More than 7,000 chemical factories shut down

More than a month has passed since the explosion in Xiangshui, Jiangsu Province. It seems that its impact on all aspects is slowly calming down. In fact, the 3.12 accident is like a fuse, triggering a major safety rectification, a large-scale shutdown of the industry, as well as a large number of unconventional chemical enterprises closed down. Transient and periodic market shortages and the formation of oligopoly market are constantly stimulating the rise. Products related to flexible packaging, such as ink and adhesives, have been affected by price increases, and then inevitably passed to flexible packaging enterprises.

Flint Group said in its latest news bulletin that the extraordinary explosion of Tianjiayi Chemical Company in Jiangsu Province in March had begun to have an impact on the global ink raw material supply chain, including raw materials for publishing and UV printing ink.

According to Arno de Groot, Vice President of Purchasing, Packaging Department of Flint Group, "Thousands of factories have been closed. Government investigations and safety inspections will affect China's chemical industry as a whole, not just the provinces where catastrophic accidents occur. The impact of the

explosion has already involved the supply chain of UV and printing ink for publishing, as the closure tide will affect companies that provide materials for photoinitiators and red and yellow pigments. Podd said the shortage of raw materials would not affect the ink supply of Flint Group customers.

Since April, Wanhua Chemical MDI has raised its price for the third time in a year. Polyurethane materials may be affected

According to Wanhua Chemical's announcement, starting from April, the listed price of China's Polymerized MDI Distribution Market is 17800/ton (2600/ton higher than that of March), the listed price of direct selling market is 18300/ton (2800/ton higher than that of March); the listed price of pure MDI is 26200/ton (1500/ton higher than that of March). 。 It is the third time in a row that Wanhua Chemicals has announced an increase in MDI prices in China since this year. MDI is one of the most important raw materials for the production of polyurethane. Its application fields include light industry, chemical industry, electronics, textiles, medical treatment, construction materials, automobiles, national defense, aerospace, aviation and so on. However, the threshold of MDI technology is very high. It has long been controlled by chemical giants such as Dow and Basf. Wanhua Chemistry has gradually broken its monopoly and grown into the largest MDI manufacturing enterprise in Asia-Pacific region and China. The only independent production plant. Therefore, MDI is an oligopoly at present, and Wanhua Chemistry has a strong voice in pricing.

Industry forecasters predict that the price adjustment of Wanhua Chemicals indicates the beginning of domestic MDI price increase in the second quarter. According to market supply and demand and equipment overhaul plan of MDI manufacturers, the price trend of MDI is still optimistic in the future. Polyurethane materials may increase in varying degrees. It is suggested that polyurethane-related chemical products enterprises pay more attention to it.

Dow announced that the prices of MDI and MDI products in all Europe, the Middle East, Africa and India had risen by 150 Euro/ton or equivalent currencies since April 1, 2019 or as permitted by the contract.

The company said in a statement issued on March 29 that the decision was due to the shrinkage of profits in its MDI and MDI product chains. The company further explained that in the past few months, raw materials used in the production of MDI and MDI systems have risen sharply, while the pricing of major segments offered by Dow has been under pressure, including energy efficiency and construction, industrial and consumer markets.

A new round of price hike of chemical raw materials is coming all round. After the Xiangshui explosion accident in Jiangsu Province, Jiangsu Province subsequently issued the "Jiangsu Province Chemical Industry Regulation and Promotion Plan" (Draft for Opinions). The explosion point in the document was that by the end of 2020, the number of chemical enterprises in the province had been reduced to 2000, and by the end of 2022, the data of chemical enterprises had been controlled to less than 1000, and a comprehensive evaluation of 50 chemical parks in the province was required. As a result, the pressure is reduced to about 20, which is a bolt from the blue for the chemical industry.

According to incomplete statistics, the number of chemical enterprises in Jiangsu Province totals more than 7400. If only 1000 chemical enterprises are retained according to the document of "Jiangsu Chemical Industry Regulation and Promotion Plan (Draft)", it means that 6400 chemical enterprises will face closure. Before that, 7000 chemical enterprises have been closed in Jiangsu Province, and this closure is also the previous one. Nothing.

In addition, it triggered thousands of enterprises in seven regions, including Henan Province, Jinhua City, Yancheng City, Suzhou City, Suqian City, Weifang City and Dongguan City, to implement the policy of stop production.

With the vigorous rectification of the chemical industry, many small and medium-sized chemical enterprises are facing the crisis of withdrawing from the market, and large-scale enterprises are also starting to stop production and maintenance. This phenomenon will further accelerate the rising speed and extent of the price of chemical raw materials, and the price of domestic chemical raw materials will remain high for a long time to come.

As for the trend of the market, some people in the industry think that the impact of the explosion of a chemical enterprise is ultimately limited. There is no need to worry about the problem of "no rice to go to the pot". Moreover, for a long time, China's chemical industry is overcapacity. The tide of closure of irregular enterprises and chemical parks caused by accidents should have come earlier and higher. Safety and environmental protection threshold, is conducive to fat chemical industry for a long time to lose weight. In addition, from the macro point of view, there is no demand for oil and downstream petroleum products, which can also be confirmed by the recent data analysis of domestic and foreign economic trends.