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Home > Chemial News > Valuable News > The skyrocketing price triggered a wave of chemical companies' bankruptcy! A large number of chemical companies across the country shut down!

The skyrocketing price triggered a wave of chemical companies' bankruptcy! A large number of chemical companies across the country shut down!

Echemi 2021-06-22

According to Wind data, in the first-level industry of Shenwan Chemical Industry, 47 listed companies have disclosed their first quarterly performance forecasts. Except for Hongda New Materials' continued loss, the remaining 46 listed companies have reported positive results (pre-increasing, turning losses, (Slightly increase), the pre-happy ratio is as high as 97.87%. Among them, Luxi Chemical is expected to increase its net profit by more than 50 times in the first quarter, Tiantie Co., Ltd. is expected to increase its net profit by more than 60 times in the first quarter.
However, the over-increasing price has caused the downstream to complain. Many companies said that the price was unbearable, some said they would not accept orders temporarily and stop production waiting, and some simply withdrew.
According to the People's Court Announcement Network, since 2020, more than 300 companies have gone bankrupt.

Raw materials are skyrocketing! The cost is rising! Chemical companies are hard to eat!
After entering 2021, the chemical industry is booming, and commodity prices such as plastics, PTA, ethylene glycol, and n-butanol have all risen. "Bulky commodities skyrocketing" has become a key word in 2021, and the degree of skyrocketing has attracted the attention of all sectors of society and relevant state departments.
According to statistics, since the beginning of this year, among the 98 monitored chemicals, 80 chemical raw materials have risen, accounting for 81.63%. Among them, polysilicon has skyrocketed all the way due to the "lack of core" problem, with an increase of over 100%. Crude benzene (+89.78%), ammonium sulfate (+87.50%), hydrogenated benzene (+83.99%), pure benzene (+83.48%), acetic acid (81.77%), etc. increased by more than 80%.

The reason for the price increase of raw materials is roughly caused by three points.
Production resumed after the epidemic, creating a situation of tight supply and demand.
Due to the outstanding properties of metals such as non-ferrous metals and some chemical products, the activity of global futures trading has been boosted in the context of loose monetary policy and positive global economic expectations.
Commodities rose collectively.
It can be seen that although the prices of chemical products have fallen in the second quarter, overall, there is still a large increase in chemical products this year.
With domestic efforts to cool down, international giants are still adding fire to price increases. Giants such as BASF, Dow, and DuPont frequently issued force majeure notices, delayed delivery notices, and product price hike notices to stimulate the continued rise of chemical products.
Hundreds of price increase letters flooded the chemical market, with one price a day, one single negotiation, and volume inquiries. Various cost pressures caused downstream companies to complain again and again. The various operations such as price increases, market closures, queuing, suspension of sales, auctions, and purchase restrictions have made chemical companies call "too difficult!"
Under this tide of price increases, companies that have no technical barriers and no monopoly will be the first to be eliminated.
8,731, chemical rectification becomes the focus!
On the other hand, because the chemical industry is closely related to "high pollution and high energy consumption", it has always been one of the key industries for my country's remediation.
The phenomenon of "there is the chemical industry before the city" is the norm in my country's urban construction. Many chemical companies included in the relocation and reconstruction plan were indeed far away from the urban area when they were originally constructed. However, with the passage of time and urban development, the factory area was gradually surrounded by residential areas, causing the sanitary protection distance or safety distance to fail to meet the standard requirements, and they were forced to stop. Renovate or move out of the city.
This has caused many hidden dangers. The conflicts between the layout of the petrochemical and chemical industries and industrialization and urbanization have become increasingly prominent, and the safety risks caused by insufficient safety protection distances between urban areas, residential areas and some hazardous chemical companies are also increasing.
Therefore, many provinces have proposed special rectification and closure and exit notices for chemical parks and chemical enterprises, respectively at 2021, 2022, 2025 and other time points.
▶▶Jiangsu Province: plans to close and exit 200 chemical companies
Jiangsu proposed this year that it plans to shut down and exit 200 chemical companies. Data show that since 2016, the province has closed 4,454 chemical companies, and the total number has dropped from nearly 7,000 to 2,341, with a reduction rate of about 65%; chemical parks have been reduced from 54 to 29, with a reduction rate of 46%. .

Shandong Province: 154 chemical companies will withdraw from 2021 to 2022
According to the "Three Resolute" Action Plan of Shandong Province, 154 chemical companies will be withdrawn by the end of 2022. At the same time, the province's chemical industrial parkization rate reached 40%.

The person in charge of the Development and Reform Commission said that up to now, the total number of chemical companies along the Yangtze River has been relocated to 8,731. As of the end of May this year, of the 1,168 companies that need to be relocated and renovated nationwide, 1,129 have completed their work, with a completion rate of 96.66%. By 2025, existing hazardous chemical production enterprises in densely populated urban areas that do not meet the requirements of safety and health protection distances will be transformed on-site to meet the standards, relocated into standardized chemical parks, or closed and exited.
Shuffle upgrade! Many chemical companies may "disappear" in the future!
The entry barrier for chemical companies will continue to increase. In the future, we will see that chemical companies that do not meet the requirements will gradually withdraw from the stage of history.
On the other hand, in the current market environment, product market competition is under great pressure, and it is very difficult for companies to increase prices. The profit margin of companies will be compressed. Needless to say, profit will be "snickered" if there is no loss. Or more and more chemical companies will face the crisis of bankruptcy.

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