In May, the price of magnesium ingot basically ran smoothly and fluctuated slightly.

According to data from business associations, the average market price of magnesium ingots on May 15 was 16900 yuan/ton, down 0.73% from 17,725 yuan/ton on May 1, and up 3.05% from the lowest price of 16,400 yuan/ton on January 9, 2019.

Since May, the price of magnesium ingots has fluctuated slightly, and the overall operation is relatively stable. It is reported that, on the one hand, based on the weak market demand, stable supply and demand, stable demand of downstream processing enterprises, a little stock in the early stage, more on-demand purchasing, magnesium prices rising weak; on the other hand, the main production area of magnesium ingot manufacturers inventory is not much, some manufacturers mainly pre-sale sales, spot inventory is not much, some manufacturers directly supply their own downstream factories, spot sales pressure. Not big, the manufacturers have strong willingness to bid.

Today’s cash tax quotation for magnesium ingots (99.9%, non-pickling, simple packaging) from major producing areas is as follows:

Fugu area has 16 650-16 900 yuan/ton of cash remittance with tax; Taiyuan area has 16 700-16 800 yuan/ton of cash remittance; Wenxi area has 16850-17 000 yuan/ton of cash remittance; Ningxia area has 16 700-16 900 yuan/ton of cash remittance.

Expected market outlook

Recently, the magnesium market has been on the low side, with few inquiries from magnesium enterprises in the main producing areas, mainly pre-shipment orders, and few new orders. Affected by poor downstream demand, some manufacturers have signs of downward shipment. However, based on the influence of raw material ferrosilicon and coal price factors, we will focus on the market to consider the changes of cost factors in the later period. It is expected that domestic magnesium ingot prices will be weak and stable in the short term.

Terminal demand has not improved, polyester enterprises may take the initiative to reduce the start-up rate. In addition, although the port ethylene glycol inventory in eastern China has declined in the past two weeks, the overall inventory is still at a historic high. Ethylene glycol prices are expected to continue their bearish trend.

Restricted by its own fundamentals, the price of ethylene glycol futures has shown a downward trend of oscillation since its listing on December 10 last year.

Maintaining high plant start-up rate

This year, the start-up rate of domestic ethylene glycol plant has remained relatively high. Although the Spring Festival holidays occurred during this period, it did not have much impact on the start-up of ethylene glycol plant. At the end of April, the ethylene glycol plant was centrally overhauled, and mainly coal-based plants. As of April 26, the weekly start-up rate of ethylene glycol plant was 81.59%, which was 0.97 percentage points lower than that of the same period last year, and 5.59 percentage points higher than that of the same period last year. As of April 30, the weekly start-up rate of coal-based ethylene glycol plant was 55.01%, which was 5.35 percentage points lower than that of the same period last year, with a slight decrease of 0.99 percentage points.

Polyester market “peak season is not prosperous”

After the downstream construction resumed at the end of February this year, the start-up rate of polyester factories and Jiangsu and Zhejiang looms remained at a high level. In April, the average starting rate of polyester chip cycle was 89.06%, which was 1.98 percentage points higher than that in March; the average starting rate of polyester staple fiber cycle was 83.42%, which was 3.13 percentage points lower than that in March; and the average starting rate of polyester filament cycle was 83.4%, which was 0.9 percentage points higher than that in March.

However, a high start-up rate does not mean an increase in demand. Although the current polyester market is in the traditional peak season from a time point of view, the trading situation has not significantly warmed up. In April, the average weekly production and marketing rate of polyester chips was 79.88%, up 10.63 percentage points from March; the average weekly production and marketing rate of polyester staple fiber was 88.2%, down 0.8 percentage points from March; the daily production and marketing rate of polyester filament was 110.91%, the lowest was 72.27%, down 7.09 percentage points and 1.73 percentage points from March, respectively.

