On March 14, Interface Journalists learned from the National Bureau of Statistics that in the first two months of 2019, the production of industrial raw coal above the scale of China declined year-on-year, the growth rate of crude oil and electricity production slowed down, but the production of natural gas maintained a relatively rapid growth.

In the first two months of this year, China produced 28.68 billion cubic meters of natural gas, an increase of 9.2%, an increase of 0.4 percentage points over the previous month, and an average daily output of 490 million cubic meters.

In January and February, imports of natural gas were 9.81 million tons and 7.57 million tons respectively, up 26.8% and 9.0%, and imports continued to grow rapidly.

There are more than 3000 enterprises engaged in the production of modified plastics in China, but there are only 70 enterprises with annual capacity of more than 3000 tons. With the expansion of market application, more and more enterprises will be attracted to increase production capacity in the future, which will lead to the expansion of the total market.

The application of modified plastics in China is just beginning

In the economic development of Germany, the proportion of plastic and steel applications is 63:37, 70:30 in the United States and 50:50 in the world. Compared with the mature development of modified plastics industry in foreign markets, China’s modified plastics industry started late, and the application of large-scale modified plastics has just started. Due to the limitation of production technology, the proportion of domestic modified plastics used in precision manufacturing industry is lower. At present, the application ratio of plastic steel in China is only 30:70, which is far below the average level of developed countries and the world. Considering that China is a big manufacturing country, with the sustained economic development and the continuous improvement of modified plastics technology, the future market demand for modified plastics will be huge.

Opportunities for enterprises lie in specialization

The enlargement of the total market volume may lead to the aggravation of product homogenization. When homogenization becomes more and more serious, the first movers in other fields have built barriers. If enterprises want to develop, they must further specialize in their own fields.

Automobile and household appliances are almost the indispensable place for every modified plastics enterprise. Compared with other modification enterprises, Nanjing Julong (300644. SZ) in the rail transit position, domestic modification enterprises are almost unmatched, which is also one of the reasons why Nanjing Julong has higher business income in recent years. Guangzhou Golden Fair Technology (600143. SH) and other enterprises with the main industries of modified plastics, fully biodegradable plastics, environmentally friendly high-performance recycled plastics, high-performance carbon fibers and composite materials will also usher in greater development opportunities.

Raw material manufacturers will benefit from this

According to Chinese Customs data, China imported 7.05 million tons of waste plastics in 2017, and imported 76,000 tons in 2018, down 99% year on year. Imports of plastics are blocked, and the recovery rate of waste plastics in China is also declining. China’s recycling industry development report (2018) shows that in 2017, China’s domestic recycling of waste plastics was 16.93 million tons, down 1.85 million tons from 2016, a decline of 9.9%.

The history of long-term import of waste plastics in China will be ended. The state’s restriction on import of waste plastics is irresistible. The shrinkage and long-term reconstruction of recycled plastics industry in the short term will become an inevitable trend. With the high pressure of environmental protection, the ban on foreign garbage, and the pressure brought by the function relief of big cities, the waste plastics recycling industry is facing the restructuring of the industry.

According to incomplete statistics, 80% of the domestic recycled plastics market is facing an embarrassing situation of environmental rectification or banning. A total of 28 cities provide tens of thousands of “scattered and dirty” enterprises to the Ministry of Environmental Protection.

Rising prices of recycled plastics materials have become a trend, and shortages have become normal. The whole imported waste plastics recycling and granulation industry may have a slim future, and millions of tons of raw materials need to find a new direction.

For most domestic importers, the promulgation of the ban will mean that they have to re-plan the procurement channels, regardless of the procurement content or source, will be a process of re-construction.

This operation has been defined as non-standard. Strictly speaking, the import of raw materials needs production capacity matching its application volume. Customs and other executing departments are also strictly checking the flow of waste plastics. Therefore, this type of enterprise must be transformed and upgraded. Some enterprises have taken precautions. When the ban was not promulgated, the source of raw materials has been changed from import 100% to domestic production. Most enterprises are still changing. Haitong Securities Research Report pointed out that as an important part of the domestic supply of plastic raw materials, the prohibition of imports will lead to shrinkage of the supply of plastic raw materials, and the domestic production enterprises of plastic raw materials are expected to benefit.

