According to statistics provided by the General Administration of Customs, in February 2019, China imported 8404.44 tons of titanium dioxide, a decrease of 2.81% and 32.43% year-on-year; imported 20842.34 tons in January-February, a decrease of 27.6% year-on-year; exported 64629.84 tons of titanium dioxide in February 2019, a decrease of 7.86% and 7.57% year-on-year; and exported 134556.59 tons in January-February, a decrease of 3.37% year-on-year.

Wang Shouwen, Vice Minister of Commerce and Deputy Representative of International Trade Negotiations in 2019, in response to “whether China accepts progressive tariff cancellation as part of the agreement”, pointed out that the heads of state of China and the United States have reached an important consensus, and established the principle and direction of abolishing all the tariffs imposed on each other. Any implementation mechanism must be bidirectional, fair and equal.

If all of the above are achieved, the export of titanium dioxide from China to the United States and even to the Americas will be substantially promoted.

According to the data reported by Yan Tieyun, the total export volume of China’s titanium dioxide to the United States in 2017 is about 46.2 million tons, accounting for 5.6% of the total export volume; the total export volume of China’s titanium dioxide to the United States in 2018 is about 51.7 million tons, accounting for 5.7% of the total export volume, an increase of 11.9% over 2017.

Due to the abnormal level of US tariffs, titanium dioxide in China has lost its original price advantage, and the first choice of American users has gradually become the second and third choice. Even so, the export of titanium dioxide to the United States is still growing. China’s titanium dioxide production capacity and output keep increasing, some of the output restrained and digested by the United States is gradually replaced by high-speed developing countries such as Southeast Asia. In 2018, China’s total exports of titanium dioxide to the United States are not open-ended growth, and we can expect a large-scale demand in the future.

Yan Titanium industry analyst Yang Xun believes that if tariffs return to a reasonable height, China’s titanium dioxide exports will return to the dominant price range, which is more conducive to the U.S. and the surrounding countries and regions with the U.S. as the center of the trade environment. The high cost-performance ratio of the international market may help us find more channels and users, which will fuel the profit and bullish market in the beginning of 2019.

With OPEC crude oil production declining by 560,000 barrels per day to 30.5 million barrels per day in February, international oil prices began to rebound gradually. WTI crude oil prices broke 57 dollars a barrel again. US President Trump once again called on OPEC to relax its efforts to raise crude oil prices. The contradiction between OPEC+and the United States about oil price is intensifying day by day.

U.S. Oil Faces Internal and Foreign Troubles with Increasing Production

In October 2018, the U.S. SUNRISE crude oil pipeline was put into operation, and the bottleneck of U.S. crude oil transportation has been improved to a certain extent. As a result, U.S. crude oil production continues to increase. Since 2019, U.S. crude oil production has risen steadily, reaching an all-time high of 12.1 million barrels per day in the week of February 22.

However, at this stage, the U.S. crude oil market still faces two problems: one is oil mismatch. Shale oil, as the main source of increasing crude oil production in the United States, produces light crude oil, while medium sulfur crude oil is still the main refinery equipment in the United States. Although heavy and light crude oil can be produced by mixing, the United States still needs to import heavy crude oil to meet domestic demand. Second, capital recovery. High attenuation rate is a major feature of shale oil production. Oil companies mostly maintain production through new drilling, and the capital is mainly supported by Wall Street financing. The book Saudi America by American journalist Bethany McLean reveals the fact that most of the oil companies involved in shale oil exploitation are trapped in increasing oil production, but their cash flow is always negative. Although some large oil companies made profits in 2018, the shale oil industry as a whole still needs to expand its market to maintain its current level.