Active start-up, but no significant improvement in terminal demand, resulting in a high level of inventory of various varieties in the polyester market. In April, the average inventory of polyester chips was 7 days, an increase of 0.5 days compared with March; the average inventory of polyester staple fiber was 6.9 days, a decrease of 1.1 days compared with March; the average inventory of POY, FDY and DTY of polyester filament was 13.7 days, 13.3 days and 19.8 days, respectively, an increase of 0.82 days, 0.55 days and 1.05 days compared with March.

Port Inventory Keeping New High

Since the beginning of the year, the ethylene glycol inventory of ports in East China has risen rapidly. On February 11, after the Spring Festival holiday, it exceeded 1 million tons, reaching 1.02 million tons, surpassing last year’s inventory peak. After that, inventory continued to accumulate and reached a peak of 1282,000 tons on April 11, an increase of 497,000 tons over the beginning of the year. As of May 5, the inventory of ethylene glycol ports in East China was 1.177 million tons, still at the highest level in recent two years.

Ethylene glycol inventory has been at a high level since this year. Historically, inventory in East China exceeded 1.1 million tons from February to March 2014, with a peak of only 1.76 million tons. Persistent high inventory leads to pressure on the futures price of ethylene glycol, which is also one of the important reasons for the weak operation of the futures price of ethylene glycol in recent years.

In summary, although the polyester market is in the traditional peak season, the terminal demand has not improved. Later, polyester enterprises may take the initiative to reduce the start-up rate to cope with the pressure of rising inventory. Under the negative pressure, the price of ethylene glycol in the future is difficult to get rid of the disadvantaged pattern.

Potassium sulphate was not expected because of the excessive carry-over stock in 2018. It did not appear in the spring market until mid-April. From the price performance, only that part of the market rose by 100-150 yuan, while most of the market prices barely maintained stability or even fell a lot, but the current market of potassium sulphate has indeed improved, water and salt bodies. The low price of the Department has not continued to fall, Mannheim’s inventory pressure has generally eased, and individual supplies have been tightened.

Unfortunately, it is still very difficult for potassium sulphate to drive the whole in part. On the one hand, although the price of water-salt system does not continue to decline, it has not yet recovered for the time being, and the price difference between water-salt system and Mannheim potassium sulfate is far greater than the normal level in the past; on the other hand, although the inventory pressure has eased, the overall supply is still relatively large, after a partial rise, the surrounding supply will be found, that is to say, there is no general and obvious shortage of supply and demand at present; Third, the fall in the price of potassium chloride has also made the price of potassium sulfate rise somewhat unjustifiable.

In summary, whether it is fluctuating potassium chloride or potassium sulfate, in some chaotic market situation, its price has not changed much, but is relatively stable.

At present, the long-term trend of potassium chloride and potassium sulfate is not very clear, but it is not expected that the temporary relative stability will last too long. In the short term (May and June), the price of potassium chloride will go downward while the price of potassium sulfate may rise. In the long run (the second half of the year), there is still the possibility of reversal. Potassium fertilizer market in 2019 is bound to be a very tangled year.

In the potassium sulfate market, with the rebound of low prices and the fall of high prices, the price of potassium sulfate in the whole country has been relatively concentrated. With the rapid summer overhaul of Rok and the start of tobacco bidding soon, the price of potassium sulfate in the water salt system is expected to rise to a reasonable level. If it is supplemented by good export, the overall price of potassium sulfate may rise further, even be separated from chlorination. Potassium has come out of a good independent market. However, there is a premise that there is a basic guarantee for the late market demand, and the decline of potassium chloride will not be too bad.

According to the Malaysian Bureau of Statistics released on May 13, Malaysia’s natural rubber production in March 2019 was 49465 tons, an increase of 6.6% over the same period last year, and a decrease of 16.2% over 59017 tons in February.

Data show that Malaysia’s Tianguo exports in March rose 29.6% to 53265 tons from 41102 tons in February. The main export destinations were China, accounting for 43.2% of the total exports, followed by Germany (12.0%), Finland (7.8%), the United States (4.8%) and Turkey (4.0%).

Malaysia’s Tianguo inventory at the end of March was 21792 tons, down 6.0% from 214771 tons at the end of February, according to the Bureau of Statistics.

