Industry insiders: new devices are put into operation and demand is growing steadily

On August 1, the “Ethylene Glycol Sub-Forum” of the Global Petroleum and Chemical Industry Economic Situation Analysis Conference was held in Yantai, Shandong Province. Several guests from enterprises, institutions and industry associations shared their views and views from different perspectives on the current market situation and industry characteristics of Ethylene Glycol.

Futures Daily reporters learned that, in addition to economic and trade frictions, there has been little change in the demand side of ethylene glycol. The sustained decline since September 2018 was mainly triggered by the concentration of new capacity. According to statistics, the price of ethylene glycol in the main textile raw material market has fallen from 8,230 yuan/ton in early September 2018 to 4,430 yuan/ton in late July 2019, which is close to a “lumbar cut”. In view of the fact that a large number of new projects are planned to be put into operation in the next two years, some guests said that “the market price of ethylene glycol is expected to remain low from 2019 to 2020, and enterprises should be prepared to live a hard life”. In addition, the reporter also learned that the domestic project of coal-based ethylene glycol has developed rapidly in recent years, and great progress has been made in both technology and scale of production. The development and improvement of coal-to-ethylene glycol has gradually become the focus of attention in the chemical industry.

Demand side: trade frictions have limited impact

Overall stable growth

Futures Daily reporter learned that polyester is the most important downstream area of ethylene glycol. At present, more than 87% of ethylene glycol is used in polyester production, and polyester is the highest proportion of products. Due to the incomparable advantages of natural fibers with low cost and high spinnability, polyester is widely used in garment and textile industry, and the related demand is growing continuously.

According to the person in charge of Sinopec Economic and Technological Research Institute, since 1950, the consumption of natural fibers has been relatively stable, while the consumption of synthetic fibers has shown a greater growth rate. The United Nations expects the global population to grow to 7.76 billion by 2020. Thus, the per capita consumption of synthetic fibers will exceed 1.35 kilograms, and the total consumption will break through the 100 million tons mark for the first time. At present, polyester has accounted for more than 75% of the total consumption of synthetic fibers. It can be said that polyester is not only the main source of the growth of synthetic fibers, but also an important force to support the development of ethylene glycol industry.

Specifically, from 2016 to 2018, China’s apparent demand for ethylene glycol has maintained a steady growth trend. Yang Qianli, general manager of Shanghai Yijing Industrial Co., Ltd., introduced that in 2018, China’s apparent demand for ethylene glycol was 16.6 million tons, of which 9.95 million tons were imported. By comparison, China’s domestic output was only 6.65 million tons, and its self-sufficiency rate just reached 40%, still at a low level. From this point of view, there is still room for growth in domestic demand for ethylene glycol.

At the forum, Ma Xiumei, deputy general manager of Hengli Refining and Chemical Company, also explained to the participants the impact of trade friction on downstream demand for ethylene glycol. “In the fourth quarter of 2018, due to the prevailing early delivery by export enterprises, China’s textile and apparel exports were not significantly affected by the U.S. tax increase measures, but since 2019, the amount of textile exports to the U.S. has declined significantly.” According to the data released by the General Administration of Customs of China, from January to May 2019, chemical fibers, yarns, carpets and non-woven fabrics in textile exports to the United States declined in varying degrees. However, people concerned said that because the scale of China’s textile industry and the matching capacity of the industrial chain have certain irreplaceability in a short time, Chinese enterprises can also circumvent the switch tax through indirect export. In conclusion, the development of polyester industry has provided support for the demand of ethylene glycol. Although trade friction may have adverse effects on the export of downstream products of ethylene glycol, it will not change the overall growth trend of demand side.

B Supply side: Increased competition in imported products with newly added capacity

According to reports, during the 12th Five-Year Plan period, the domestic petrochemical industry continued to develop rapidly, which was manifested in the following three aspects: firstly, the new naphtha ethylene unit was put into operation continuously, and the supporting ethylene glycol unit was relatively large; secondly, the domestic methanol olefin project and the outsourced ethylene ethylene ethylene glycol unit were successively constructed. Third, more than 60 new coal/syngas ethylene glycol plants are under construction and planned to be built in China, with capacity approaching 30 million tons, of which 6 million tons are added around 2020, and most of the remaining projects are planned to be put into operation before 2025.

In 2018, a total of 2120,000 tons of ethylene glycol production capacity were added in the whole year, including CNOOC Huizhou project with an annual capacity of 400,000 tons and Yangquan project with an annual capacity of 200,000 tons. In addition to CNOOC Huizhou project using petroleum technology, other projects are using coal technology. The centralized operation of the new plant led to a 25.57% increase in ethylene glycol production capacity in a year, which reduced market expectations for the price of ethylene glycol.

Yang Qianli said that although no new devices were put into operation in China in the first half of 2019, the total output continued to grow. “In the first half of 2019, the output of coal-based ethylene glycol was 1512,000 tons, an increase of 52% over the first half of 2018, and that of petroleum-based ethylene glycol (including MTO) was 2.465 million tons, an increase of 17.9% over the first half of 2018.” In addition, at present, the total production capacity of ethylene glycol projects under construction and proposed in China is close to 30 million tons. The pressure on the price of ethylene glycol caused by the expansion of production is bound to remain for some time.

