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Analysis of the Reasons for the Great Fall of Ethylene Oxide

Last week, domestic ethylene oxide fell by 900 yuan/ton in South China, Central China and East China, respectively 10000 yuan/ton, 9900 yuan/ton and 9900 yuan/ton. In the Northeast region, a reduction of 800 to 850 yuan/ton will be implemented, with 9700 to 9900 yuan/ton implemented respectively; The price of ethylene oxide immediately broke through 10000 yuan, reaching a year-end low. The main factors contributing to this sharp decline are: 1. The continuous decline in raw material ethylene has dampened market sentiment. Ethylene prices have dropped from $1550/ton at the end of September to the current $1220/ton, a drop of $330/ton, a drop of up to 21%; The decline in ethylene has to some extent suppressed the market mentality, but on the other hand, it has also alleviated the pressure on EO costs; Due to the decline in ethylene, the profit of ethylene oxide increased from negative profit to a thousand yuan. Therefore, although ethylene oxide did not follow the decline in ethylene during the decline, it also laid the groundwork for a significant downward adjustment. 2. Downstream wait-and-see, EO factories are forced to limit production in a bearish mood, and the enthusiasm for downstream procurement of ethylene oxide is not high, with a basic focus on taking and using as needed; And in the market atmosphere where falling prices are rampant, downstream buyers are more passive, causing some EO factories to increase inventory and have to limit production and maintain prices; During this period, some downstream markets have already experienced a drop of over a thousand, with strong selling sentiment among intermediaries and a pessimistic market sentiment, which is the main reason for this price adjustment. 3. The production of new devices and the potential hazards caused by the upcoming production of Dena's 100000 ton EO device were put into operation on the 18th, with a recent increase in production volume; In addition, Lianhong Group's 120000 ton EO device is scheduled to be put into operation on the 28th of this month. In the face of new device hazards, the factory has lowered prices to stabilize downstream sentiment. At present, the decline has finally been confirmed, and downstream sentiment will also tend to stabilize. Currently, the most concerned is whether the EO price can stabilize at these points; It is understood that the decline was significant this time, and the factory intends to fall to the designated level in one go to avoid creating illusions for customers that there is still room for a downward adjustment; Of course, with the start-up of the Lianhong device in the future, the supply range will continue to relax. As the end of the year approaches, it is unknown whether the downstream can digest high inventory in the short term; It is expected that the short-term EO price may continue to decline.

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