Multi-factor resonance, m-cresol stepped into the business cycle

Meta-cresol is an important chemical intermediate, mainly used in the pesticide and pharmaceutical industries. It is an important raw material for pesticides, medicines, antioxidants, fragrances and synthetic vitamins. It is also an intermediate for color films, resins, plasticizers and fragrances. In 2019, the global consumption of m-cresol was approximately 45,000 tons, of which 45% was used in the pharmaceutical industry, 30% was used in the pesticide industry, and 10% was used in the fragrance industry.

The demand for m-cresol is improving year by year, and the industry is expected to usher in a high boom. The main downstream sources of m-cresol are menthol, pyrethroids and vitamin E. Menthol is the largest in oral care products, accounting for more than 1/3 of the total. At present, most of L-menthol in China is imported, and the annual import exceeds 10,000 tons. Due to the rapid growth of downstream demand, some chemical companies It has also begun to actively deploy synthetic menthol production capacity; China’s pesticide industry as a whole is in a period of structural adjustment, and resources are further tilted to leading enterprises. Among them, the future expansion plan of pyrethroid products is highly certain; the expansion of menthol and pyrethroids will become One of the main sources of increase in demand for m-cresol. The vitamin E industry is expected to see an upturn in the future, which will support the demand for m-cresol. On the whole, the continued improvement in the demand side of m-cresol will help the industry to continue to rise.

The m-cresol industry is highly concentrated, and my country still relies on imports. From the supply side, m-cresol is a typical oligopoly market. There are currently 6 m-cresol producers in the world with an overall production capacity of about 56,000 tons. Among them, Sasol in the United States and LANXESS in Germany each accounted for 36% and 27% of the total production capacity, and foreign-funded enterprises accounted for the main share of the industry. In recent years, the rapid development of downstream products of m-cresol in my country has led to the rapid growth of demand for m-cresol. However, the current domestic production capacity cannot meet domestic demand. my country still needs to import 4800-7200 tons of m-cresol each year. With the breakthrough of m-cresol technology, manufacturers with technological advantages and scale advantages will stand out. It is expected that my country will become self-sufficient in m-cresol.

The entry barriers of m-cresol are increasing, and it is expected that industry competition will tend to be orderly in the future. Due to the difficulty of product separation and the treatment of by-products and wastes, the m-cresol industry has high barriers to entry. The stricter environmental protection makes the supply of raw materials stricter, and the future development of the industry will be more orderly. In July 2019, the Ministry of Commerce of China decided to initiate an anti-dumping investigation on imports of m-cresol originating in the United States, the European Union and Japan. If anti-dumping is implemented, it is expected that domestic prices of m-cresol will be boosted and import substitution will be accelerated.

From the perspective of demand, the continuous growth of m-cresol's main downstream menthol, pesticides and vitamins will drive the growth of m-cresol demand. With the breakthrough of domestic m-cresol technology and the expansion of production capacity, the self-sufficiency of m-cresol in my country is expected to further increase. With high technical barriers to m-cresol and stricter environmental protection, the supply of raw materials has become stricter. With the implementation of anti-dumping investigations on m-cresol in China, the m-cresol industry is expected to enter a business cycle.