The glycol market also faces a slowdown in downstream polyester demand. Polyester industry is the most important downstream industry of glycol. At present, more than 87% of glycol is used in polyester production.
Due to the recovery of textile industry, the main downstream polyester industry of glycol started from the second half of 2016, and 2017-2019 entered the peak of capacity expansion. By the end of 2018, China's polyester production capacity has increased to 54 million tons, equivalent to about 18 million tons of glycol consumption.
However, according to industry insiders, the prosperity of textile industry will gradually decline from 2019, and the growth rate of polyester production capacity will begin to decline. The ongoing trade war between China and the United States has severely hit the export of China's manufactured products, including textiles and clothing, which are mainly made of polyester yarn and fiber. The demand for glycol in the future is unlikely to keep up with the growth of production capacity.
According to the news, some of China's major polyester factories are reducing production in response to rising inventories and falling profit margins. On November 1, the average operating rate of China's Polyester plants fell to 86% from 89% a month ago, according to anxins.
"The end of the year is usually the off-season for the polyester industry because downstream processors have completed export orders," said a Chinese polyester producer
Therefore, in the face of the competition from the explosive growth of production capacity and the cost advantage of foreign enterprises, there is not much time and space left for glycol. For glycol project, it is necessary to keep enough caution. Whether the new glycol project is competitive or not needs careful discussion and careful decision-making.