Ethylene Glycol: From Attention To Drum Breaking

After entering March, ethylene glycol fluctuated violently. First, it continued the high trend of February, and the spot price rose to the high level of 6750-6800 yuan / ton. With the strong contrast of bulk commodities, under the optimistic resonance of supply and demand expectation in March, ethylene glycol once again became the leading producer of chemical products after many years, which attracted high attention of the market for a time.

However, the good times did not last long. Just as the market bulls were looking forward to the ethylene glycol breakthrough and opening up a new rising space, the market situation changed suddenly. The crude oil price dropped sharply, leading to the collective callback of chemical bulk commodities. The ethylene glycol shipping willingness with a large number of profit margins increased significantly, causing the bulls to stampede, and the price fell rapidly. On March 12, the closing price of ethylene glycol in East China was at 5 465 yuan / ton, the lowest point in March, down 21.1% from the peak. meanwhile,

Ethylene glycol from the attention of the public, the star of the rising list, has fallen to the point where it has just begun to rebound, and it has been severely suppressed. It only took a few trading days. The contrast is so great that what happened during this period attracts people's attention.

To explain this reversal, first of all, let's look at the main driving force of the increase of more than 1000 yuan of ethylene glycol. At the beginning of the rise, the market mainly speculated on the low selling value of ethylene glycol. We should know that ethylene glycol in 2020 can be described as miserable in chemical products. Under the guidance of crude oil, many chemical products rose like a rainbow. In the second half of the year, most of the decline in the first half of the year was recovered, and some products even made achievements in recent years However, although ethylene glycol is higher than the bottom of the first half of the year, it is still struggling at the bottom of history. The low selling value caused funds to carry out a long-term strategy on ethylene glycol before the Spring Festival. With the shutdown of the ethylene glycol plant in the United States during the holiday period due to extremely cold weather, glycol finally ushered in an outbreak after the festival, which completed this wave of long-standing super in half a month In the twinkling of an eye, the market is full of bulls and bears are full of sorrow. However, when the market enters the craziest speculation, the main logic changes. After the sharp rise, the low selling value no longer exists. The ethylene glycol profit level of all processes has soared sharply. The focus of market speculation is that the import of goods decreased in March, and the main port inventory is reduced. Under this situation, the market will be pushed to a higher level New height.

The logic of closing position in the market speculation itself is a false proposition, because the market is always a long short game market. If the bull mentality is stable and the selling is reluctant to sell, the short market will appear. However, when the market rose too fast in March, and the market reached a new high level, once the market with rich profit margins met with a bit of market agitation, they would compete to choose to fall From the basis of the first week of March, the spot and disk basis did not strengthen because of the approaching delivery date of paper goods, but weakened, which proved that the cash market had a clear idea of profit taking. In addition, the peak of crude oil triggered the end of the upward trend of chemical bulk commodities. Bulls' confidence was frustrated, and they scrambled to ship goods. The market reversed, and the short market turned into a forced multi market The basis of goods and futures fell sharply.

The spot market failed, and the futures delivery month met with greater than expected, which explained the rapid reversal of the market. After a substantial withdrawal, the current spot price of ethylene glycol has basically returned to the current basic normal price. Therefore, the market in March has limited meaning of long short at this point, and both long and short are looking for new entry nodes. However, from the perspective of future supply pattern, ethylene glycol's new production capacity will gradually start. With the gradual increase of overseas unit load, the situation of future oversupply is irreversible, and ethylene glycol will become an important member of short position allocation.