Global Chemical Supply Chain Crisis! The Energy Dilemma Is Coming Back! Natural Gas Skyrocketed By 800%!

The European energy crisis, which has been silent for a long time, has come back again. Natural gas in Europe has risen by more than 20%, a record high, an increase of 800% compared to the beginning of this year. The combination of natural gas shortage and extreme cold weather has caused electricity prices in Europe to rise, at least six to ten times higher than the same period last year.

At the same time, European natural gas storage tanks have only 60% of their storage capacity, which is the lowest level at the same time in history. The surge in natural gas prices has also contributed to international oil prices. International oil prices rose by 3% during the intraday trading session, and the U.S. oil market forced US$76 to break through US$78. The main Brent crude oil futures contract jumped to above 78 US dollars/barrel, and WTI crude oil was quoted at 75.97 US dollars/barrel.

Global chemical supply chain is in crisis

Affected by the surging prices of gas, oil and electricity, large-scale power outages occurred in many European countries, 25 energy retail suppliers closed down, and the cost of chemical companies using natural gas as a raw material rose sharply. The energy crisis has also increased pressure on overseas chemical companies.

Not only the volatility of the European energy market has intensified, the raging overseas epidemic has also caused the global supply chain to fall into a crisis of "out of supply" again. One month later, the Omi Keron strain has spread to more than 100 countries and regions around the world. In Florida, USA, the Omi Keron strain is spreading rapidly, leading to a sharp increase in the number of cases. In Europe, France and Italy are also suffering from the same situation. The number of infections with this strain doubles every 1.5 to 3 days. The Netherlands, Germany, France, Italy, Austria and other countries have introduced strict blockade policies. In addition, Israel plans to include the United States, Italy, Germany, Belgium, Hungary, Canada, Morocco, Portugal, Switzerland and Turkey on the list of "outbreak red countries".

The severity of the overseas epidemic will have a certain impact on the start-up of local companies and the transportation of goods. The tightening of control will bring many obstacles to the export of chemical products. It is understood that there are many well-known chemical companies in Europe and overseas countries, such as the United States. Dow, DuPont, France’s Arkema, Total, Japan’s Mitsubishi Chemical, Mitsui Chemicals, South Korea’s LG Chemical, Lotte Chemical, etc. The escalation of severe control of the epidemic may mean that these companies are restricted in their production and operation.

In addition to production constraints, there is also a lot of resistance in shipping. The global container congestion crisis has spread from southern California to the coasts of the Mediterranean and South Africa. It is expected that freight rates will continue to rise until the Spring Festival next year. Not alleviated. The global shipping crisis has caused delays in the delivery of goods and contributed to the effect of inflation, which may continue until 2023.

It is difficult for domestic chemical companies to stand alone

Overseas energy crises and epidemic containment have also had a great impact on the country, and domestic chemical companies are also unable to stand alone and stay out of the matter. According to industry insiders, in terms of natural gas, my country is the world's largest demand country, and imports continue to increase each year, mainly from Australia and Russia. Imported natural gas accounted for 45% of consumption in the first half of this year, which is significantly more than previous years. The emergency of overseas natural gas will also bring greater difficulties to the import of domestic natural gas, and the price will naturally rise. Recently, natural gas concept stocks have collectively pulled up. Guoxin Energy, Xinjiang Torch, and Chase Gas have their daily limit, Changchun Gas, New Natural Gas, Guizhou Gas, etc. have risen more than 5%, and the sector index has risen by more than 3%, ranking first in the industry.

The natural gas crisis has triggered increased demand for oil substitution, boosted oil prices, and has an impact on the domestic petrochemical industry chain. In addition, although the power shortage caused by the domestic coal emergency has been eased in the near future, it still cannot be completely resolved in the short term. Since the third quarter, more than 30 regions have seen electricity prices rise, and the impact of power restrictions caused by dual control of energy consumption Also continues to ferment.

Rising crude oil, rising natural gas, and rising electricity prices have put even greater pressure on chemical companies that are already under the pressure of rising raw material prices. What’s more serious is that the high-end raw materials of overseas chemical giants cannot reach the country. Among the more than 130 key basic chemical materials, 32% of my country’s varieties are still blank, and 52% of them are still dependent on imports. The lack of important raw materials means that Chemical companies are unable to carry out normal production in the absence of raw materials. On the one hand, there is a shortage of raw materials, and on the other hand, there is a shortage of energy. Domestic chemical companies that rely heavily on imported raw materials are definitely clever women who can’t cook without rice.