oil prices are expected to usher in a new rise
.
Crude oil is expected to strengthen, and naphtha is still tight due to low refinery starts, and high-priced raw materials may form a short-term positive support
for the ethylene market.
However, the contradiction between ethylene supply and demand has not been fundamentally improved, and the downstream profit space is expected to continue to narrow, and it is difficult for the ethylene market to improve
under the situation of poor cost transmission.