Overseas, the period from 2019 to 2023 is a period of rapid expansion of global production capacity. During this period, SASOL, MEGlobal in the United States, Kayang Petrochemical and Jubail Petrochemical in Saudi Arabia and other enterprises have plans to put into operation. The head of Sinopec Economic and Technological Research Institute said that in the next five years, 5.29 million tons of new ethylene glycol production capacity are expected to be added abroad, with an average annual increase of about 1 million tons. North America and the Middle East are areas with relatively concentrated production capacity, and their installations are dominated by the traditional petroleum system.

According to the person in charge, ethylene glycol from North America and the Middle East has a greater competitive advantage in production, thanks to the breakthrough in shale gas production technology and the proximity to oil producing areas. At present, domestic production can not meet the demand, and the rapid growth of ethylene glycol imports leads to more fierce price competition in the domestic market. According to statistics, in 2018, China’s total import of ethylene glycol was 9.8 million tons, an increase of 1.08 million tons over the previous year, an increase of 12.4% over the previous year. In the case of little change in the demand side, the domestic multi-unit centralized production, and then superimposed imports continued to increase, the supply side significantly released, so that the price of ethylene glycol pressure.

C Coal to Ethylene Glycol: Great Prospects

The characteristics of “more coal and less oil” determine that China must expand the application of coal in chemical industry. In the process of expanding production of ethylene glycol since 2018, it is the large-scale production of coal-based ethylene glycol plant that makes people’s eyes bright. According to statistics, in 2018, the production capacity of coal-based ethylene glycol increased by 1.72 million tons per year, accounting for 81.13% of the total annual production capacity. As of April 2019, the actual production capacity of coal-based ethylene glycol has reached 432,000 tons per year. In addition, production capacity of more than 7 million tons per year is expected to be put into operation by the end of 2022. Yang Qianli estimates that in three years’time, the capacity of domestic coal-based ethylene glycol plant will reach 10 million tons per year, plus petroleum-based ethylene glycol, which can meet 70-80% of domestic demand. At that time, the external dependence of China’s ethylene glycol market will be greatly reduced.

With the continuous optimization of related production technology, the quality of coal-based ethylene glycol has reached the standard requirements of downstream production enterprises. It has been widely used in the production of polyester, bottle flakes, staple fibers and filaments, and the blending ratio has been improved. Yang Qianli said that when polyester enterprises decide the blending ratio of coal to ethylene glycol, they no longer only consider the technical requirements, but also consider the production scale, market price, process equipment, use time, marketing strategy and other aspects comprehensively.

However, some market participants believe that at present, the blending ratio of coal to ethylene glycol in most enterprises is only 20%-30%. The unstable supply is the main reason that restricts its larger-scale application. Polyester enterprises need stable supply to ensure production and sales, but due to the depressed market price from 2019 to now, the start-up rate of coal-based ethylene glycol plant has not reached 60% for a long time, so it can not guarantee the sustainability and stability of supply. Many experts at the meeting agreed that large-scale and high-load operation of coal-based ethylene glycol plant is an important prerequisite to support its future development.

In view of the current low price and fierce competition in the market, Yang Qianli put forward his own thoughts and suggestions from the raw materials and products of coal-based glycol. On the raw material side, “cost reduction is the king of survival”. Even if the oil price rises to $70 per barrel, the production cost of ethylene to ethylene glycol is still lower than that of coal. Therefore, relevant enterprises need to further control the cost of coal-to-ethylene glycol through process innovation and fine management. Futures Daily reporter learned that in recent years, there have been some new changes in the raw material end, some enterprises began to try to use waste gas or coke oven tail gas as raw materials to produce ethylene glycol. There are still some problems to be solved in gas volume, gas pressure stability and purity of tail gas in this technical route. But if it can pass long-term stability certification, it will help to reduce the production cost of subsequent coal-based ethylene glycol plant, and then increase the competitiveness of this technical route.

At the product end, the coal-to-ethylene glycol unit equipped with methanol production line shows greater flexibility. Such devices can flexibly adjust the product structure according to market conditions. For example, when the price of ethylene glycol is low, it can reduce the production of ethylene glycol and increase the methanol load. At present, Xinhang and Yigao units have such capabilities, and many follow-up units have been deployed and designed in the period of investment and technical demonstration. In addition, “PJ-EG polygeneration technology” is also developing. If a set of devices can produce products of multiple varieties and sequences according to the situation, the ability of coal-based ethylene glycol enterprises to resist price fluctuations and adapt to market changes will be greatly improved. Yang Qianli concluded that “coal-based ethylene glycol has made outstanding contributions in alleviating supply constraints, reducing production costs and enhancing the competitiveness of domestic polyester fiber enterprises, and its prospects are bound to coexist with challenges and opportunities. It is believed that the coal chemical industry can prove that the coal-to-ethylene glycol route is a “road to go, to go well”.

Price Trend

Business associations: maleic anhydride market rose in July as a whole

According to data from business associations, the average price of maleic anhydride offered by the end of July was 6987.50 yuan/ton (including taxes), with a monthly increase or decrease of 5.87%.