Since the United States began to export large-scale crude oil in 2015, “energy independence” has become the mainstream trend of the United States. Although the net import of crude oil in the United States has been decreasing, the heavy crude oil in the United States still needs to rely on Canada, Saudi Arabia, Iraq, Venezuela, Mexico and other countries. The dramatic reduction of Venezuela’s crude oil production has also made it difficult for the United States to import heavy crude oil. Meanwhile, Saudi Arabia has cut its heavy crude oil supply to the United States. The decreasing supply of heavy crude oil has further stimulated the sensitivity of the United States to high oil prices. On the other hand, under the circumstances that it is difficult for the United States to adjust the demand of refineries on a large scale in a short period of time, the output of light crude oil is increasing and difficult to digest. As a result, American crude oil is facing the external problems of importing large quantities of heavy crude oil and the internal worries of excess domestic light crude oil.

As a net importer of crude oil, the United States wants to expand its market share in the global crude oil market, but oil prices and transportation costs are major constraints. Therefore, the United States hopes that oil prices will fall further, which will not only alleviate the pressure of domestic oil mismatches, but also bring back funds for oil companies to maintain production, and save costs for purchasing heavy crude oil, so as to obtain greater operating space.

Resolutely Reduce Production and Guarantee Financial Security in Saudi Arabia

As the largest producer among OPEC member countries, Brent oil prices of $65 per barrel at this stage are also unacceptable. Saudi Arabia’s budget increased by 7% to 1.106 trillion rials in 2019, equivalent to about $295 billion. According to the report, in order to maintain the deficit at $35 billion, Saudi Arabia expects to produce an average of 10.2 million barrels per day in 2019 at a price of $80 per barrel. But now production and oil prices are far below Saudi expectations. Saudi Arabia has cut production to 9.8 million barrels per day ahead of schedule in an attempt to further rebound oil prices under the OPEC+cut-off agreement.

In order to maintain oil prices and exports, Saudi Arabia has also made large-scale overseas investment. In February, China Weapons and Panjin Industries signed an agreement with Saudi Arabia and the United States to establish Huajin Ami Petrochemical Co., Ltd. with a total investment of over 69.5 billion yuan. It is expected to start production in 2024. Saudi Arabia is trying to ensure its future crude oil exports by establishing joint refineries overseas. Faced with huge fiscal deficits, Saudi Arabia urgently needs oil prices to rise to more than $80 per barrel, which is also the main reason why it actively calls for OPEC + to further reduce production.

Opinions differ. Russia is hard to choose.

Russia’s attitude towards reducing production is somewhat contradictory. From the repeated discussions on output reduction at OPEC + meeting to the failure of the reduction to reach the agreed scale, all kinds of signs indicate that Russia has been hesitant about the reduction. The president of Rosneft, a Russian oil company, is a typical example of his unwillingness to cut production. He told Russian President Putin that OPEC and non-OPEC production cuts were “in the hands” of the United States. Russia is facing a decline in oil market share. The OPEC agreement is a strategic threat to Russia’s oil industry. The Russian government is more supportive of production cuts. Russian energy minister Nowak said on March 4 that Russia plans to speed up oil production reduction this month and will reduce production by 228,000 barrels per day at the end of this month compared with last October. Putin also made it clear that he believed OPEC + production reduction agreement would help stabilize the oil market.

The core of Russia’s internal disagreement can be attributed to the government’s desire to consolidate its alliance with OPEC, while enterprises are worried about their declining market share. In the face of the fierce US, heating with OPEC is an important means to maintain its market position, but the decline in market share caused by the reduction of production will also cause irreversible harm. Faced with this dilemma, Russia’s attitude will largely affect the future direction of oil market development.

In short, for their own core interests, the United States, Saudi Arabia and Russia, the three major oil producers, have very different expectations for production, of which the contradiction between the United States and Saudi Arabia is almost irreconcilable. As the biggest variable, whether Russia will resolutely reduce production or delay in the future will be the key factor to eventually leverage the oil market. We believe that OPEC + will not discuss further production cuts until the June meeting, before which Russia may continue to maintain a state of “inadequate production cuts”. As a result, WTI oil prices will remain between $53 and $62 a barrel in the next three months, and Brent oil prices will remain between $64 and $72 a barrel.

On March 19, it was reported that the Korean government, while lowering sales tax, would substantially reduce the cost of importing LNG, making its tax amount lower than that of coal, in order to encourage people to switch to cleaner fuels in order to face the worsening air pollution.

