Crazy' price hike! Wanhua, Dow and other giants all issued price increases!

Recently, driven by the increase in crude oil prices, force majeure of styrene plants in Europe and the United States due to extreme cold weather, and centralized maintenance of the plants, many major manufacturers have issued price increases. Whether the rising trend of chemical products indicates that a new industry boom cycle is coming, this view has not been recognized by industry insiders.

Wanhua products rose as much as 15,000 CNY/ton

Driven by the increase in crude oil prices, the styrene plants in Europe and the United States due to extreme cold weather and other force majeure, and the centralized overhaul of the plants, the supply of most chemical raw materials such as styrene, MMA, BA, EHA, HDI, BDO, etc. has been significantly reduced. Prices continue to skyrocket, and supplies continue to be tight. This has brought unprecedented challenges to the cost and supply of our water-based products. While continuing to bear the pressure of rising raw material prices, our company had to adjust the prices of industrial water-based products as follows:

Acrylic emulsion, the price will increase by 1,000-1,500 CNY/ton;
The price of hydroxypropyl dispersion is increased by RMB 1500-2500/ton;
The price of water-based curing agent is increased by RMB 10,000-15,000/ton;
Water-based PU resin, the price will increase by 1,000-1,500 CNY/ton;
The price increase will take effect today!

Raw materials are in short supply, skyrocketing, and the whole line is red

The shortage of raw materials has spread to all walks of life. The suspension of production and sales of various major chemical plants and the shortage of raw materials have intensified, and the quotations have been constantly refreshed. It is expected that the gold three silver four in 2021 may double.
According to market monitoring, since February 1st, a total of 71 products on the bulk list have risen, of which 18 products have risen by more than 20%! The top three gains were: 1,4-butanediol (84.74%), n-Butanol (71.48%), and isooctyl alcohol (53.87%).

BASF, Dow and other major manufacturers have successively increased prices
There was a delay in delivery before, and there was a price increase to follow up.
The price increase in the chemical market completely exceeded market expectations!
BASF, Dow, DSM and other major manufacturers have taken the lead in continuously increasing prices!
BASF: All its chemical products have been adjusted up! The highest increase is 3086 CNY/ton!
The global chemical industry big brother BASF has opened the door to the full range of price increases for its chemical products due to various reasons such as production damage and logistics obstruction!

MDI

Starting from February 15, 2021 or the time allowed by the contract, BASF will increase the price of Lupranate polymerized MDI products and polymerized MDI mixtures by US$0.20/lb (equivalent to approximately RMB 3086/ton); BASF will also increase Lupranate The price of pure MDI products and pure MDI mixtures rose by US$0.10/lb (equivalent to about 1543 CNY/ton).

TDI, polyol

Effective from February 15, 2021, or where the contract permits, BASF will increase the price of all Lupranate® TDI products by 0.11 USD/lb (equivalent to approximately RMB 1697/ton), and the price of all Pluracol® polyol products The price increased by 0.14 US dollars / pound (equivalent to about 1697 CNY/ton).

Biodegradable compound ecovio®

On February 16, BASF announced an increase in the European price of its certified biodegradable compound ecovio®:
ecovio®F: +350 Euro/ton (equivalent to RMB 2,725/ton, the same below)
ecovio®M: +350 Euro/ton
ecovio®T:: + 350 Euro/ton

Dow: The impact of device shutdown may exceed expectations!

Some of Dow Chemical’s production facilities in the Gulf Coast region of the United States have been shut down, but the company did not specify. Dow’s business in the Gulf Coast region includes a combined plant in Freeport, Texas, which includes three crackers with a combined production capacity of 3.2 million tons/year, and two sets of combined production capacity of 552,000 tons/year Low-density polyethylene equipment and 186,000 tons/year high-density polyethylene equipment. Dow’s combined plant in Seadrift, Texas includes a 490,000 tons/year LLDPE device and a 390,000 tons/year high-density polyethylene device. Dow told South American customers in a letter on February 16 that the company is evaluating the impact of frost on polyethylene equipment. The company said: "We know that our ability to supply various products may be affected."　