On July 31, the maleic anhydride commodity index was 65.82, down 0.12 points from yesterday, down 46.78% from the cyclical peak of 123.67 points (2017-12-26), and up 17.18% from the lowest point of 56.17 on February 16, 2016. (Note: Period refers to 2011-09-01 to date)

II. Analysis of Influencing Factors

Products: In July, maleic anhydride market continued to rise first and then fall. July crude oil market shocks, downstream resin factories due to environmental factors and high temperature factors, low start-up rate, market continued to weaken, the demand for maleic anhydride is general. In July, most of the major domestic maleic anhydride plants operated normally, and the domestic supply of maleic anhydride was sufficient. Downstream enterprises and traders have low inquiry intentions, mainly to maintain on-demand procurement, and market transactions are general.

Industry chain: According to the monitoring of business associations, the hydrogenated benzene market rose 8% monthly this month due to the double positive effects of the rise in the external market of pure benzene and the rise in the listing price of pure benzene in Sinopec. The downstream resin factory starts because of environmental protection and high temperature factors, low start-up rate and weak market sentiment. Benzene law deficit situation aggravated, this month due to the sharp decline in pure benzene port inventory and import volume, the United States pure benzene supply gap, domestic pure benzene prices rose by more than 8%. The price of n-butane is still hovering at a low price, the market is well supplied, and the downstream is still in the off-season. In August, maleic anhydride is expected to continue downward trend.

Industry: According to the price monitoring of business associations, in July 2019, 43 kinds of commodities rose annually in the chemical sector, of which 23 commodities increased by more than 5% accounted for 27.4% of the monitored commodities in the sector; the top three commodities were yellow phosphorus (47.32%), phosphoric acid (26.94%) and hydrochloric acid (23.33%). There are 33 kinds of commodities with a decline of more than 5%, accounting for 11.9% of the monitored commodities in this sector. The products with the first three declines are trichloromethane (-16.39%), sulfur (-13.71%) and bromine (-9.66%). This month’s average rise and fall was 2.41%.

3. Future Market Forecast

Analysts of maleic anhydride products from Business Society Chemical Branch believe that at present, the domestic maleic anhydride market is expected to have a downward trend in August.

Oil prices plunged more than 7% on Thursday to a seven-week low after President Trump said he would impose a 10% tariff on $300 billion worth of Chinese imports from September 1.

The protracted trade war between the world’s two largest economies has raised concerns about oil demand.

Brent crude oil futures plunged $4.55, or 6.99%, to close at $60.50 a barrel, once falling to $60.02, the lowest level since June 13. Thursday saw the biggest one-day percentage decline since February 2016.

U.S. crude oil futures plunged $4.63, or 7.9%, to close at $53.95 a barrel, after falling to the lowest level since June 19 at $53.59. Thursday recorded the largest percentage decline since February 2015.

“Oil prices have fallen sharply today, frustrated by the Federal Reserve’s policy of easing and the announcement by President Trump of tariffs on Chinese imports,” said John Kilduff, partner in Again Capital Management.

“The U.S. -China trade war has seriously damaged the prospects for energy demand, which only exacerbates these concerns,” he said. “The trade war is clearly far from over.”

Oil prices fell earlier and continued to respond to the Federal Reserve’s policy decision on Wednesday. The Federal Reserve cut rates as expected, but Fed Chairman Powell said the rate cut may not be the beginning of a series of rate cuts to help the economy withstand the risk of global economic weakness, which reversed market sentiment.

The Fed’s information did not match market expectations, triggering a rebound in the dollar. The dollar index rose to a 26-month high of 98.93 on Thursday. The strength of the dollar has made dollar-denominated oil more expensive for holders of other currencies. After Trump commented on tariffs, the dollar index moved below flat.

The bearish momentum of crude oil prices is likely to continue after Thursday’s fall below key support levels, said Edward Moya, senior market analyst at OANDA.

Oil prices fell on Thursday, although U.S. inventories fell more than expected, and the Organization of Petroleum Exporting Countries (OPEC) cut production in July, which is usually a profit-driven factor in oil prices.

Manufacturing activity in the United States slowed to a nearly three-year low in July, and new factory orders rebounded slightly, suffering from the negative impact of the trade war between the United States and China.

Other data released on Thursday showed that the number of new jobless claims rose last week and construction spending fell in June as private construction investment fell to its lowest level in a year and a half.

Data released Thursday showed that overall U.S. oil demand fell by 98,000 barrels a day in May to 20.26 million barrels a day.

Price Trend

According to the data of business associations, the price trend of cryolite market was temporarily stable in July, with the average price stabilizing at about 6333.33 yuan/ton in the month, down 2.99% from the same period last year.

II. Market Analysis

Products: Cryolite manufacturers quoted stable prices this month, as of July 31, Zibo Kunyu industry and trade cryolite quoted 6500 yuan/ton; Changshu Hongjiafu Co., Ltd. cryolite quoted 7300 yuan/ton; Jiaozuo City commercial cryolite quoted 7000 yuan/ton; Zhengzhou Tianrui crystal technology cryolite quoted 6500 yuan/ton; Shandong Botao Group Co., Ltd. The price of cryolite is 7000 yuan/ton.