The average price of concentrated latex in March was 474.19 centimeters/kg, up 15.5% from February, while that of Malaysian standard rubber SMR20 was 592.62 centimeters/kg, up 6.2% from February.

Malaysia’s domestic consumption of natural rubber in March was 43,770 tons, up 9.1% from 40,121 tons in February. The rubber glove industry is the main consumer, with a monthly consumption of 32,848 tons, accounting for 75.0% of the total consumption.

Market Overview

According to a large number of data monitored by business associations, the price of dichloromethane in Shandong rose sharply this week. At the beginning of the week, the average price of dichloromethane in Shandong was 3000 yuan/ton, and at the end of the week, the average price was 3400 yuan/ton, with an increase of 13.33% in the week.

quotations analysis

Products: This week, due to the overhaul of Jinling Chemical Industry in Shandong Province, the overall supply of dichloromethane market is tight. Enterprises and traders have limited shipments and low inventories. At present, the quotation of bulk water remittance in Shandong is around 3400 yuan/ton, 3800 yuan/ton in Jiangsu and 3750 yuan/ton in Jiangxi. In terms of start-up, at present, the time for Jinling chemical plant to be repaired and restored is uncertain; Dongying Jinmao fully loaded operation; Luxi chemical plant to start 60%; Jiangsu science and technology plant to start normal; Jiangxi science and technology plant to run normally, etc.

Industry chain: In the upstream, the natural gas market is gradually warming up, with a small 1.1% in a week, and the average price at present is about 3363 yuan/ton; the liquid chlorine market is stable and weak, and the reservoir pressure of enterprises is relatively large. Enterprises in North China offer more than 1 yuan/ton, subsidized freight is about 100 yuan/ton, and East China is affected by overhaul, reporting more than 500 yuan/ton. Domestic R410a market shocks adjustment, refrigerant downstream market demand is flat, mostly export orders.

Forecast for future market

Business Club dichloromethane data analysts believe that the overall start-up of dichloromethane production enterprises is low, spot supply is tight and inventory is low, although the current downstream market demand is flat, but will soon enter the peak demand season for refrigerants, dichloromethane market is expected to be strong in the near future.

Price Trend

According to the data from the business associations’list, the price of domestic dry-process aluminium fluoride Market declined this week, with an average market price of 9,500 yuan/ton at the beginning of the week and 9,333 yuan/ton at the end of the week, which was 1.75% lower than that of last week.

II. Market Analysis

Aluminum fluoride prices remained stable this week: at present, the price of aluminium fluoride in Henan is between 8500 and 9200 yuan/ton, while that in Shandong is between 8500 and 9200 yuan/ton. Zhengzhou Zerun Energy and Chemical Co., Ltd. quoted 8500 yuan/ton of aluminium fluoride, Shandong Luzeng Chemical Co., Ltd. 11000 yuan/ton of aluminium fluoride and Henan Zhongse Dongfang Shaoxing Industrial Co., Ltd. 9500 yuan/ton of aluminium fluoride.

Industry chain: This week, the price of hydrofluoric acid rose slightly. Enterprises reported that the spot supply of hydrofluoric acid in the market has decreased. Recently, the situation of on-site goods has improved. Some enterprises have low start-up rate of hydrofluoric acid plants and slightly increased ex-factory prices. However, the downstream market performance of aluminium fluoride is general, and the market price is close to the cost line. The market price of dry-process aluminium fluoride is still declining this week.

3. Future Market Forecast

Analysts of Aluminum Fluoride Industry of Business Society Chemical Branch believe that the price of hydrofluoric acid, the upstream raw material, has fallen to a higher level, and the price of Aluminum Fluoride is expected to rise next week.

Natural rubber is one of the important strategic basic materials in China, and Yunnan is the largest natural rubber production base in China. The Ministry of Industry and Information Technology of Yunnan Province recently issued the Implementing Plan of Yunnan Province Supporting the Development of Rubber Industry, proposing that Yunnan Natural Rubber Agriculture should achieve output value of 9 billion yuan by 2020, optimize industrial layout and structure, develop rubber products industry, basically form a modern marketing system, and further enhance the voice of the international market.

