- China's Chemical Market Price Trends in the First Half of 2022
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Petrochemical and new energy upstream product prices rise, downstream part of the fine chemicals price trend is not optimistic
Crude oil, coal and natural gas market prices rose by more than 30% in the international energy market in the first half of 2022, of which, Brent and WTI crude oil spot prices rose by 40.95% and 37.64%, respectively, European power coal (S:1.0 A:16 Q:6000) rose by 47.84%, and NYMEX natural gas rose by 33.68%.MORE
Most of the products' prices rose while a few fell
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Among more than 200 chemical varieties, the number of varieties with rising prices reached 49% in the first half of 2022, while those with flat and falling prices accounted for 28% and 23% respectively. Among the chemicals with rising prices, lithium carbonate, diesel, sulfur, phosphate rock, gasoline, fuel oil, crude oil, xylene, European power coal and NYMEX natural gas led the way, with increases of more than 30%.
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![Overview of the rise and fall of Chinese chemicals in the first half of 2022]()
What Drives The Volatility Of Chemical Prices
In the context of the accelerated transformation of the international energy structure, fossil energy supply may appear to be limited in the medium and long-term growth.
Petrochemical & New Energy Products Price Upward
In the first half of 2022, the prices of petrochemical products such as PX, toluene and MTBE in China moved upward rapidly.
In the first half of 2022, the products whose prices increased mainly include lithium carbonate, diesel, gasoline, sulfur, phosphate rock, toluene, paraxylene, fuel oil, diammonium phosphate, potassium chloride, TDI, etc., of which the price of lithium carbonate products increased the most. Price increases over the upstream raw materials are mainly concentrated in petrochemical products (gasoline, diesel, sulfur, paraxylene, toluene, fuel oil), new energy lithium batteries (lithium carbonate, lithium iron phosphate), etc.
- New energy upstream lithium resources prices soared
- Phosphate rock prices continue to rise
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New energy vehicle production and sales are booming, upstream lithium resources prices soared
New energy vehicle industry chain continues to grow at a high rate, according to the latest data released by the China Association of Automobile Manufacturers, in addition to April, the first five months of 2022, new energy vehicle sales growth of more than 100% year-on-year. In terms of batteries, the data released by the China Power Vehicle Battery Industry Association in June showed that the year-on-year increase in power battery production from January to May 2022 was over 120%.MORE -
Phosphate ore supply decreases and demand increases, prices continue to rise
Since 2021, phosphate rock prices have continued to rise, with relatively stable prices in the first quarter of 2022 and rapid price increases after the second quarter. The downstream of phosphate rock mainly includes phosphate fertilizer, feed grade phosphate, yellow phosphorus, wet process phosphoric acid, etc., of which phosphate fertilizer is its core downstream, accounting for more than 60%.MORE
China's Chemical Industry PPI Has Declined Slightly
According to the latest data released by the National Bureau of Statistics, the chemical industry PPI in the first half of 2022 is still at a mid-high historical level, but has shown a high level of decline compared to the fourth quarter of 2021. Comparing upstream and downstream, the year-on-year PPI of the upstream oil and gas extraction industry and the midstream petroleum, coal and other fuel processing industry is much higher than that of the downstream chemical raw materials and chemical products manufacturing industry and end industrial products, and the PPI of the downstream chemical raw materials and chemical products manufacturing industry has declined continuously month by month since October 2021. From a molecular industry perspective, the year-on-year PPI of rubber and plastic products and chemical fiber manufacturing is weaker than that of chemical raw materials and chemical products manufacturing.
Polyurethane, Acetic Acid and Refrigerants Prices Fell
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The number of chemicals with falling prices in the first half of 2022 accounted for a relatively small number, mostly fine chemicals close to the downstream, with a more dispersed industry distribution.Among the top falling categories, polyether and spandex (propylene oxide, hard foam polyether, soft foam polyether, spandex), acetic acid (acetic acid, acetic anhydride), and chlor-alkali refrigerant industry chain (calcium carbide, trichloroethylene, R134a) accounted for a relatively large number of products.
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![Chemical Industry PPI Year-On-Year Trend]()
The price center of polyether and spandex industry chain is shifting downward due to the drag of capacity expansion and consumption decline in downstream industries.
Soft foam polyether, hard foam polyether and spandex are all downstream products in the polyurethane industry chain, and propylene oxide is the main raw material for soft foam polyether and hard foam polyether. 2018-2020, the overall boom of the polyurethane industry is high, and since 2021, a number of upstream and downstream products have entered a new round of capacity expansion, among which propylene oxide has started to accelerate its capacity expansion in 2021. According to statistics, in 2022, propylene oxide is scheduled to add capacity of nearly 2.5 million tons, with a capacity growth rate of more than 35%, while spandex is scheduled to add capacity of 164,000 tons, with a growth rate of more than 12%, which will significantly increase the market supply capacity. On the demand side, the consumption of downstream industries such as household, home appliances and garments declined in the first half of the year due to the epidemic and other influences.
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Acetic Acid And Calcium Carbide Prices Fell Back To a High Level
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Refrigerant Industry Is In Great Flux With Downward Price Movement
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In 2021, due to the combined impact of coal cost push, energy consumption double control policy and strong downstream demand for PVC and PTA, the prices of calcium carbide and acetic acid rose sharply, and even reached the highest price in history in October 2021. On the supply side, the impact of energy consumption double control policy weakened.MORE
![Downstream demand slowed down, acetic acid and calcium carbide prices fell back to a high level]()
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In the first half of 2022, the prices of upstream and downstream products in the refrigerant industry chain have been on a downward trend. At the same time, 2022 is the last year of three generations of refrigerant quota benchmark, industry starts remain high, price competition is fierce.MORE
![Refrigerant industry reshuffle accelerated, upstream and downstream prices downward]()
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From the demand side, the demand for automobiles, real estate and home appliances is expected to recover after the epidemic, and the demand for intermediate and downstream chemicals is expected to recover.
Significant fluctuations in raw material prices, the development of integrated industry giant companies will have more advantages.
In the second half of 2022, it will be difficult for the international crude oil market supply to rise rapidly, and tight supply will remain the main theme. In addition, the risk of global crude oil trade imbalance due to geopolitical conflicts remains, and the international oil price The risk of rapid downward movement of international oil prices may not be significant. However, at the same time, there is a risk of downward adjustment of global crude oil demand expectations. On the other hand, major economies such as the U.S. and Europe are facing greater inflationary pressure, and the pace of interest rate hikes by the Fed is expected to accelerate if the global economy slows down. If the global economy slows down, the demand for crude oil is expected to weaken. Based on the above considerations, we believe that in the second half of 2022, crude oil prices will be in the range of 100-120 However, we need to be alert to the rebound of the epidemic and the conflict between Russia and Ukraine, which may bring unexpected shocks to oil prices. Forecast Chemical product prices are expected to remain at a high historical level, but the cost transmission and profitability of different sub-sectors are expected to diverge.