Acetic acid industry chain/urea/titanium dioxide increase

Chemical Product Price Index (CCPI): This week, the CCPI continued to fall by 0.7% from last week, and rose by 6.3% from the same period last month. The growth rate during the year was 4.5%, and it was up 3.9% from the same period last year.

The products with a large increase this week: acetic acid (East China), 32.8%; China LNG spot (North China), 20.3%; Lithium hexafluorophosphate, 17.5%; Acrylic staple fiber (1.5D, 38 mm), 15.2%; Vinyl ACETATE (East China) , 14.3%.

Products that have fallen sharply this week: dimethyl carbonate DMC (East China), -14.8%; Ethane (MB), -12.7%; Maleic anhydride (East China), -12.6%; Industrial naphthalene (East China), -11.6% ; Propylene glycol (East China), -10.9%.

Recent views

Polyurethanes: overseas, Covestro’s US MDI and related products have been force majeure (320,000 tons) due to shortage of raw materials; Huntsman’s MDI plant (500,000 tons) in Geismar, Louisiana, USA partially suspended production; Dow Chemical’s US MDI products Encountered force majeure (340,000 tons). According to Longzhong Information, Shanghai Covestro (550,000 tons) is undergoing maintenance. The follow-up Wanhua Ningbo (800,000 tons) plant will start maintenance on December 15, 2020. Chongqing BASF (400,000 tons) also has maintenance plans. , MDI's centralized overhaul supply is tightened. In terms of demand, the global resumption of work is advancing, and MDI needs to be repaired.

In the context of improving demand and high industry concentration, the price of MDI has rebounded significantly. We strongly recommend Wanhua Chemical.

Coal chemical industry: During the year, the planting area of major crops in India increased significantly year-on-year, or the demand for urea increased.

In addition, the price difference of methanol, ethylene glycol and other products is at the bottom of history, and it is expected that some companies in the industry are already at a loss. From the perspective of industry operation rules, this state is not sustainable, that is, the average profitability of the industry will be restored regardless of whether demand recovers or not. The current downstream demand is gradually repaired. The price difference of some coal chemical products methanol, acetic acid, and Adipic Acid-raw materials are located at the historical quantiles of 18.0%, 42.7% and 10.0% respectively, which has rebounded from the historical quantile of about 5% in the previous period. The industry is profitable. The repair logic at the bottom of the ability is gradually verified. Highly recommend the leading domestic coal chemical company Hualu Hengsheng.

Pesticides: The prices of some pesticide intermediates (glycine, etc.) and technical drugs (glyphosate, difenoconazole, thiamethoxam) rose this week, and the price index of Zhongnong Lihua technical drugs continued to rise to 96.11 points, up month-on-month 4.0%. Pesticide companies have further widened gaps in cost control, product layout, technical strength, and integrated layout. Pesticide product differentiation: focus on pyrethroids, innovative drugs (etazole, chlorantraniliprole, chlorantraniliprole, etc.), glufosinate-ammonium, etc. Recently, EPA passed the key registration of dicamba, and Syngenta Group plans to become the controlling shareholder of Yangnong Chemical, which is expected to accelerate growth. The key recommendation is Yangnong Chemical, Lianhua Technology, Lier Chemical, and Guangxin.

Risk warning: the risk that the demand for chemical products does not meet expectations, the risk of a sharp drop in international oil prices, the risk of poor environmental protection implementation.