According to the statistical data, by the end of 2017, the planting area of natural rubber in Yunnan Province was 8.66 million mu, accounting for 49.5% of the total planting area in China. The output of natural rubber was 438,000 tons, accounting for 53.8% of the total national output. The agricultural output value of natural rubber reached 6 billion yuan.

The plan put forward that we should consolidate and improve the management level of rubber plantations, improve the development quality of natural rubber preliminary processing industry, speed up the development layout of rubber deep processing industry, establish and improve the supporting service system of rubber industry, improve and expand the construction of rubber warehousing and logistics system, expand the influence of rubber trade market, enhance the leading enterprises in rubber industry, promote the construction of key projects and enhance them. The main tasks of enterprises in 10 aspects are the level of technological innovation and strengthening investment promotion and attraction.

The plan points out that by 2020, the planting area of natural rubber in Yunnan should be stabilized at about 9 million mu, the production area should be 6 million mu, and the annual output of natural rubber should be 600,000 tons. The output value of natural rubber agriculture should reach 9 billion yuan, and the per capita income of rubber farmers should reach 7,000 yuan.

At present, the problem of oversupply of polypropylene market has not been alleviated, and the price is weak as a whole. However, considering that Sino-US trade frictions and US sanctions on Iran will affect the quantity of imported plastic products and stimulate oil prices, polypropylene futures prices are expected to rebound in the near future.

Strong support from peripheral factors

Recently, periphery macro-risk events occur frequently, which has a great impact on commodity prices.

First, the United States imposed a crude oil embargo on Iran in November last year. However, considering the high dependence of some countries on Iranian crude oil, the United States granted eight countries and regions, including China, Japan and South Korea, exemptions from importing crude oil from Iran. However, in May this year, the United States announced an escalation of sanctions against Iran, requiring earlier exemption countries and regions to stop importing crude oil from Iran. At the same time, in response, Iran threatened to block the Strait of Hormuz, which greatly threatened the transportation of crude oil in the Middle East. OPEC’s April monthly report estimated that global crude oil demand in the second quarter was 99.18 million barrels per day and supply was 98.42 million barrels per day. Among them, non-OPEC countries supply 63.35 million barrels per day, OPEC unconventional oil and gas and liquefied petroleum gas supply 5.55 million barrels per day, OPEC crude oil supply 3.2 million barrels per day, with a supply gap of 76 million barrels per day. In March, Iran’s crude oil output was 2.698 million barrels per day. If the U.S. comprehensive crude oil embargo against Iran is implemented, the global crude oil supply gap will be further widened. Although OPEC can partly compensate for Iran’s shortfall by increasing production, it will take some time. Therefore, international crude oil prices will strengthen as a whole, which will give strong support to PP futures prices.

Second, since last year, Sino-US trade frictions have been plaguing the two countries and even the global economy. After many rounds of negotiations, the differences between China and the United States have become smaller and smaller, and the market generally believes that the Sino-U.S. trade frictions will be resolved. However, recently, US President Trump declared in the social media that he would continue to impose tariffs on China. Sino-US trade frictions intensified and the market fell into panic. China needs to import a large number of plastic products from the United States. If the trade friction between China and the United States escalates or can not be solved, the plastic products imported from the United States will decline. The resulting supply gap will be filled by the domestic market, which invisibly increases domestic demand and has certain support for the price of polypropylene.

We believe that there are more market risk events in the near future, and commodity prices are more affected by peripheral factors. In the short term, market panic causes commodity prices to fall, but as the market returns to rationality, peripheral factors will have a positive impact on polypropylene.

