Viscose DMF, etc. began to continue to increase prices

WTI oil prices rose 0.23% this week to US$52.36 per barrel.

Focus on sub-sectors: DMF rose 18.8%, viscose rose 10.3%, urea rose 7.1%; calcium carbide method pvc fell 3.1% weekly, ethylene method pvc fell 2.9%, and silicone fell 2.4%. The top five sub-sectors this week’s increase: Vitamin C (21.8%), DMF (18.9%), epoxy resin (14.6%), thermal coal (13.4%), n-butanol (13.3%)

Vitamin C (21.8%): Hebei and Northeast China have recently suffered severe epidemics, some cities have been closed, logistics control, and VC manufacturers are experiencing difficulties in shipments. As a leading VC manufacturer, CSPC has stopped quoting and signing all vitamin products. Due to the more serious epidemic in Europe, demand for overseas VCs has increased and exports have been better.

DMF (18.9%): The domestic downstream rigid demand industry followed up with stocking, and the shortage of market sources was obvious; as the overseas demand gap deepened. On the supply side: Hualu Hengsheng equipment gradually resumed output, and individual domestic factories stopped production, and the export supply was relatively concentrated.

Epoxy resin (14.6%): The domestic liquid epoxy resin has been operating stably, and the overall operating level is around 60%-70%; the overall load of the solid epoxy resin plants in Huangshan and Shandong has decreased, and the operating level is about 40%-50%. The downstream continuation just needs inquiries, and the operation is cautious.

N-Butanol (13.3%): The downstream manufacturers’ purchases were relatively stable, and the upstream propylene price rose slightly, but it had little impact on the octanol market; the supply side was as of January 14th, and the octanol operation rate was 87.3. %, the weekly output is 41693 tons, and the inventory is low.

Viscose (10.7%): Viscose staple fiber continued to be shipped steadily this week, mainly due to rigid demand. This week, the operating rate of the viscose staple fiber industry increased to 82.17%. Within the week, a factory in Anhui restarted its installation, involving a production capacity of 60,000 tons per year.

Market performance of the chemical sector this week

The basic chemical sector fell by 0.92% from last week, and the Shanghai and Shenzhen 300 Index fell by -0.68% from last week. The basic chemical sector underperformed the broader market by 0.24 percentage points, ranking sixth among all sectors. According to the classification of Shenwan, the basic chemical sub-sectors saw larger increases: petroleum processing 0.73%, petroleum trading 1.22%, soda ash -2.79%, chlor-alkali -1.99%, and inorganic salts -6.01%.

Key sub-sectors and company views

(1) The impact of the epidemic has gradually eased. We are optimistic about the recovery of textile and apparel demand. We continue to be optimistic about viscose staple fiber and recommend leading Sanyou Chemical.

(2) Under the current global ecological background of the impact of the epidemic, China's food system is under new pressures under the influence of international trade, environment and public health, and the supply chain system is disrupted. It is important to strengthen the anti-risk ability of the entire food system , Pesticide is a necessary means of production for agricultural production and one of the main means to ensure the supply of agricultural products. Currently in the off-season of the domestic and foreign pesticide industry, I am concerned about the development of the epidemic in India and the impact of the domestic pesticide export market. The key recommendation is to focus on the industry chain integration, technology and single product competitive advantages of the leading sub-sectors Yangnong Chemical and Lier Chemical; second, it is recommended to pay attention to the formulation companies Adama, as well as Limin shares and Guangxin shares.

(3) International car manufacturers increase the size of electric vehicles. The short-term impact of the epidemic will not change the medium and long-term trends of the industry, and continue to recommend Xinzhoubang, the leader in lithium battery materials with performance that exceeds expectations.

(4) The implementation of the National VI of diesel vehicles has resulted in high demand for zeolite, and the OLED business has entered a performance release period. Wanrun is recommended.

(5) Long-term optimistic about the leading Wanhua Chemical (the production of large ethylene is approaching, and MDI will return to the price increase cycle after the epidemic is over), Hualu Hengsheng (the bottom of the product price cycle, and new projects will be launched).

Risk warning: large fluctuations in oil prices; major safety incidents; uncertainty in environmental protection policies