Korea’s Ministry of Trade, Industry and Energy has proposed to reduce the surcharge on LNG imported fuel for power generation from the current 24.2 won ($0.02) per kilogram to 3.8 won. The revised tax law will come into force on April 1.

This is expected to boost the use of liquefied natural gas. So far, LNG taxation has been higher than fossil fuels.

Because of its low emission, the environmental cost of LNG is half that of bituminous coal. But the total tax, including special consumption tax, import surcharge tax and customs duty, is 91.4 won, more than twice the 36 won of bituminous coal.

After the special tax exemption in July last year, the reduction of import surcharge of liquefied natural gas will raise the total levy of liquefied natural gas from 23 won to 91.4 won, while the Levy of power coal will rise from 36 won to 46 won.

The government estimates that the new tax will help reduce 427 tons of ultrafine particulate matter per year. Ultrafine particulates are small dust particles with diameter less than 2.5 microns, which are directly absorbed into the blood and pose serious health risks.

LNG used in thermal power plants or cogeneration plants will enjoy full tax rebate, because its energy efficiency is significantly improved, about 30 percentage points higher than that of traditional power plants. From April 1, enterprises with installed capacity of less than 100 MW will reduce tax by 6.9%.

At present, 40% of South Korea’s electricity supply depends on coal. Liquefied natural gas accounts for less than 20%. Nuclear reactors account for 30% and renewable energy sources such as solar, wind and fuel cells account for about 10%.

In the next three years, China’s liquefied petroleum gas (LPG) will show double growth in imports and demand.

On March 21, the 24th China LPG International Conference, co-sponsored by the Guangdong Oil and Gas Chamber of Commerce and the Guangdong Petroleum Society, was held in Suzhou.

“China’s LPG imports are expected to increase to 23-25 million tons in 2021.” Yan Jiasheng, vice president of Donghua Energy Co., Ltd. (002221.SZ), China’s largest LPG importer and distributor, said at the meeting that China’s LPG demand will increase steadily in the next three years with the promotion of the Sixth National Standard Petroleum and the centralized commissioning of the propane dehydrogenation (PDH) cracking unit.

According to his forecast, China’s LPG imports will increase by 20% to 30% in 2021 compared with 2018.

In 2018, as the world’s largest LPG importer, China’s LPG import volume was about 19.16 million tons, up 11.5% year-on-year, accounting for more than 1/3 of the total apparent consumption of LPG.

According to Zhongyu data, in 2018, China produced about 38,005,000 tons of LPG, up 11.2% year-on-year.

LPG, also known as liquefied gas, is a kind of gas that volatilizes during the exploitation of oil, natural gas or the extraction of crude oil. It is a mixture of propane and butane, usually accompanied by a small amount of propylene and butene.

LPG is mainly used for civil fuels, alkane cracking, PDH to propylene and so on. The canned gas used in rural areas and towns is usually LPG.

“At present, the import price of LPG in China is higher than that in other parts of Northeast Asia.” He Yanyu, head of pricing for global NGL (natural gas liquids) at IHS Markit, a global industry information service provider, said that in recent years, the correlation between LPG and global crude oil price fluctuations has been increasing, and the attribute of LPG as a “by-product” of crude oil has been strengthened.

In 2018, Saudi Arabia’s propane exports to China were priced at $540 per ton, an increase of 14.9 per cent over the same period last year.

“The sanctions imposed on Iran will lead to the reduction of LPG exports in the Middle East and a global pattern dominated by LPG supply in North America.” Emma Lamb, chief consultant of NGL Strategy, said that the Asian market was the dominant market for LPG consumption.

In 2018, global LPG supply was 300 million tons, an increase of 3.7% year on year. Depending on abundant crude oil production, the Middle East is the second largest LPG export area after North America.

“In 2019, as the world’s largest exporter of LPG, the impact of the United States on the price and volume of LPG trade will be strengthened day by day.” He Yanyu said that influenced by China’s trade tariff policy with the United States, China has reduced its imports of LPG from the United States. To meet demand, Chinese buyers will choose to buy more Middle East spot goods.