The pattern of supply exceeding demand is difficult to change

The weakness of supply and demand is the main reason for the continued weakening of polypropylene price, but at present, the supply and demand side of polypropylene has not obviously improved. From the supply side, although the production profit of polypropylene has declined due to the continuous rise of crude oil price before, because of the lower price of olefin monomer, the profit of oil-based PP is 700 yuan/ton at present, and that of coal-based PP is 2000 yuan/ton, and the production enthusiasm of enterprises is still high. In this case, the polypropylene production enterprises which had been repaired in the early stage began to resume production one after another. At the end of April, Qilu Petrochemical Company, Yanshan Petrochemical Company and Wuhan Petrochemical Company resumed production one after another. This week, Qinghai Salt Lake will drive, and the market supply will increase further. From the demand side, due to the weakness of the real estate market, the consumption of white household appliances in the past two quarters is not as strong as in previous years, which makes the demand for polypropylene decrease. In addition to the current pessimistic terminal market sentiment, downstream enterprises mainly buy ready-to-use purchases, and there was no centralized stock market before the May Day holiday. Under the combined effect of increased supply and weak demand, the accumulation of polypropylene during the May Day holiday was higher than expected.

In summary, polypropylene has been interwoven in many vacancies in recent years. On the one hand, the sanctions imposed by the United States on Iran and the escalation of trade disputes between China and the United States will increase the price of crude oil and decrease the import of plastic products, thus supporting the price of polypropylene. On the other hand, due to poor terminal demand and weak supply and demand in the polypropylene market, slow de-inventory will suppress the price of polypropylene. In this case, we believe that it is difficult for the polypropylene market to form a trend. However, with the recent end of the callback, polypropylene has a certain buying value.

Aluminum price has been a good non-ferrous variety since this year, especially since April. Whether it can maintain its rising trend in the future depends mainly on downstream demand and re-production capacity. On the demand side, the recovery of real estate is relatively strong, and the marginal increase of re-production capacity is relatively weak. Aluminum prices are expected to fluctuate strongly in the second quarter.

Macroscopic data is better

In April, China’s official manufacturing industry PMI was 50.1, down 0.4 percentage points from last month, and remained in the expansion range for two consecutive months, but the extent was weakened; in March, China’s M2 grew by 8.6% year-on-year; in March, China’s social financing scale increased by 2.86 trillion yuan, 1.28 trillion yuan more than the same period last year. Among them, M2 and social finance data are more than expected.

From the perspective of electricity consumption, China Telecom Union disclosed March 2019 electricity data: in March, the total social electricity consumption was 573.2 billion degrees, an increase of 7.5% over the previous year, which exceeded expectations. From January to March, electricity consumption was 1.6795 trillion yuan, an increase of 5.5% over the same period last year. In March, China’s electricity generation was 569.8 billion degrees, up 5.4% year-on-year; in January-March, it was 1.6747 trillion degrees, up 4.2% year-on-year.

In terms of railway freight volume, the cumulative year-on-year rates of January, February and March 2019 were 8.2%, 3.3% and 3%, respectively, showing a weak recovery. In January, February and March of 2019, the RMB loan balances of China’s financial institutions were 87.18 trillion, 87.92 trillion and 89.03 trillion respectively, with an increase of 14% year on year, which was relatively neutral. At present, broad credit is still conducting downward, and the sustainability of tax cuts and fee cuts is strong, and China’s economy will continue to recover.

“Xiaoyangchun” in the real estate market

Aluminum for construction accounts for about 33% of the total consumption of aluminium in China. According to the statistics bureau, the investment in real estate development increased by 11.8% from January to March, which was higher than 11.6% from January to February, and the new construction area increased by 11.9% from January to February, which was significantly higher than 6% from January to February. From January to March, the sales area of commercial housing decreased by 0.9% compared with the previous two months, and the sales volume of commercial housing increased by 5.6% compared with the previous two months, and by 2.8% in the previous two months. At the end of March, the area of commercial housing for sale was 516.46 million square meters, down 9.9% from the same period last year.