On March 5, the State Energy Administration issued the Circular on Establishing the Information Monthly Report System for Expanding the Production and Promotion of Biofuel Ethanol and Gasoline for Vehicles, which stated that it was necessary to establish the Information Monthly Report System and to keep abreast of the progress made by relevant provinces (regions, municipalities) and central enterprises in promoting the production and popularization of biofuel ethanol and gasoline for vehicles.

In fact, it has been less than one year since the target of “realizing the basic coverage of ethanol and gasoline in the whole country by 2020″ was put forward in the Implementation Plan on Expanding the Production and Promotion of Biofuel Ethanol, issued jointly by the National Development and Reform Commission and other 15 ministries. What is the progress of ethanol and gasoline promotion in China? Can the planning objectives be achieved? What problems still exist?

Development lag

Ethanol is the improver of clean fuel and oil quality. Ethanol gasoline (E10) with 10% fuel ethanol can increase the octane number of gasoline and reduce the emission of carbon dioxide and harmful substances such as particulate matter, carbon monoxide and hydrocarbons in vehicle exhaust. According to incomplete statistics, more than 40 countries and regions have promoted biofuel ethanol and automotive ethanol gasoline. The annual consumption of ethanol gasoline is about 600 million tons, accounting for about 60% of the world’s total gasoline consumption.

Fuel ethanol has been widely used in China since 2001. In 2002, pilot projects of fuel ethanol were launched in Heilongjiang and Henan provinces, and expanded in 2004. By 2018, China had been promoting ethanol gasoline in six provinces including Heilongjiang, Jilin, Liaoning, Henan, Anhui and Guangxi, and semi-closed in 31 cities of Hebei, Shandong, Jiangsu, Inner Mongolia and Hubei. In October 2018, Tianjin also successfully realized closed sales of ethanol and gasoline.

However, according to the reporter’s understanding, in the above pilot areas, in addition to the three northeastern provinces and Tianjin, the development of ethanol gasoline in other provinces and cities is not very good. Taking Guangxi as an example, since April 2008, ethanol gasoline for automobiles has been sold in closed sales in Guangxi. According to the data of the Development and Reform Commission of Guangxi Autonomous Region, the coverage rate of ethanol gasoline for automobiles reached 85.79% in 2009. However, the market share of ethanol gasoline gradually decreased, and the coverage rate dropped to less than 5% by 2017.

In view of the current development situation, many respondents expressed to reporters that it was “more difficult” to achieve the goal of “basic coverage of ethanol and gasoline by the end of 2020″.

According to Liu Lin, an analyst at Zhongyu, the development of ethanol gasoline is lagging behind. “The comprehensive promotion of ethanol and gasoline will inevitably lead to a sharp increase in the output of fuel ethanol, thus driving the whole ethanol industry to a better position. If the total coverage of ethanol and gasoline is achieved by 2020, the fuel ethanol market should be very hot now, but for the moment, the whole fuel ethanol market can only be said to be general. According to the current growth rate of fuel ethanol production, it will be difficult to achieve this goal next year.

Large gap in fuel ethanol

“At present, the promotion of ethanol gasoline is not ideal, the core reason is that there is a large gap in the supply of fuel ethanol.” Zhang Zhe, Senior Engineer of Marketing Institute of China National Petroleum Planning Institute, spoke frankly to reporters.

According to the data of China National Petroleum Planning Institute, the current production capacity of fuel ethanol in China is 2.89 million tons per year, while the current domestic gasoline consumption is about 130 million tons. According to the 10% addition ratio, if we want to achieve basic national coverage by 2020, the demand for fuel ethanol is about 13 million tons, with a gap of 10 million tons.

Among them, the economy of fuel ethanol production is the most important constraint.

