Chemical Market Is Expected To Return To Pre-holiday Market

Recently, foreign chemical giants have frequently issued price increase letters.

Rising voices abroad

On January 3, ExxonMobil sent a letter saying that it will adjust the price of the company's high-performance polymers (POE) in the Asia-Pacific region from now on, with a maximum increase of $100/ton (about 637 CNY/ton).

On January 4, BASF announced that effective January 15, 2022, or as existing contracts allow, BASF will increase the price of select polyetheramines sold under the Baxxodur® brand in North America. The EC130 product with the largest increase rose by about 13,000 CNY/ton.

On January 7, LyondellBasell said in a letter to customers that due to rising costs such as labor, the company had to increase the rate for all polymer (PP/PE, etc.) bulk truck cargo transportation and containerized cargo transportation in North America. price. Among them, the transportation price of polymer bulk truck cargo was increased by 1 cent/pound (about 141 CNY/ton), and the transportation price of bulk cargo was increased by 2 cents/pound (about 282 CNY/ton).

Due to the continued tight supply of raw materials, on January 11, Tosoh issued two notices of price increase in succession. One is that the price of thermoplastic polyurethane elastomer (TPU) will be raised from January 24, 2022, among which polyether products will increase in price. It is more than 150 yen/kg (about 8290 CNY/ton); the increase of polyester products is more than 60 yen/kg (about 3316 CNY/ton).

The other is to increase the price of polycarbonate diol resin (PCD) from January 24, 2022, with an increase of more than 200 yen/kg (about 11,053 CNY/ton).

In this regard, Tosoh explained: The recovery of demand is underway due to the improvement of the economic situation, and the prices of major raw materials have been rising due to the tight supply. Currently, we have been trying to reduce all costs to improve the situation, but due to the recent increase in raw fuel, utility costs and logistics costs, business profits have dropped significantly. Faced with the difficult situation of rising costs, we decided to revise our prices to maintain a stable supply of products.

Domestic ups and downs may be cautious

On the one hand, foreign countries are constantly rising. On the other hand, on December 31, 2021, Indonesia, the world's largest coal exporter, suddenly announced that from January 1 to January 31, 2022, coal exports will be banned, including those that are being shipped and those that have not yet been shipped. All coal will be given priority to domestic power plants.

But what is gratifying is that on January 10, the Coordinating Minister of Oceans and Investment of Indonesia issued a statement saying that after the coal supply of the Indonesian National Electric Power Company (PLN) was guaranteed, the government has allowed coal ships to leave the country. On January 13, Indonesia has allowed 37 coal ships to set sail.

As my country is a large coal-producing country, Indonesia’s imports account for about 5% of the total supply, and with the help of the country’s policy of ensuring supply and stabilizing prices, domestic coal supply and reserves are in good condition. Therefore, it is expected that the market will be less sensitive to coal positives. The performance of commodities mostly returned to the pre-holiday market.

As the Spring Festival is approaching, there are sporadic outbreaks of epidemics in many places. Omicron variants have been found in local confirmed cases. Prevention and control measures have been upgraded in many places. The downstream consumption performance may be sluggish before and after the Spring Festival. Enterprise warehouses and downstream stocking operations will still lead the way in the near future. Market, pay attention to the inventory of related products, it is expected that the short-term rise and fall of commodities may be more cautious.

A quick look at the chemical market this week

Among the 64 important chemical products monitored, 33 rose varieties, accounting for about 51.56%; 23 fell varieties, accounting for about 35.93%; and 7 products remained unchanged, accounting for about 10.93%. The top three products that rose were butadiene (↑43.90%), aniline (↑12.20%), and dimethyl ether (↑8.14%). Among them, the products with the top three declines were BDO (↓11.02%), phenol (↓6.58%), and acrylonitrile (↓5.00%).

The king of the increase list - butadiene

This week, the domestic butadiene market price rose broadly, the demand in the United States increased, and South Korea exported a large number of goods to the United States, which boosted the price of the South Korean market to a substantial increase. The outer market rose sharply. The US arbitrage window is still open, and merchants are actively seeking shipments. During the week, the butadiene units were in normal operation, the second phase of Zhenhai Refinery was put into operation, and the market supply increased. The supply of goods on the market is abundant, but the circulation of some goods sources has accelerated, and the overall inventory of butadiene has decreased slightly compared with the previous month. Boosted by the rise in the outer market this week, and some suppliers controlled the volume and pulled prices, the domestic market bottomed out and the market rose rapidly. Businesses are reluctant to sell, and the market speculation is obvious. At present, it is difficult to find low-cost sources of goods on the market. The rapid rise of the butadiene market has driven some downstream chasing sentiments, and the transaction atmosphere has improved.

Approaching the weekend, the supply of goods in the Northeast market continued to increase prices and transactions. Sinopec's supply prices continued to rise, and merchants' offers followed up, and the enthusiasm for shipments increased. During the week, synthetic rubber fluctuated and declined, some units restarted operation, and the operating rate increased slightly, but the demand was limited. On the whole, the high prices of external disks and suppliers support the mentality of the industry, but the spot market has risen sharply, and there is no lack of profit-making disk outflows, and the market may fall back.

It is expected that the domestic butadiene market will maintain a volatile trend next week. As of January 14, the delivery price in Shandong was 6,250 CNY/ton, an increase of +40.45%. The price in Jiangsu and Zhejiang regions refers to 5900 CNY/ton, an increase of +43.90%.

The leader of the list of decliners - BDO

This week, the domestic BDO market continued its weak decline. As of Friday, the mainstream negotiated price of bulk water sources in East China was 26,000-26,500 CNY/ton for acceptance. The BDO market was well supplied this week and demand was lower than expected. The overall operation of the BDO plant is at a high level. Chongqing Jianfeng is still undergoing maintenance. Inner Mongolia Dongyuan Technology also started maintenance on Monday. The operation of other factories has not changed much. Abundant; the supply of goods in the northwest is not ideal, and there is still no transaction in the auction during the week after a large price reduction. The mentality in the market is not good, and the bearish sentiment continues. Some supporting PTMEG factories have accelerated the pace of shipment due to the reduction in self-consumption, and the downstream PTMEG and PBT have started work There is a decline, the demand is lower than before, the downstream willingness to enter the market is not good, and the center of gravity of real orders has moved down wide.

As of Friday, the mainstream negotiated price of bulk water sources in East China was 26,000-26,500 CNY/ton for acceptance. In terms of supply, in addition to Chongqing Jianfeng's 60,000-ton unit under maintenance; Inner Mongolia Dongyuan Technology's 100,000-ton unit started maintenance on February 10, and it is planned for 7 days. The rest of the devices did not change much. The downstream PBT industry starts at about 60%; PTMEG starts at about 7-80%, and the price continues to decline; TPU starts at about 54%.

Looking at next week, Chongqing Jianfeng’s 60,000-ton/year plant will be restarted; Inner Mongolia Dongyuan Technology’s 100,000-ton/year plant is scheduled to restart; (Meizhou Bay plant is still parked due to relocation; Yizheng Dalian plant has no restart plan; 70% of the overall load of the industrial installation). The supply has increased further than before, and the downstream demand is less than expected. Under the game of more supply and less demand, it is expected that the BDO market will continue to run weakly.