​A brief analysis of the rise and fall of chemical products market in the first quarter

In the first quarter of 2022, the overall performance of the domestic chemical market reappeared a strong pattern. Firstly, around the Spring Festival, the peripheral markets were disturbed again based on extremely cold weather and geopolitical factors, the strong rise of crude oil and other commodity markets continued, and WTI crude oil hit a new high in seven years. Driven by the strong strength of crude oil and other bulk commodities, the domestic chemical market opened after the festival with hot trading, the warehouse building demand of downstream enterprises was generally positive, and the operating rate of some industries recovered in advance. Although the actual orders at the lower end of the industrial chain were not followed up enough, and the market was weakened for a time, with the outbreak of the Russian Ukrainian war, the fear of the energy crisis continued to ferment, and crude oil rose again, further driving the domestic chemical market into a super rising cycle. In addition, after March, the cascade itself was in a rising cycle of construction and stock replenishment in downstream industries, and the "inflation" level of chemical products continued to rise.

Increase list:

1. Butadiene: in January, the operating rate of units at home and abroad decreased, the supplier controlled the quantity and price, tightened the expectation of supply, and the profit window in the United States still existed. The market rose rapidly, boosted the preparation of goods before the downstream Festival, and the demand promoted the market to rise further. In February, stimulated by geopolitical tensions and severe cold weather in the United States, crude oil prices rose to a new high. Subsequently, the situation in Russia and Ukraine was comprehensively upgraded, the international crude oil rose sharply, and the cost side was good. In addition, due to several sudden failures of Korean devices, the operating rate of butadiene decreased by nearly 15%, and the supply continued to tighten, boosting the market mentality. In March, crude oil futures continued to break upward, and the sharp rise in crude oil prices continued to weaken the profits of the olefin industry, resulting in a decline in the operating rate of cracking units in Asia, continued tightening of supply, and boosted the price of the external market gradually upward. The domestic butadiene market price also rose to a high level.

2. Ortho benzene: in the first quarter, the inventory of ortho benzene at the wharf was low for a long period of time, the source of marketable goods was limited, and the early release of some maintenance information of Sinopec units boosted the mentality of the industry due to the tight supply of goods; Secondly, the external positive boost, the continuous rise of crude oil prices, which supports the aromatic hydrocarbon industry chain. At the time of the rise of isomeric xylene, the cost pressure of o-xylene increases, and merchants actively follow up and support the price; Third, the downstream phthalic anhydride industry improved. The price of o-phthalic anhydride also set a new high in recent years in the first quarter, and the demand for o-benzene was guaranteed when the stage was oversold. Therefore, the price of o-benzene continued to rise at the time of multiple positive support.

3. Primary stearic acid: after the Spring Festival holiday, with the tense situation of global vegetable oil supply and demand, Indonesia, the number one palm oil exporter, restricted the export of palm oil, and the weather in South America worsened the Supply Prospect of Argentina, the number one soybean oil exporter. The Russian Ukrainian crisis led to the risk of export supply interruption in Ukraine, the No. 1 sunflower oil exporter, which prompted the high operation of raw palm oil, and the manufacturer's quotation continued to rise. At the end of February, the price of domestic primary stearic acid reached a high in recent years.

Decline list:

1. DMC: since the beginning of the year, the market has been rising for a time. After new year's day, although sanning, a new coal plant, began commissioning and produced stable high-grade products in late January, the downstream pre holiday stock volume gave strong support to the market. In particular, in terms of PC, the stable start-up of Zhongsha PC 260000 T / a unit and the commissioning of Shanghai nanhuasheng 260000 T / a unit at the beginning of this month have led to an overall increase in the start-up of domestic non phosgene method, a gap in spot in DMC market and an overall rise in prices. However, after the Spring Festival and into February, the market turned sharply and fell. After the festival, the number of new orders received by factories fell, and the cargoes of Zhejiang Petrochemical gradually arrived in Hong Kong. The bidding price of downstream PC factories fell on February 4. Since then, the price decline began. However, domestic public health events continued to occur frequently in the first and middle of March, especially the epidemic in Shandong, and the goods circulation of some factories decreased significantly. So far, the DMC market was cold again.

2. Acetic acid: the domestic acetic acid market fell significantly this week. During the long Spring Festival holiday, except that some acetic acid plants in North China have reduced the load under the influence of the Winter Olympic Games, the rest of the acetic acid plants operate stably. During the long holiday, the downstream parking or holiday, the demand side has shrunk significantly, and the overall inventory of acetic acid has increased rapidly, especially in Henan and Shaanxi factories dominated by spot goods. After the festival, although Henan Shunda stopped, the manufacturer's inventory pressure did not decrease. Part of the downstream is still in the parking state, and users in normal production are also just in need of purchasing when they are bearish about the future market.

3. Dichloromethane: in the first quarter of 2022, the dichloromethane market fluctuated frequently. By the end of March, the low-end price in Shandong market was 16.37% lower than that at the end of last year. During the period from New Year's day to the Spring Festival, the market as a whole was in a high and falling stage. The maintenance devices in the early stage of the year basically returned to normal, and the supply of resources was relatively abundant. The downstream resisted high priced raw materials, and the market focus mainly fell. Before the festival, some operators went on a bargain hunting to replenish the warehouse, and the market regional trends were different. During the Spring Festival, the device load of some enterprises decreased, the overall supply pressure of the market was ok, and the operation was relatively stable. After the festival, the logistics gradually recovered, some downstream started to prepare goods, and the maintenance news of Jinling Dongying plant continued to ferment in mid February. Under the expectation of reduced supply, the mentality of the operators was strong. However, with the rising price, the cost of downstream enterprises was under pressure, and the market turned weaker under the restriction of demand.

Plagued by the epidemic, the chemical products market gradually weakened in March. After the conflict between Russia and Ukraine eased, the crude oil turned into a wide-ranging shock trend. After the stimulating factors decreased, the domestic chemical products market turned to the supply and demand level. Based on the slowdown of the growth power of domestic demand, the decline of export orders and the actual overall decline of the overall prosperity of the end industry, the upstream products in the industrial chain of the chemical products market fell into an adjustment trend as a whole, Especially after the epidemic has led to the limitation of logistics and transportation, the actual commencement of the lower end of the industrial chain has decreased under the multiple adverse factors of declining orders, shrinking profits or even losses caused by high costs, and resistance to raw material supply. After gradually uploading, the chemical market is expected to enter the downward adjustment stage at the beginning of the second quarter. However, it is expected that with the gradual mitigation of the domestic epidemic after the upgrading of prevention and control, and the strength of bulk commodities in the future will continue in the short term, the cost dominance will still control the overall trend of domestic chemicals, while the downstream and terminal industries are expected to recover after the recession recovers in the late second quarter.