It is understood that the main source of fuel ethanol raw materials in China is maize. In order to promote the development of biofuel ethanol industry, the Ministry of Finance has subsidized the production enterprises of biofuel ethanol relatively high. In 2009, COFCO Biochemical had enjoyed 2055 yuan/ton of raw material subsidies, and the production enterprises were more enthusiastic. Since then, however, subsidies have fallen sharply because of “fighting for grain with the people and grabbing land with grain”. On August 14, 2014, the Ministry of Finance issued the Notice on the Adjustment of Fiscal Policy on Biofuel Ethanol for Fixed-point Enterprises. The criteria for the continued subsidies of biofuel ethanol for approved projects using grain as raw materials are 300 yuan/ton in 2013, 200 yuan/ton in 2014 and 100 yuan/ton in 2015, and no subsidies will be provided after 2016. “In the past few years, the international crude oil price has gone down, while the ex-factory price of fuel ethanol in China has remained low due to its linkage with the price of refined oil. Its profitability is weak and it has no economy.” Liu Lin said.

Zhang Zhe also pointed out that under the superposition of many factors, the enthusiasm of fuel ethanol production enterprises declined. “Some enterprises have reduced the production of fuel ethanol, some of which are converted to edible alcohol, resulting in a lower and lower market share of ethanol and gasoline.”

Promotion schedule should be adjusted appropriately

According to Zhongyu information and statistics, 87% of the current fuel ethanol production in China comes from maize, 11% from cassava and sugarcane, and 2% from cellulose. Corn fuel ethanol production process, including aging rice, wheat and other crops, is the best raw material for fuel ethanol production because of digestible “problem grain” and “aging grain”, stable source of raw materials, mature production technology, and by-product corn oil, distiller’s grains protein feed (DDGS). However, its production capacity is restricted by the stock of aged grain such as corn in China, which is easy to cause worries about the food crisis. Therefore, Zhang Zhe said that the development of fuel ethanol should be tailored to local conditions and develop a diversified production process of ethanol raw materials.

It is reported that cassava and sugarcane have mature technology to produce fuel ethanol, and the production cost is low, but because of the small planting area, they rely more on imports. However, the solid fermentation technology with sweet sorghum as raw material has been commercially operated. Sweet sorghum can be planted on a large scale. The solid fermentation products are ethanol and distiller’s grains, which have no waste water and have large-scale production conditions. It is regarded as the most competitive ethanol raw material in the world.

In addition, cellulose, as the most advanced direction of ethanol production in biomass raw materials, has a wide range of sources of raw materials. It can make full use of crop straw to achieve waste utilization. However, at present, it is not mature in technology, and the cost of commercial process is very high, so large-scale production is not economically feasible.

“Biomass energy is the choice of energy diversification in the future, but the schedule should be adjusted timely according to the actual situation in the promotion process. At the same time, for raw materials in line with the national conditions, we should develop more new technologies and processes to maximize the benefits as far as possible. Like cellulosic ethanol, it should continue to develop, which is a good direction. In addition, because production costs will be affected by fluctuations in raw material prices and international crude oil prices, and the benefits are uncertain, enterprises can adopt more flexible production schemes, such as having the conditions to produce edible ethanol, fuel ethanol, or multiple products co-production.

According to Houston, the International Energy Agency (IEA) predicts that the United States will drive and lead the growth of global oil supply in the next five years, increasing the country’s already rapidly growing oil production by another 4 million barrels a day.

The IEA said that by 2024, U.S. oil production will rise from 15.5 million barrels a day last year to 19.6 million barrels. Total crude oil exports will double, which will lead to more intense competition in the global market, especially in Asia.

This prospect suggests that demand from the Organization of Petroleum Exporting Countries (OPEC) will be under pressure as the United States and other competitors expand their crude oil supply. However, the International Energy Agency believes that global oil demand has not yet peaked, which will boost the confidence of oil producers.

In its five-year outlook report, the IEA, which advises the United States and other industrialized countries on energy, said: “The United States is increasingly leading the growth of global oil supply, and oil production in other non-OPEC oil-producing countries has increased significantly, including Brazil, Norway and Guyana, the new oil-producing country.”

The US oil boom over shale oil runs counter to OPEC’s and its Russian-led partners’efforts to limit supply. The so-called OPEC + Group started a new round of cuts in oil supply in 2019 to support oil prices.