Industry chain: The domestic market price of fluorite in the upstream of July is shaking. By the end of the month, the average price of fluorite in China is about 312.50 yuan/ton, which is more stable than that at the beginning of the month. Recently, the fluorite plant has started to work normally. On the whole, the supply of fluorite is sufficient, but the fluorite market is greatly affected by environmental protection. The supply of fluorite in the field is normal. The price of fluorite from different factories has fallen, and the price trend of fluorite market is temporarily stable.

Industry: According to the price monitoring of business associations, in July 2019, 43 kinds of commodities rose annually in the chemical sector, of which 23 commodities increased by more than 5% accounted for 27.4% of the monitored commodities in the sector; the top three commodities were yellow phosphorus (47.32%), phosphoric acid (26.94%) and hydrochloric acid (23.33%). There are 33 kinds of commodities with a decline of more than 5%, accounting for 11.9% of the monitored commodities in this sector. The products with the first three declines are trichloromethane (-16.39%), sulfur (-13.71%) and bromine (-9.66%). This month’s average rise and fall was 2.41%.

3. Future Market Forecast

Analysts of cryolite products from business associations believe that: at present, the plant is running normally, the factory stock is sufficient and pressure-free, the ex-factory quotation is temporarily stable, the upstream has little impact on cryolite, and the market of cryolite is expected to run steadily in August.

According to information released recently by PetroChina, as of July 23, the Central Asian natural gas pipeline and the Sino-Burma natural gas pipeline have delivered 300 billion cubic meters of natural gas to China since they were put into operation.

China’s natural gas imports have increased year by year, from 57.8 billion cubic meters in 2014 to 126.2 billion cubic meters in 2018, with a compound growth rate of 22%. China’s natural gas import resources include pipeline gas and liquefied natural gas (LNG), mainly from Central Asia and Myanmar, and LNG mainly from Australia, Qatar, Malaysia and Myanmar. Indonesia, Papua New Guinea, the United States and other countries. The increase of pipeline gas import is relatively limited, and LNG import resources have been in a multi-channel state in recent years. Central Asia natural gas pipeline and China-Myanmar natural gas pipeline are the main channels to ensure China’s natural gas energy security.

On April 3, 2006, China and Turkmenistan signed a framework agreement on gas pipeline construction and long-term natural gas supply. Central Asia natural gas pipeline is through Uzbekistan and Kazakhstan, with a single mileage of 1837 km. AB pipeline was put into operation in December 2009 and C pipeline was put into operation in June 2014. The third pipeline currently has a gas transmission capacity of 55 billion cubic meters per year. In December 2009, CNPC and the Ministry of Energy of Myanmar signed an agreement on the rights and obligations of China-Myanmar crude oil pipeline. The first station of China-Myanmar natural gas pipeline is located in Jiaoyao Port on the west coast of Myanmar. It is imported from Ruili, Yunnan Province. It was completed and put into operation in July 2013 with a gas transmission capacity of 5.2 billion cubic meters per year.

“The two major pipelines are important projects of” one belt and one road “. The construction and operation of pipelines have brought nearly 10000 jobs to the countries along the border, and the total taxes and fees have been paid more than 2 billion US dollars. The oil industry of the relevant countries has also been promoted, and the goal of mutual benefit and win-win has been achieved, which has effectively deepened the political economy of China and its host country. Cooperation.” Sun Yang, an information analyst at Zhongyu, said that as one of the three major energy sources, natural gas is the main clean energy source in the future. Further promotion of natural gas development in China also needs to be supplemented by imported natural gas.

The proportion of LNG imports in China’s total natural gas imports has increased year by year. Since 2017, imports of LNG have exceeded imports of pipeline gas. In 2018, LNG imports accounted for 59% of total natural gas imports. In addition to the signing of long-term associations with Australia, Qatar, Malaysia and Indonesia by PetroChina, Sinopec and CNOOC, Chinese traders are also active in LNG spot market procurement. In terms of pipeline gas, PetroChina and Sinopec have strengthened communication and coordination with various resource parties in Central Asia and Myanmar to ensure the normal supply of pipeline gas.

In 2018, there were 26 natural gas import countries in China, 10 more than in 2016. The new countries are Algeria, Equatorial Guinea, Angola, Canada, the Netherlands, Britain, France, Japan, Cameroon and Egypt.

From the point of view of import enterprises, the LNG import volume of CNOOC, PetroChina, Sinopec and other enterprises from 2016 to 2018 shows a significant growth trend. “CNOOC’s LNG imports declined from 62% in 2016 to 50% in 2018, but the decline slowed down in 2018, because CNOOC’s receiving stations and business scope in the north are relatively limited and there is competition from some new buyers in the south. On the contrary, PetroChina and Sinopec’s import share has increased steadily. Jin Lianchang gas analyst said.