On August 23, 2018, China began imposing a 25% tariff on imports of liquefied gas from the United States.

“The persistence of tariff collection has prompted the collection of LPG’s'exchangeable’market.” Yan Jiasheng said that by exchanging contracts, Chinese LPG importers “transitioned” their original LPG contracts with the United States to other Asian countries such as Japan and South Korea, and sought to buy more LPG from the Middle East, Australia and West Africa.

Demand for polystyrene foam plastics (EPS) in Asia will remain weak in the near future, as China, a key market, stagnates seasonally with sufficient supply.

But because of production losses, regional producers have pushed up prices. Since the end of January, the difference between EPS and styrene monomers has been below the break-even point of $180 per ton.

According to ICIS data, spot EPS prices in China rose further on March 15 compared with last week, with CFR quoting $1,250-1,260 per ton.

Due to the seasonal stagnation of downstream construction industry, China’s demand is particularly tepid, which may keep EPS production at a low level in the coming weeks.

Demand in Southeast Asia is relatively good, and Asian suppliers prefer to sell in the region.

At present, the inventory level of Chinese terminal customers is good, and the EPS supply in the Chinese market is sufficient to meet the demand. It is reported that the operating rate of Chinese manufacturers is about 70%.

ICIS data showed that the EPS premium to styrene monomers fell to a new low of $160 per ton in the week ending March 8, and Asian manufacturers kept operating interest rates low to curb losses.

According to New York Bloomberg News on March 19, American refiners not only buy crude oil to produce gasoline and diesel, but also compete with producers and traders to export shale oil.

Marathon Petroleum Corp. and Philips 66, two of the three largest independent fuel producers in the United States, are entering a boom in shale oil exports. Gary Heminger, chief executive of Marathon Petroleum Corp., said in an interview at a meeting of U.S. fuel and petrochemical manufacturers in San Antonio that he traveled to Singapore and South Korea two weeks ago to find potential customers for U.S. crude oil.

In addition to the Grey Oak Pipeline to Coppers Christie, Texas, which will be completed by the end of the year, the marathon also transports crude oil from the Midwest to New Orleans, where it can be exported through the Louisiana offshore oil port.

At the end of 2018, Philips 66 shipped Bacon Oil from North Dakota to Mexico, defeating trading companies and producers and supplying Mexican Oil Company with the first batch of American crude oil.

1. Supply and demand of China’s HDPE market in 2018

In 2018, the total consumption of HDPE in China was 134.283 million tons, accounting for 44.57% of the total domestic consumption of PE. From the overall distribution of domestic supply and demand, East, North and South China were the main consumption areas of HDPE, while Northeast, Northwest and South China were the main production areas, so the allocation and sales of goods in Northwest and Northeast China were larger. With the development of national policy orientation (urbanization construction, coal to gas, ban on waste, etc.) and medicine, logistics and other industries, domestic demand for HDPE is growing rapidly, and there are large gaps in HDPE film, pipe, hollow and injection moulding. Domestic HDPE output, import and apparent consumption increase year by year.

II. China’s HDPE Consumption Proportion in 2018

In recent years, the downstream consumption of film and sheet materials, injection moulding, pipes and fittings has increased. In the field of film, the vigorous development of e-commerce in recent years has led to the leap-forward growth of express delivery business. People’s daily shopping in e-commerce has gradually changed from easy-to-pack and transport-resistant products (such as clothing, books, etc.) to diversified purchases (such as fragile goods, fresh goods, etc.). The rapid development of express delivery industry promotes the demand of packaging industry and drives the demand of film and sheet materials. With the development of the Internet in China, the With the increasing penetration of e-commerce and Internet and the upgrading of consumption level, there is still room for a substantial increase in the total demand of packaging industry. In the field of injection moulding, with the improvement of residents’consumption level and diversification of demand in recent years, as well as the liberalization of the second child policy and the continuous expansion of population base, people’s demand for daily necessities has been promoted, and the demand for injection moulding has also increased. With the development of urbanization in our country, the demand for PE pipes keeps growing. In recent years, the popularity of heating pipes in residential buildings in northern China, and the promotion and implementation of the policy of “coal to gas” in recent years have greatly promoted the demand for PE pipes, and the demand for pipes has increased significantly.