The U.S. Energy Information Agency (EIA) on Tuesday slashed its domestic crude oil production forecast by 110,000 barrels a day and 170,000 barrels a day for this year and next, respectively, due to lower production expectations in the Gulf of Mexico, Nairobala and Anadarko shale prospects, according to Washington Energy Information.

EIA said in its monthly short-term energy outlook report that US oil production is expected to average 12.3 million barrels per day this year and 13.03 million barrels per day in 2020.

EIA expects U.S. producers to produce 13 million barrels of oil a day for the first time in the third quarter of next year, a quarter later than last month’s forecast.

“Oil production in the United States is expected to set a new record this year and next,” Linda Capuano, director of the U.S. Energy Information Agency, said in a statement.

The EIA said that the United States would become a net exporter of oil for the first time in December, with crude oil and finished oil output up to 240,000 barrels a day over imports.

By 2020, the United States is expected to remain a net exporter of oil, exporting more than 70,000 barrels a day on average. In 2018, the average net import volume of U.S. oil was 2.34 million barrels per day, and it is expected to reach 950,000 barrels per day in 2019.

In its monthly short-term energy outlook report, EIA raised its expectations for the average prices of Brent crude oil and West Texas intermediate crude oil this year.

India’s Ministry of Environment, Forestry and Climate Change (hereinafter referred to as India’s Ministry of Environmental Protection) recently issued an official statement saying that the Indian government has issued a ban on India’s import of solid plastic waste, including special economic zones and export-oriented enterprises. However, the statement has not yet disclosed when the ban will come into force.

India’s Ministry of Environmental Protection has revised the Hazardous Wastes and Other Wastes (Management and Cross-border Transfer) Rules (2016 edition) to “strengthen the implementation of environmental management of hazardous wastes in the country”.

“By simplifying the process involved in the rules and adhering to the principle of sustainable development, the amendment ensures the convenience of doing business and encourages Indian manufacturing. At the same time, these amendments adhere to the principle of sustainable development and ensure that the environmental impact of hazardous wastes and other wastes (management and transboundary movement) is minimized. India’s Ministry of Environmental Protection said.

India’s Ministry of Environmental Protection also pointed out that once defects in electrical and electronic components manufactured in India and exported by India were found, they could be imported back to India within one year after export without the permission of the Ministry of Environmental Protection.

In addition, enterprises that have not been authorized to deal with wastes under the Water (Pollution Prevention) Act (1974 edition) and the Air (Pollution Prevention) Act (1981 edition) can now also be authorized under the Hazardous Wastes and Other Wastes (Management and Transboundary Transfer) Rules (2016 edition), provided that hazardous wastes and other wastes generated by the industry are transferred to authorized actual users and wastes. Collector or treatment facility.

According to a Reuters report on March 8, the agency quoted customs data to report that China’s imports of crude oil and natural gas continued to grow in February, although it had reached a record high a few months ago.

Crude oil imports amounted to 39.22 million tons, or 10.23 million barrels per day, up 21.6% year-on-year, and exceeded 10 million tons for the fourth consecutive month. The big increase at the end of 2018 was the result of the eagerness of independent refiners to fill import quotas by the end of the year. But now, even though the quotas issued by the Ministry of Commerce in January are low, imports are still strong.

China’s Customs data show that the total import volume of natural gas (liquefied natural gas and pipeline traffic) was 7.55 million tons last month, down from 9.81 million tons in January, but up 8.8% from February 2018.

For more than a month, as Japan continues to restart its nuclear reactor, China is expected to become the world’s largest importer of liquefied natural gas. Restarting its nuclear reactor will have a negative impact on Japan’s import of liquefied natural gas. It is predicted that China will become the largest consumer of imported liquefied natural gas in 2022.

International oil prices rose on Monday, with U.S. oil and oil distribution both rising by more than 1%. By closing, WTI crude oil futures closed up $0.72, or 1.28%, at $56.79 a barrel in April. Brent crude oil futures closed up $0.84, or 1.28%, at $66.58 a barrel in May. In addition, SC1904, the main contract of crude oil futures in the previous period, closed up 13.20 yuan, or 3.05%, at 445.30 yuan per barrel.