It is noteworthy that in 2018 CNPC and CNOOC signed a large number of long-term agreements with foreign oil companies. CNPC signed LNG import contracts with Cheneil Energy Company, Qatar LNG Company and ExxonMobil. CNOOC and Malaysian Petroleum and Gas Company signed five-year LNG contracts of 400,000 tons per year. Woodfibre signed a 13-year contract of 750,000 tonnes per year, and the long-term agreement with Dodall increased from 1 million tonnes per year to 1.5 million tonnes per year. With the early LNG contract signed by CNOOC and BP coming into effect in 2019, the new LNG contract will exceed 10 million tonnes.

“In 2018, China imported 51.7 billion cubic meters of natural gas pipelines from Central Asia and China-Myanmar. The importance of these two pipelines is self-evident.” Sun Yang said that Central Asia accounted for 94% of pipeline gas imports in 2018, while China and Myanmar accounted for 6%.

In addition, the natural gas imported by PetroChina from Kazakhstan in 2019 will double to 10 billion cubic meters compared with 2018; the eastern natural gas pipeline between China and Russia is expected to supply gas to China by the end of 2019, with an annual delivery of 38 billion cubic meters of natural gas, which will form three major natural gas pipeline gas transmission systems in Northwest, Southwest and Northeast China, and offshore natural gas. The system jointly guarantees domestic natural gas supply.

I. Trend analysis

According to the monitoring data of business associations, cobalt price has risen slightly since mid-July. As of July 31, cobalt price has risen by 5.47% to 228,000.00 yuan/ton, 0.65% lower than that of 229,500.00 yuan/ton at the beginning of the month, 216,166.67 yuan/ton higher than the lowest price of cobalt in mid-month. Cobalt prices first fell and then rose, stop falling and rebound, cobalt market or through the coldest winter, into the recovery rising range.

II. Market Analysis

1. International Cobalt Price Falling

In July, the cobalt price in LME market fluctuated and fell, and the cobalt price in international market did not perform well. International cobalt market performance is not good, affecting domestic cobalt market, domestic cobalt market is negative.

2. Cobalt prices can’t fall

Cobalt prices have fallen sharply since the summer of 2018. At present, domestic cobalt metal prices have fallen by nearly 70% from the April 2018 high. Shen Wanhongyuan reported that the cobalt price is close to the mining cost at present, unless there is an extreme situation of seizing the market with low prices, it can not fall.

3. The future market of new energy vehicles is not optimistic.

According to the wholesale sales data of passenger car manufacturers, the wholesale sales of new energy narrow passenger cars in June reached 134,000 units, an increase of 90% over the same period last year. From January to June 2019, the sales of new energy passenger cars reached 570,000 units, an increase of 65% over the same period last year. June is the last month of the transition period of the New Deal of Subsidies, which objectively stimulates early consumption and overdraws some future consumption. The surge in sales of new energy vehicles in June does not reflect the real demand of the market, on the contrary, it will restrain the growth of new energy vehicles in the future. Previously, a large part of the driving force behind the sales of new energy vehicles came from subsidies. This year, the subsidies have declined dramatically, and the profit margin of new energy vehicles has dropped to a low level of 2% to 3%. New energy vehicles are facing profit pressures. If prices do not rise in the second half of the year, there will be losses. Once a company loses money, the sales of new energy vehicles in the second half of the year will be full of variables. It is expected that the growth rate of new energy vehicles will slow down in the future, which will be bad for the future cobalt market.

4. Mobile phone market

In June 2019, the total shipment of domestic mobile phone market was 34.31 million units, down 6.3% from the same period last year; in January-June 2019, the total shipment of domestic mobile phone market was 186 million units, down 5.1% from the same period last year. Sales of mobile phones declined, demand for cobalt declined, which was bad for the cobalt market.

According to the official information of China Quality Certification Center, 8 5G mobile phones have been certified by China Quality 3C. At present, 5G mobile phone manufacturers with three major certificates are making final preparations, the first wave of domestic 5G mobile phone shipment is imminent. ZTE 5G mobile phone officially opened on July 23, Huawei released its 5G mobile phone on July 26, and other mobile phone manufacturers will release their own brand 5G mobile phone in the near future. With the advent of 5G era, the storm of changing planes is bound to come. The demand for cobalt for changing planes will be greatly increased, which is obviously beneficial to the cobalt market. However, due to the recent launch of 5G mobile phones, how the market reaction remains to be investigated, whether it can trigger the switching storm still needs time to test, the demand of cobalt market will not improve significantly in the near future, and the demand of cobalt market will not change much in the near future.

5. The situation in Congo or its influence on cobalt supply

According to Darton Commodities, handicraft production soared during cobalt price increases in 2017 and early 2018, accounting for 20% of Congo’s cobalt production last year. Congolese authorities say the figure is as high as 30%. Many artisanal miners in the Democratic Republic of Congo are now turning their attention to copper, after oversupply caused cobalt prices to plunge by about 70% from their peak. Jacques Kaumbu, president of a mining cooperative in Lualaba province, said that this year, the staff of the Kaumbu cooperative has halved to about 500 people. The cooperative produces only 2,000 tons of ore a month, 15% of which is cobalt, compared with 4,000 tons of cobalt ore and 1,000 tons of copper a year ago. The dramatic decline in manual cobalt mining results in a decrease in the amount of low-cost cobalt in the market and a decrease in the supply of cobalt in the market, which objectively has a positive impact on the rise of cobalt prices.

