As the world's largest shipping companies have suspended Red Sea voyages, the international ethylene glycol market has been severely impacted. Ethylene glycol, as an important chemical raw material, has been attracting much attention in its market dynamics. Recently, due to geopolitical risks and the postponement of the resumption of overseas installations, ethylene glycol** has risen sharply, and the outlook for the market is full of uncertainty.
1. The impact of the Red Sea situation on the ethylene glycol market.
Tensions in the Red Sea have led to international development, which in turn has increased the cost of ethylene glycol production. In addition, the suspension of Red Sea voyages by shipping companies has further exacerbated tensions in the ethylene glycol market, further increasing the tension in the ethylene glycol market. The combination of these factors has driven up the market for ethylene glycol**.
Second, the competitive landscape of the ethylene glycol industry.
In recent years, the ethylene glycol industry has put into production more, resulting in intensified market competition. Judging from the comparison of the profits of the main production processes, since 2019, the profits of various processes of ethylene glycol have been in the red. In 2022, the Russia-Ukraine conflict will exacerbate the energy crisis, driven by a strong upward trend, and the losses of production enterprises will further intensify. Continued low profits have led to the withdrawal of some high-cost production capacity from the market, and the industry competition pattern has further intensified.
3. Capacity clearance and market outlook.
With the successive commissioning of Zhongkun and Yuneng units, the ethylene glycol (MEG) production capacity has increased to 28.77 million tons, and the production capacity growth rate is as high as 146%。The annual output is expected to reach 16.4 million tons, with an output growth rate of up to 23%. However, only 3 sets of units are planned to be put into operation in 2024, and the production capacity is close to the end of clearing, and the new investment plan is significantly reduced. This suggests that MEG may enter the second half of its production cycle amid continued low margins. Some high-cost production capacity will be withdrawn from the market, and the industry will usher in a supply and demand repair mode.
IV. Conclusions. To sum up, the tension in the Red Sea, the intensification of industry competition and the promotion of production capacity clearance jointly affect the ethylene glycol market. In the current context, the ethylene glycol market is highly volatile, and the future trend is full of uncertainty. For relevant enterprises, it is necessary to pay close attention to market dynamics and policy changes, and flexibly adjust business strategies to cope with market challenges. At the same time, technological innovation and industrial upgrading are also needed to enhance competitiveness and achieve sustainable development. For investors, it is necessary to carefully assess market risks and make sound investment decisions.
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