It has been announced in many places that starting this year, chemical companies may shut down in batches

With the rapid development of China's chemical industry, many investors are rushing to enter this industry, wanting to get a share of the pie. As a result, the competitiveness of the chemical industry has become increasingly fierce.

However, under the influence of last year's epidemic, many chemical companies have actually started to go downhill, and many of them have gone bankrupt, cancelled and delisted.

No, this year's chemical industry is not doing well. From the second half of last year, news about the price increase of various commodities began to blow, and it was still not stopped until this year.

Some raw material companies formally announced the resumption of work and production, but it was unexpected that the market would start the "price increase mode" again.

Under the "price hike", downstream chemical companies are complaining, and many companies are beginning to "cannot survive". According to relevant department data, from 2021 to mid-June, more than 100 coating and chemical companies have been cancelled within one year of establishment. So, how powerful is the "price increase" that caused many companies to stop operating?

After entering 2021, the price of chemical products has not only not fallen, but has risen more drastically. Among them, the prices of acetic acid, polysilicon, pure benzene, urea, PVC, etc. have risen one after another, and even hit new highs.

For example, the price of acetic acid in July 2020 was 2333.33 CNY/ton, and in June 2021, the price rose to 7725 CNY/ton, an increase of 231.07%, a 10-year high.

In addition, the price of polysilicon in July last year was 43833.33 CNY/ton, and the price in June this year was 126333.33 CNY/ton, an increase of about 188.21%. There are still many chemical raw materials that have doubled their growth rate. It is no wonder that chemical companies feel a lot of pressure.

According to incomplete statistics, since the second half of last year, the prices of nearly 100 kinds of raw materials have shown an upward trend, and the prices of more than 10 kinds of raw materials have risen by more than 100%. Concerning the reasons for the price increase of raw materials, the person in charge of the relevant department also conducted an analysis before, and it was roughly caused by three points.

The first point is that production resumed after the epidemic, creating a situation of tight supply and demand.

The second point is that due to the outstanding properties of metals such as non-ferrous metals and some chemical products, the activeness of global futures trading has been boosted in the context of loose monetary policy and better global economic expectations. The third point is the collective rise of bulk commodities.

Under the background of the above factors, according to the current situation, the "price increase tide" is still continuing. Many leading chemical companies have issued price increase letters more than once, which has driven the continuous rise of chemical raw materials.

For this reason, under this round of bankruptcy, as long as there are no technical barriers and no monopoly, companies will be the first to be eliminated.

In fact, in addition to rising prices, chemical companies continue to face the edge of bankruptcy, because the chemical industry is always associated with "high pollution, high energy consumption, and high risk", it has always been one of the industries in my country to remediate.

Now there is news that many provinces have proposed special rectification and closure of chemical parks and chemical enterprises, and notices of closure and exit, respectively, at 2021, 2022, and 2025.

For example, Jiangsu Province currently plans to close another 200 chemical companies this year. In addition, Shandong Province stated that it will resolutely eliminate backward kinetic energy, strictly implement standards, etc., and withdraw from 154 chemical companies before 2022...
Relevant department personnel said that up to now, a total of 8,731 chemical companies along the Yangtze River have been relocated.

It can be seen that for the chemical industry, some chemical companies whose threshold is not high enough and the conditions do not meet the requirements will face the risk of shutting down and exiting, and shutting down in batches.

In other words, there are actually two reasons for the continuous closure of chemical companies. The first is the sharp increase in the cost of raw materials in the past two years. For this reason, chemical companies are under severe pressure.

The second reason is that my country wants to improve the order of the chemical industry as a whole. For this reason, chemical companies are strictly regulated and managed, and a large number of chemical companies that do not comply with the regulations will be closed.

Therefore, if price hikes continue for a long time, coupled with increased control, more chemical companies may fall in the future.