3. Future prospects:

Bai Jiaxin, a data analyst for business associations, believes that the domestic cobalt market fell in July, approaching a historic low, and that there is limited room for cobalt prices to fall. The growth rate of new energy automobile power battery installation has been restored, which is good for the cobalt market; in the consumer electronics field, although the previous mobile phone market performance is not good, but with the advent of the 5G era, the consumption expectation in the electronics field has increased; in the supply side, the manual cobalt mining in Congo Kinshasa has dropped dramatically, and the cobalt supply has declined, which has a certain upward trend for the cobalt Market in the future. Force, the recent spread of Ebola epidemic in Congo will also have a certain impact on transport, affecting the supply of cobalt ore. Generally speaking, the cobalt market has little room to fall in the near future, and the decline is incompetent; the demand of cobalt market has not improved significantly, but the expected growth in the future, cobalt market has a certain upward momentum, and cobalt price fluctuation is predicted to rise in the future.

As we all know, the price of urea in mid-late July was rather poor. The price of urea gradually dropped to 1850-1900 yuan/ton in Shandong Lianghe mainstream factory, and the turnover rate was as low as 1800 yuan/ton. The price of urea in Linyi once dropped to 1850-1860 yuan/ton in the factory. Some manufacturers in Shandong and Hebei Province rose by 1 due to the large number of orders pending for export on 26-28 days. 0-30 yuan/ton also stopped abruptly. The price of Northwest manufacturers dropped by 100 yuan/ton. By July 30, the price of Jiangsu and Anhui lakes manufacturers dropped by 20-30 yuan/ton, which is the end of urea in July.

However, it is worth noting that by the end of July, urea prices have slowed down, some urea manufacturers have stabilized their prices for more than a week, and Linyi’s urea delivery price has rebounded by 10-30 yuan/ton, which is a large quantity of compound fertilizer enterprises? Or is it due for export? Or will supply be reduced? Is it feasible to go up in August?

August’s rise is feasible, but it is limited to a few small increases, which is difficult to sustain by a large margin.

First, although domestic demand exists, it is not centralized. On the industrial side, at the end of June, the compound fertilizer enterprises began to collect autumn fertilizer. In July, the start-up rate of the compound fertilizer enterprises has slowly rebounded. On the one hand, in order to avoid the greater pressure of environmental protection from September to early October, on the other hand, the demand for autumn fertilizer is just needed after all, and the manufactured products that can be processed properly will certainly try their best to produce in autumn. Fertilizer, after all, is a high phosphorus and potassium fertilizer. In addition, urea price has been on the high side. Compound fertilizer enterprises either use ammonium chloride sulfate to replace urea when purchasing raw materials, or use ammonium chloride sulfate to replace urea slowly, or pull urea price ahead of time. The purchasing of compound fertilizer enterprises is to support a small increase in urea price, and it is difficult to constitute a special case. Great upward momentum. Plywood factories have been facing greater environmental pressure in recent days. Plywood factories in some areas of Shandong Province have been completely shut down and rectified. After the explosion of No. 1 Gasification Plant in Henan Province on July 19, environmental protection pressure in Henan Province is also greater. Of course, with the passage of time, after environmental safety inspection meets the standards, urea purchases in plywood factories will be a little concentrated. The exact time remains to be seen. Power plants can only maintain the same pace of procurement as before, and the impact on urea prices is still small.

Agricultural sector, starting in late August, from south to north, agricultural distributors will continue to take goods for autumn fertilizer, or consider the impact of environmental pressure on urea start-up, or consider the consumption of exports, a small number of distributors will take goods in August, only to support a small increase in urea prices, will not have too much power.

Second, exports can be expected, but they are limited to quantity rather than price. In recent days, the off-shore guiding price of Urea Export in China has risen to about 280 US dollars per ton. The price of urea export ports in China is also limited to 1800 RMB per ton. A few ports have a slightly higher price of 1850 RMB per ton. According to the usual practice, the factory price of urea factory in China is 50 yuan/ton higher than that of export factory. At present, although the factory with export advantage concentrates on low-price or non-price port, the quantity is large, even causes some ports to be blocked, suspend unloading, and this practice has been realized in price, but the factory price for domestic sale is only one. It’s a listing price, with very few transactions, which are limited to just needed customers.

Export volume can be expected, as can be seen in India, Australia and other places. In January-June, China’s urea exports totaled 1.77 million tons, an increase of about 150% compared with the same period last year. Prices are hopeless. Since the end of the bid-printing on July 8, international urea prices have dropped to around $280/ton. If India issues a new tender on August 10 and after. If the price is lower than the tender price, the price is still bad for China’s urea, which is also regarded as volume; in short, considering India’s domestic stock is sufficient, the quantity is detailed in the membership zone of China Fertilizer Network, whether there will be tender in India is still unknown, even if there is tender, the quantity of goods will not be taken. It will be too big.

