Imported Chemical Industry is Frustrated, 40 Million Tons of Chemicals May be Bad

The RMB exchange rate, which had stabilized since the middle of the year, fell again. At the opening of the market on August 29, the onshore and offshore RMB exchange rates against the US dollar both fell. The spot exchange rate of the onshore renminbi against the U.S. dollar fell sharply after the opening, and fell by more than 500 basis points during the session, to a minimum of 6.92 yuan; the offshore renminbi exchange rate once fell by more than 300 basis points, and the minimum fell below 6.93 yuan, both hitting two-year lows. Since the beginning of this year, the central parity rate of the RMB against the US dollar has depreciated by 7.33%.

This means that the prices of our imported raw materials have risen by 7.33% in disguised form.

Imported chemical industry is frustrated, 40 million tons of chemicals may be bad

The devaluation of the renminbi means a decrease in the value of the currency, that is, a decrease in purchasing power, which will have some negative effects on imports. While the cost of some import-based enterprises increases, their profits will also be compressed. Judging from the data for a period of time after the depreciation of the RMB in the past, consumption and medicine are relatively dominant; petroleum and petrochemical, non-ferrous metals, real estate and other industries perform relatively poorly.

In addition, for industries with more foreign currency borrowings, the depreciation of the renminbi will increase their debt service costs. Industries such as electronics, transportation, mining, chemicals, and non-ferrous metals have more dollar borrowings, which also account for a higher proportion of total assets. In addition, industries such as electronics, chemicals, and non-ferrous metals account for a relatively high proportion of short-term loans, and the pressure on debt repayment is also greater.

As my country is a major importer in the world, it imports a large number of products every year, and industries such as energy and chemicals are no exception. According to data from the Ministry of Industry and Information Technology, among more than 130 key basic chemical materials, 32% of the varieties in my country are still blank, and 52% of the varieties still rely on imports. Such as high-end electronic chemicals, high-end functional materials, high-end polyolefins, etc.

Looking at the chemical market, my country's import volume in 2021 will exceed 40 million tons, of which the import dependence of potassium chloride is as high as 57.5%, the external dependence of MMA exceeds 60%, and the import volume of chemical raw materials such as PX and methanol will exceed 10 million tons in 2021. Ethylene glycol, pure benzene, propylene, ethylene. The import volume of raw materials such as styrene and xylene in 2021 will be around one million tons.

Taking EPS as an example, the raw material of EPS is styrene, and a considerable number of domestic enterprises purchase imported styrene for production. my country is currently a net importer of styrene, and nearly 409% needs to be imported. The devaluation of the RMB will lead to an increase in the cost of styrene imports and increase the pressure on production and sales of EPS companies. If the EPS increase cannot keep up with the increase in styrene, the profit margin of the company will be squeezed, and the cost pressure will increase. Subsequent active production cuts, short-term suspension of work, and production and holidays may follow.

At the same time, many solvents, additives, pigments, film-forming substances, etc. in the coating industry chain are also imported from overseas. As Hong Jie, chairman of 3trees Coatings, said, from the perspective of the coatings industry we are in, our market size is the largest, but many high-end technical coatings and upstream raw materials still rely on imports, such as high-end industrial equipment coatings, high-performance coatings Auxiliary, these neck-locking technologies cannot be broken through, and will inevitably pose a threat to the long-term development of my country's high-end equipment and various aspects. "