III. Output of Plastic Products in 2017-2019

From January to February 2019, the output of plastic products decreased significantly compared with previous years. With the increasing supply and shrinking demand in recent years, the imbalance between supply and demand in polyethylene market has become more and more evident, and the prices of HDPE varieties are constantly at a new low point. All kinds of HDPE prices are unavoidable, and the sales situation is gloomy. Businessmen are not in a good mood, and the market continues to mourn. Therefore, in today’s society with the continuous improvement of economic development and consumption level, market demand shows a more high standard and diversification. Only by further developing high-performance products, can we better occupy the market initiative.

From late December to the present three months, the price of potassium sulfate has fallen by 100-200 yuan (ton price, the same below). During this period, the average starting rate of Mannheim potassium sulfate industry is only 50%, which is much lower than 63% of the same period last year. The price of potassium sulfate is basically the same as that of the same period last year, but the price of potassium chloride is about 150 yuan higher. It can be seen that in the past three months, potassium sulfate manufacturers have experienced what. Fortunately, with the formal launch of the spring market, the market of potassium sulfate in some areas has gradually recovered.

According to Zhongfei, some low-end prices in Hebei, Shandong and Northeast China have rebounded slightly in recent days. Not long ago, the actual factory price of 52% water-soluble powder and 50% granular potassium sulfate in Hebei and Northeast China dropped to about 2800 yuan, but now the price of 2850 yuan is not considered by all manufacturers. Some factories whose inventory pressure is obviously relieved and the start-up rate is still low say that they will not take orders for the time being under 2900 yuan.

In addition, the word “export port” has appeared in the market of potassium sulfate. Customs data show that the export volume of potassium sulfate in January was 0.72 million tons, a sharp increase of 1700% compared with the same period last year. Although in fact that amount is still poor, but this growth rate is really shocked, so that the industry for zero tariff potassium sulfate exports generated more yearning. Whether it is 50% powder, 52% water-soluble powder, 50% granule or 50% ball, whether the export price is slightly higher or slightly lower than the domestic price, whether it is directly negotiated or mediated by traders… In short, “Export Port” has been disseminated and discussed by more and more industries, and the export volume has indeed continued to increase (the actual export volume may reach about 100,000 tons in the first quarter), which has played a positive role in the domestic market.

However, while the local low-end price rebound, the high prices in central, southern and southwestern China continue to fall, and the price of potassium sulfate in water-salt system is gradually falling, so it is too early to conclude that potassium sulfate should “rise from the dead”. First of all, demand is not strong, the threat of demand reduction still exists, inventory pressure is only eased, has not really lifted; secondly, the price of potassium chloride still has room to fall, and the overall situation of by-products is slightly better than the previous two years; thirdly, the production of potassium sulfate in water-salt system will be further restored after April; fourthly, although the export volume is considerable, the main benefit is that few exports are located. Advantage manufacturers.

So now we can only say that the market of potassium sulfate has improved, prices at both ends are concentrated in the middle, there is a possibility of stabilization, the pressure to continue to fall in the short term is weakened, and even there may be a partial tightening, rebound, but the overall price recovery is still lacking of strong supporting factors for the time being.

According to Dow Jones, Ole Hansen, an analyst at Sambourg Bank, the global oil market is likely to experience a supply gap of about 500,000 barrels a day in the second quarter of this year after OPEC’s production cuts and oil production declines. However, he said that despite optimistic fundamentals, the current oil price rise may be suspended after climbing to a four-month high. Hansen said that the rise in crude oil prices caused by reduced supply for political purposes could only push oil prices up to levels where global demand might begin to be affected. He believes that Brent and West Texas Medium Oil have strong resistance levels of $70 and $60 per barrel, respectively.