Thirdly, China’s urea supply rate is still high. Although prices fell in July and some fell sharply, the prices of most urea manufacturers are still above the cost line at a certain level. Under the pressure of considerable profits and temporary absence of environmental safety inspection, urea start-up rate continues to be high. In recent days, production has risen to around 160,000 tons. Only a few urea manufacturers need to be repaired in August. Even considering the subsequent environmental safety inspections for military parades and so on, the daily output of urea is estimated to be 150,000 tons or even more, which will restrain the possible rise in urea prices in August.

In short, the price of urea has not fallen sharply, and it will be difficult to rise sharply in the later period. Although there are some good things we can see, they can not be called too much support. Our distributors do not have to wait for low prices, but can operate in an appropriate amount, but they can not blindly optimistic that urea prices will rise all the way since August of the previous two years. The so-called urea rise in August is better than a small consolidation or a small shock of urea prices under the autumn fertilizer demand.

Production of urea

1. Urea Production Capacity and Yield in China

China’s urea industry has developed rapidly. After 2010, new and expanded urea production capacity was released centrally, and urea production capacity and output increased rapidly. Urea production increased to 74.92 million tons in 2015, and the supply of urea in the whole industry exceeded the demand. Affected by supply-side reform and downstream demand after 2016, urea production continued to decline and initial results were achieved. According to the statistics of the National Bureau of Statistics, China’s urea output in 2018 was 52.067 million tons, with an output value of 107.5 billion yuan (calculated according to the average price of urea in 2018 of 2065 yuan/ton), accounting for 26.30% of the global output, and it is the largest urea producer in the world.

2. Distribution of urea production capacity

Urea production in China is mainly concentrated in North China, Northwest China, East China and Southwest China. The main producing provinces (autonomous regions) are Henan, Shandong, Shanxi, Xinjiang and Inner Mongolia.

The distribution of urea production and production capacity in China is basically the same. In 2018, the top ten provinces (autonomous regions) in China’s urea production are Shanxi, Shandong, Inner Mongolia, Henan, Xinjiang, Hebei, Sichuan, Jiangsu, Anhui and Shaanxi. The output of ten provinces (autonomous regions) totals 43.73 million tons, accounting for 84% of the total urea production in China.

3. Concentration of urea industry

There are 123 urea production enterprises in China. There are 23 enterprises with urea production capacity of more than one million tons. The total production capacity reaches 36.16 million tons, accounting for 46.36% of the total production capacity. With the deepening of the structural adjustment of the chemical fertilizer industry, urea industry has gradually shown the trend of large-scale and group.

Urea demand

1. Overall demand

China’s urea downstream demand is divided into agricultural demand and industrial demand. Among them, agricultural demand is direct application of crops, and direct application is mainly maize, rice and other field crops. Industrial demand is mainly used in the fields of compound fertilizer, urea-formaldehyde resin, melamine, cyanuric acid, gas denitrification and fine chemical industry.

China is the largest urea consumer in the world. In 2018, China’s total industrial and agricultural consumption was 5.08 million tons, of which 3.01 million tons were consumed in agriculture, accounting for 59% and 2.86 million tons in industry, accounting for 41%.

In recent years, China’s urea industry consumption has maintained rapid growth, and agricultural consumption has tended to stabilize. Overall, urea consumption remained stable growth until 2013. Since the 18th National Congress, the state has vigorously advocated the development of ecological agriculture, requiring the gradual control of fertilizer use. In 2015, the Ministry of Agriculture put forward the action of “zero increase of fertilizer application in 2020″ and drew up a series of action plans. The Ministry of Agriculture deepened the structural reform of agricultural supply side, adhered to the principle of promoting agriculture by quality and green, advocated the increase of fertilizer reduction and efficiency, and made the demand of urea agriculture decrease continuously, which would make the growth rate of fertilizer demand step by step. Slow down.

2. Regional Consumption

At present, the production and marketing pattern of urea in China has gradually got rid of the traditional characteristics of local production and consumption. Urea consumption is mainly concentrated in the main agricultural producing provinces in the middle and lower reaches of the Yellow River and the Yangtze River. The top ten provinces (autonomous regions) in domestic consumption are Shandong, Henan, Jiangsu, Hubei, Sichuan, Anhui, Hebei, Xinjiang, Inner Mongolia and Hunan. The total consumption of these provinces (autonomous regions) is 30.6429 million tons, accounting for 60.24% of China’s total urea consumption.

Import and export of urea

Before 1997, urea production in China could not fully meet the domestic demand, and a certain amount of urea was imported every year.

Since 1998, China’s urea production has been increasing. In order to protect the domestic fertilizer industry, the state has suspended urea imports, and urea imports have declined sharply since then. Since 2002, the State Economic and Trade Commission and the General Administration of Customs have implemented a quota system for the import of chemical fertilizers to strictly control the total amount of chemical fertilizer imports.

After 2003, China’s urea production capacity and output increased rapidly, urea export volume increased substantially, but the export volume was affected by the domestic export window period and the international urea market, which fluctuated greatly between years. The largest export volume was 13.748 million tons in 2015. After 2016, with the introduction of new international production capacity, urea supply in the international market has become more relaxed, competition has intensified, and domestic urea exports have gradually decreased due to cost disadvantages. In 2018, the total urea export volume was only 2.462 million tons, a decrease of 47.1% compared with the same period last year.