According to media reports, Saudi government sources recently revealed that Saudi Arabia plans to push for an extension of production cuts at the April meeting to stabilize crude oil prices.

At the same time, the news also effectively alleviated the weak demand worries caused by last week’s non-farm report in the United States, and encouraged the confidence of crude oil bulls.

On the other hand, Saudi Arabia said that its crude oil export in April will be reduced to less than 7 million barrels per day, which means that Saudi oil production will be about 30% lower than the target of 10.311 million barrels per day, and the reduction will be about 2 million barrels per day.

In addition, data from Beckhughes, a US oil service company, showed last Friday that the number of active oil drillings in the United States fell by 9 to 834 from a 10-month low last week, partly alleviating market concerns about rising U.S. crude oil production.

In fact, U.S. crude oil production remains one of the greatest threats to OPEC’s production cuts. Last week, data from the U.S. Energy Information Agency (EIA) showed that U.S. crude oil production remained at a record high of 12.1 million barrels per day, which has inhibited the boosting effect of the cuts on oil prices.

Reporters learned from the industry that the recent vitamin factory Tiger due to shortage of raw materials calcium pantothenate products shutdown, the market circulation of goods reduced, leading to the main manufacturers shortage of shipments, have bid. Last weekend, there was another rumor in the market that a manufacturer in Zhejiang stopped reporting and the quotation of distributors continued to rise. The price of calcium pantothenate rose from 155-160 yuan/kg the previous week to 180-200 yuan/kg last weekend. Some enterprises even signed 210/kg lists on the market.

Market survey shows that more than 60% of practitioners believe that the price of calcium pantothenate has an upward trend. The industry believes that with the coming of the market peak season, the upstream raw material tension and demand is expected to continue to pull the price of calcium pantothenate firm.

European polyethylene (PE) prices have risen for the first time since June 2018.

Some traders breathed a sigh of relief.

“The past few months have been really tough and prices have been falling,” one of them said.

Another trader said, “It’s great to hear that after several months of decline.”

The last time most PE prices rose was in June 2018.

For several months, some PE spot prices have been lower than contract prices for ethylene.

Since July 2018, the spot low-end price of low-density polyethylene (LDPE) has been significantly lower than the contract price of ethylene, and the net low-end price of C4 (butenyl) linear low-density polyethylene (LLDPE) has performed worse.

The last time the spot low price of C4 LLDPE was higher than the contract price of ethylene in March 2018, the upward pressure was the greatest in March, because there were fewer imported materials available.

Most of the low density polyethylene C4 used in Europe is imported, so the relationship with ethylene may not be the same as other brands, but the price of global exports to Europe has been very low.

Last week, spot prices of C4 LLDPE fluctuated sharply, some quotations were still below the level of ethylene contracts, and some buyers were forced to raise prices substantially to get the volume they needed.

The net price of LDPE has also risen, with FD quoting more than 1,000 euros per ton in Northwest Europe.

Low density polyethylene (LDPE) and C4 low density polyethylene (C4 LLDPE) are in short supply due to production problems and reduced imports. Although some buyers have to accept higher prices, they are well supplied.

High density polyethylene (HDPE) has mixed tastes. The price gap between ethylene and HDPE has always been higher than LDPE and LLDPE, but sellers are also pushing up prices.

Rising prices and weak demand

Despite the sharp rise in prices, demand from smaller sellers did not all improve in March.

One of them said: “Prices are rising, but sales are not. There is no shortage of anything and not many customers want to buy it.

Big customers may sell better, and some buyers are making sure their needs are met once the plant maintenance plan is in place.

Sources said May was an important month for ethylene supply, but they also expected that as long as everything went according to plan, there would be no shortage.

Some sellers had predicted price increases of up to 50-70 euros per ton, but buyers were very skeptical that the price would not be higher than the increase in the contract price of ethylene.

PE negotiations usually take a long time to reach an agreement, and retrospective pricing still exists in many regions.

PE is used in packaging, household goods manufacturing, and also in the field of agriculture.