According to the survey data of housing enterprises, in the first four months of this year, sales of 75 Housing enterprises exceeded 10 billion yuan. Among them, sales of five leading housing enterprises, including Biguiyuan, Vanke, Hengda, Poly and Rongchuang, exceeded 100 billion yuan. While sales remained stable, real estate enterprises took land actively, and the phenomenon of land premium rate exceeding 100% reappeared. Eighteen enterprises took land more than 5 billion yuan in a month, which broke the monthly record of land market in the past year or so. Among them, Rongchuang, Biguiyuan, Xincheng, Zhonghai, Huarun, Greentown, Rongsheng, Jindi and other eight enterprises have more than 10 billion yuan in land.

This is closely related to the marginal improvement of financing channels for housing enterprises. In April, the intensive release of financing by housing enterprises approached 260 billion yuan, and the scale of financing approached 850 billion yuan. However, due to the high leverage rate of Chinese residents and the positioning of the central “housing is not speculative”, the “Xiaoyangchun” property market will be difficult to sustain for a long time, but it will still support the aluminum price in the medium term.

Power electronics and transportation accounted for 14% and 12% of China’s aluminium consumption, respectively. According to data from China Ride Federation, retail sales of generalized passenger cars in March were 1.78 million, down 12% from the same period last year, falling for 10 consecutive months, showing a cliff stall, and the automotive industry has yet to see a turning point. According to the State Grid Corporation’s Social Responsibility Report 2018, the State Grid’s planned investment in 2019 is 512.6 billion yuan, an increase of 4.84% over last year’s actual completion, which is relatively neutral.

Resumption of production

With the rapid rise of aluminium price since April, the profit level of electrolytic aluminium industry has recovered to a certain extent, but it is not enough to stimulate large-scale resumption of production. The current time also corresponds to the successive resumption of production capacity of Weiqiao in Shandong Province due to its shutdown in response to the policy of production restriction in autumn and winter. In November 2018, Weiqiaoguan in Shandong Province shut down production capacity of about 500,000 tons. On April 15, Shandong Province Announcement Document “Announcement on 542,000 tons of capacity replacement scheme for electrolytic aluminium in Shandong Weiqiao Aluminum and Electricity Co., Ltd.” According to the plan, Weiqiao in Shandong Province needs to dismantle its original capacity after the replacement capacity is put into operation, and the expected start-up time is 6 months. This capacity is expected to put pressure on aluminium prices after the second quarter.

In the first quarter of this year, the cumulative production of domestic electrolytic aluminium was 8.633 million tons, a decrease of 1.2% compared with the same period last year. Among them, the output in March was 2.981 million tons, down 1.5% from the same period last year. As supply and demand remain tight, the second quarter fundamentals remain optimistic. However, due to the widespread expectation that higher aluminium prices will stimulate more large-scale re-production, and Weiqiao replacement capacity is approaching, it is expected that the price of aluminium will be dominated by strong shocks.

In recent years, the domestic fertilizer market as a whole has shown a relatively weak trend, the demand for raw materials is not strong, potassium chloride temporarily maintains price stability, but the follow-up supply is relatively large, the domestic market weakening signal release. The supply of imported potassium is still loose. In the conservative mentality of new single trading, the downward price focus exists.

The quotation of domestic potassium enterprises is steady to support the downstream shipment. The arrival price of 60% crystal powder of Salt Lake benchmark products remains unchanged, maintaining 2350 yuan/ton, but the rebate policy is changed to 50 yuan/ton; Tibetan Ge 60% powder/crystal 2350 yuan/ton, 57% powder/crystal 2200 yuan/ton; 60 mainstream 2200-2250 yuan/ton of market outlet.

Affected by the end of spring fertilizer production and procurement in Northeast China, the supply radiated to North China market and the price widened. The price of big granules in Yingkou Port was 2300-2350 yuan/ton, while the price of white potassium in border trade Port was 62% 2050-2080 yuan/ton. The actual transaction was negotiated.

Most of the potassium imports from ports are concentrated in the hands of large distributors. The quotation is stable. The price of 62% white potassium in ports is more than 2350-2380 yuan/ton. The actual transaction is mainly negotiated according to the order.