China’s urea export ports are mainly in the north, with more than 50% of the export volume. The exporting countries are mainly large agricultural countries represented by India.

According to the data of the business associations’list, the domestic adipic acid market rose by 3.26% on July 29. Most of the dealers’ quotations increased by 300 yuan per ton. Mainstream quotations in the market generally range from 8500 to 8700 yuan/ton. The quotations of distributors in North, East and South China have increased to some extent.

In mid-July, adipic acid market generally warmed up. Since the market went down in June, the market has repeatedly risen under the influence of external forces such as upstream costs and price adjustments of large factories. Especially on the end of July 29, the settlement price of factories was generally higher, which passively raised the market quotation of distributors. But at present, the downstream market view Hope mentality is still heavy, purchasing behavior is biased towards rationality, and there is room for merchants to make profits. Social inventory still shows some pressure, and the shipment dynamics do not change much compared with the previous period.

On the supply side, the market still shows certain supply pressure, and many distributors say that the inventory pressure is high, the level of equipment maintenance is not high, the median level of inventory performance of manufacturers, distributors are getting goods one after another, and the current market inventory is constantly degraded. Therefore, although adipic acid market quotation has increased, but also There are many relatively low-priced goods in the market, and the overall supply pressure is still in the market, which leads to the strong willingness of distributors to let profits go of inventory, the price difference between market price offer and actual transaction, and the market quotation is relatively chaotic.

In terms of demand, downstream demand is moderate. Although nylon 66 belongs to the peak season of market consumption, there is no phenomenon of centralized purchasing in the downstream this year, so the downstream start-up rate has not generally increased. The start-up rate is basically 5-60%. The upstream adipic acid has not formed a strong boost, so this market. The rebound basically depends on the upstream pure benzol, driven by the cost effect, which belongs to the passive follow-up. The market is still going out of stock cycle.

The analysts of adipic acid in the chemical branch of business association think that the price of adipic acid has rebounded at present, and the higher market quotation is affected by the rising settlement price at the end of the month of the manufacturer. The fundamentals have not changed much. At present, the supply and demand are basically in a balanced pattern. Therefore, the Business Association believes that the market of adipic acid may stabilize in the short term to eliminate the current increase.

On July 29, the rare earth index was 367 points, unchanged from yesterday, down 63.30% from the cyclical peak of 1000 points (2011-12-06), and up 35.42% from the lowest point of 271 on September 13, 2015. (Note: Period refers to 2011-12-01 to date).

The average price of Neodymium in rare earth metals is 382.5 million yuan per ton, dysprosium metal is 2.3 million yuan per ton and praseodymium metal is 700,000 yuan per ton. The average price of praseodymium and neodymium oxide in rare earth oxides is 289.5 million yuan per ton, dysprosium oxide is 1.84 million yuan per ton, praseodymium oxide is 3.90 million yuan per ton and neodymium oxide is 2.915 million yuan per ton. The price of praseodymium and neodymium alloys in rare earth alloys is 382,500 yuan per ton, and the average price of dysprosium and iron alloys is 184,000 yuan per ton.

Recent price declines in rare earth market, domestic rare earth market trading market is poor, some commodity prices in the rare earth market are stable, but in the near future, prices of some products in the rare earth market have fallen continuously, the price of dysprosium and terbium metals has fallen, the recent market trend of praseodymium and neodymium series products has been declining continuously, the supply in the market is normal, and the price of light rare earth has been in the near future. The trend is declining. The price fluctuation of rare earth market is related to environmental protection supervision in the whole country. Rare earth production has its particularity, especially the radiation hazard of some products, which makes environmental protection supervision stricter. Under stringent environmental protection inspection, rare earth separating enterprises in many provinces have stopped production, resulting in a general market input of rare earth oxides, especially some mainstream rare earth oxides, the supply is normal, the price trend of rare earth market has slightly declined, the recent market sentiment of large enterprise groups is reluctant to sell, the market trend of rare earth is poor, but for production. Pricing of products is also a cautious wait-and-see by major manufacturers.

Recently, the State Environmental Protection Department has made no reduction in its stringent efforts, which has a greater impact on the rare earth industry. The rare earth industry has a low start-up and a cold market. At the recent press conference on macroeconomic operation held by the Development and Reform Commission, Meng Wei, spokesman of the National Development and Reform Commission (NDRC), answering reporters’questions on rare earth, said that on the basis of in-depth investigation and scientific demonstration, relevant policies and measures would be put forward to give full play to the special value of rare earth as a strategic resource. Due to the increasingly obvious regulatory effect, the supply of raw ore resources in the upstream of the rare earth industry has shrunk, the demand in the downstream is poor, and the trading market of the rare earth industry has declined.

Rare earth analysts of business associations expect that the domestic environmental stringency will not diminish in the near future, coupled with the domestic rectification of the order of the rare earth industry, Myanmar’s export restrictions and normal supply, but the recent rare earth market transactions are limited, and the price of the rare earth market is expected to continue to fall.