Chemical Weekly: MDI Demand Forecast/Price Fluctuation Products

Listed prices were flat in December, optimistic about MDI demand in 2021

In October, domestic MDI prices soared. Polymerized MDI and pure MDI prices rose by 37% and 55%, respectively. Prices fell from a high level in November. As of November 26, 2020, polymerized MDI fell 24% from the beginning of the month, and pure MDI fell from the beginning of the month. 18%, the weaker demand margin and the concentration of shipments by traders are the main reason for the short-term price decline. Looking forward to 2021, the global economic recovery is expected to drive overall optional consumer demand. At the same time, the domestic downstream terminal overseas export market is expected to continue to exceed expectations. The superimposed domestic real estate completion end is expected to be repaired, which will boost the demand in the traditional building sector, and the continuous launch of new applications will stimulate demand. We are optimistic about the full-year MDI demand in 2021, and the price center is expected to rise.

Changes in prices and spreads this week

The prices of most products rose month-on-month. The top varieties of product price increases include: sulfuric acid (98%) (28.57%), accelerator NS (16.16%), acrylonitrile (14.56%), hexamethylene diamine (13.79%), methyl cyclosiloxane (DMC) (13.56%), etc. The main reasons for the price increase are shrinking supply, low production, and stable demand.

The leading product price decline varieties include: polymeric MDI (-12.62%), maleic anhydride (-9.18%), vitamin K3 (MSB96%) (-8.70%), heavy soda ash (-8.11%), polymer polyol ( Bulk bubble) (-7.84%), etc., the main reason for the decline was weak downstream demand.

Investment views

Leading value through the cycle, actively embrace the opportunity of new materials, crude oil storage is expected to pick up in the medium term, it is recommended to pay attention to offshore oil projects. Traditional bulk is still looking for the bottom, and the value of the leader goes through cycles. Affected by the economic cycle and the global spread of the epidemic, traditional bulk products in the chemical industry are in a downward trend. As the mainstay of the chemical industry, the PPI of chemical raw materials and chemical products manufacturing industry in October 2020 decreased by 6.0% year-on-year, which was negative for 22 consecutive months, and the decline continued to narrow. It is recommended to pay attention to leading companies with excellent quality and core competitiveness: in the down period of the cycle, leading companies expand their advantages, and at the same time, the valuation is obviously low, or they can cross the cycle, such as Wanhua Chemical, Hualu Hengsheng, Yangnong Chemical, Xinhe Cheng, Rongsheng Petrochemical, Tongkun Stock, Hengli Petrochemical.

New materials: Actively embrace industrial innovation and supply chain reshaping. Advances in science and technology promote the innovation of terminal demand and promote the upgrading and development of high-end manufacturing industries. In this process, industrial innovation will put forward higher requirements for material performance and promote the rapid development of the new material industry. It is recommended to pay attention to the targets of industrial innovation and supply chain remodeling: Jacques Technology, Wanrun shares, Guoci Materials. In addition, it is recommended to pay attention to high-quality growth companies: Hailide.

Risk warning event

Macroeconomic downside risks, crude oil price fluctuation risks, and business operation risks.