The Discontinuation Rate is 90​%! Big Factories Make Efforts to Increase Raw Material Prices!

Power cuts, production cuts, force majeure and other incidents occurred frequently, and multiple factors converged, accumulating energy to surge the market in September!

Power restrictions, bans, force majeure! Big factories cut production more than expected!

It is reported that the shutdown rate of some raw materials this month has reached 90%! Close to complete discontinuation!

It is believed that the orderly electricity consumption notice has been sent to each manufacturer. Although this year's power cut is not as serious as last year's, and no "strong measures" were taken to directly switch off the power in previous years, this year's electricity consumption peak is still to maintain residents' lives Electricity is the main industry, and industries with large electricity consumption such as factories and construction sites must "make way" for residential electricity consumption.

Entering August, many provinces across the country have officially put into effect new restrictions on travel and travel bans. Shandong, Zhejiang, Guangdong, Gansu, Shanxi and other provinces have formulated new restrictions on the passage of hazardous chemicals vehicles, and the above areas are all large chemical production plants in China, which have limited transportation or caused difficulties in raw material transportation. Extend the lead time of raw materials.

In addition, overseas markets are also in turmoil. The war between Russia and Ukraine has not stopped, the Iran-US peace talks have continued, the crude oil industry chain has experienced great ups and downs, and crude oil has fluctuated around $90. Moreover, Russia's natural gas supply cut off, causing a large number of factories in Europe to "forced" to suspend production; superimposed on the force majeure of major chemical factories such as Covestro and BASF, the overall supply of overseas raw materials has been greatly reduced.

To sum up, the production reduction in the global chemical market has already started. It is expected that the market inventory will decline again before September, which will help the surge in raw materials in September.

September price increase warning! Involving multiple chemical industry chains!

The above factors have all become the driving force behind the increase in raw materials during the peak season in September. Taking power curtailment as an example, Anhui, Sichuan, Jiangsu, etc., major chemical provinces, have all started orderly electricity consumption, resulting in a tight supply of local main chemical raw materials, thus pushing up prices.

Anhui:
Hefei, Anhui Province advocates industrial enterprises to avoid peaks and yield electricity through planned maintenance and other methods, and to use high-energy-consuming equipment in an orderly manner.
▶Epoxy resin: The production is mainly concentrated in Huangshan, Anhui. This time, the Huangshan Huizhou Park has limited electricity and gas, and the factory has been temporarily shut down for 3 days, and the Shexian Park boiler will be overhauled until the end of the month. The main focus is on reducing negative production, and the supply of epoxy resin has been greatly reduced. At present, companies such as Baling Petrochemical and Huangshan Fifth Ring have suspended quotations, and the operating rate is less than 50%.

Sichuan:
Sichuan requires that from August 15th to 20th, all industrial power users (including whitelisted key guarantee enterprises) in the orderly power consumption plan of Sichuan Power Grid will be completely shut down (except for security loads). Sichuan has a large output share of raw materials such as titanium dioxide, industrial silicon, polysilicon, yellow phosphorus, lithium salt, and urea.

▶Titanium dioxide: The production of titanium dioxide in Sichuan accounts for 22%. At present, the terminal supply of some manufacturers is tightening, and one single discussion is the main one.
▶Industrial silicon: The monthly production capacity of industrial silicon in Sichuan Province reaches 92,250 tons, accounting for 15.1% of the national total. Subway alloys and industrial silicon smelting enterprises in the main production areas of Aba Prefecture, Leshan City, Ya'an City, etc. have suspended production in large areas or maintained production at different peaks. The production rate of silicon plants in Leshan and Aba Prefecture has reached 90% -100%. At present, the operating rate of some silicon factories in Leshan, Aba and Ya'an in Sichuan has dropped to about 20%.
▶Polysilicon: Sichuan has a total annual production capacity of over 210,000 tons of polysilicon. At present, Tongwei and GCL have indicated that they have received notices of power curtailment. Assuming that companies resume production next week, the shutdown will bring about a loss of 2,350 tons of production.
▶Yellow phosphorus: The production capacity of yellow phosphorus in Sichuan accounts for about 23% of the national total. Both Mianyang and Mabian in Sichuan have been shut down, and the daily production has decreased by about 100 tons.
▶Lithium salt: Sichuan has a lithium salt production capacity of 274,200 tons, accounting for 29% of the total domestic production capacity. This round of power supply regulation is expected to affect the production of lithium salts between 2,800 and 3,200 tons in August. Considering the actual production process, the overall impact on production days is estimated to be 7-8 days. If calculated according to the estimated value of 3,000 tons, it is equivalent to a drop of about 30% in Sichuan's August output.
▶Urea: basically all urea plants in Sichuan have been shut down, including downstream compound fertilizer plants. It is estimated that the total theoretical supply loss of urea is 71,700 tons, with an average daily loss of 14,300 tons.