It was announced on February 18 that the production of various intermediate chemicals in Deer Park, Freeport, Texas City and Bayport, Texas, Harnville, Louisiana, and Louisville, Kentucky, had encountered force majeure. Products include vinyl acetate monomer (VAM), methyl methacrylate (MMA), glacier methacrylic acid (GMAA), butyl methacrylate (BMA), glycidyl methacrylate (GMA), 2-ethyl acrylate Ethylhexyl ester (2EHA), butyl acrylate (BA), etc.
From February 15, 2021 or the time allowed by the contract, Dow Chemical Company will increase the prices of the following MDI products in all grades and packaging types in North America on behalf of itself and its applicable consolidated subsidiaries, by the following increase: (equivalent to RMB (About 2725 CNY/ton)

Starting from February 15, 2021 or the time allowed by the contract, the Dow Chemical Company, on behalf of itself and its applicable consolidated subsidiaries, will increase the following polyol products in all grades and packaging types in North America. The increase is as follows: (equivalent to approximately RMB 1543 /Ton).　
　
DSM: 15% increase

On February 15, Royal DSM announced that the global prices of its Dyneema® and Trosar™ÙHMWPE products would be increased by an average of 15%, effective from March 1, 2021.

Selani: increase by 1,000 CNY/ton

On February 1, Celanese announced an increase in the price of LCP liquid crystal polymers in Asia by US$1/kg, effective from March 1, 2021.

Multi-factor superposition

Many research institutions believe that the rise in crude oil prices has become the main reason for the rise in prices of chemical products, and the two show a positive correlation. Data show that Brent crude oil futures have risen by 19.7% this year; New York light crude oil futures have risen by 20% this year. acetic acid, Ethylene Glycol, glyphosate, chemical fiber, urea, etc. all rose to varying degrees.

"Overall, it is caused by multiple factors." Zhu Fang, director of the Market and Information Department of the China Petroleum and Chemical Industry Federation, pointed out that the reasons for this round of chemical price increases include oil prices. There are three factors:

The first factor is that rising oil prices drive up downstream products. Recently, oil prices have risen from more than US$40 to more than US$60, and downstream product prices will also rise accordingly.

The second factor is market supply and demand. The supply-demand relationship of many price-increasing products is in a relatively balanced state. Because the production capacity is not very sufficient, the balance of supply and demand is relatively fragile, and it is more susceptible to price fluctuations affected by downstream demand. And downstream demand is indeed improving. Zhu Fang mentioned that, driven by the massive export of downstream terminal products, the prices of many raw materials and additives have risen.
　
The third factor is that the operating profit margin of bulk products has been declining in recent years, and many investors have withdrawn. When downstream demand rises, raw material prices have also been pulled up.

An expert from Sinochem Group said that although this round of chemical price increases is related to oil prices, it is more related to the epidemic. The overseas epidemic has repeatedly caused some overseas chemical plants to stop production, and this part of the production capacity has been transferred to China. The increase in demand for overseas orders for domestic chemical products has driven the demand for chemical raw materials, and the prices of many chemical products have risen significantly.
　
The new business cycle is too early

Whether the rising trend of chemical products indicates that a new industry boom cycle is coming, this view has not been recognized by industry insiders.　

An expert from Sinopec said that the price increase of chemical products from before the holiday was caused by a combination of factors, such as rising oil prices, loose domestic policies, demand recovery, positive development of internal circulation, and seasonal factors have all played a role in promoting the increase. .

Experts believe that the last round of the petrochemical industry's boom cycle was 2016-2019. According to the normal cycle, it is generally 3 to 4 years to return to the boom cycle. Therefore, it is too early to say that the petrochemical industry has entered a new boom cycle. The short-term behavior of chemical product price hikes can continue to be determined by the recovery of domestic and foreign demand.　

Zhu Fang believes that despite the improvement in prices, domestic bulk products are still in a state of surplus. "There have been two consecutive PPIs of industrial products lower than CPI of consumer products. The first cycle had 54 months of negative growth, and the second cycle (until December last year) was 26 months of positive growth. However, the PPI was still lower than CPI. It could not be reversed, which means that there are still difficulties in transferring raw materials to the terminal."　

Zhu Fang judged that chemical prices should go well in the short term, but they are definitely in excess in the long term. From the perspective of the business cycle, Zhu Fang said that under the high-quality development measures of reducing production capacity and adjusting the structure for many years, the industry no longer has the obvious business cycle as in the past, but there will be price rotations. This wave of price increases cannot be regarded as a long-term behavior, but the chemical industry is indeed gradually improving. Although all industries are difficult in 2020, the operating profit margin of the chemical industry is higher than that in 2019.

In addition, the CPI has shown a downward trend, and industrial products are showing signs of improvement. For the future, Zhu Fang believes that the problem of excess is to be solved. The "dual cycle" proposed by the central government is very meaningful. There will be growth points in stimulating domestic demand for chemicals in the future. This method will solve the problem of surplus.

CL gas hydrochloric acid analysis device (226,000 tons/year) and supporting public works and auxiliary facilities. After the company's Yantai MDI plant's 500,000-ton/year technological transformation project is put into operation, the global production capacity will reach 2.6 million tons, with a market share of 28%, further consolidating its leading position in the polyurethane industry.