Facing the predicament of overcapacity

It is understood that more than 90% of ethylene glycol is used to produce polyester products in China, and the fluctuation of ethylene glycol price affects the production and operation of downstream polyester enterprises. In mid-June, the reporter of Futures Daily visited several polyester factories and mainstream traders in Zhejiang Province with a delegation from Daijin Commercial Research Institute. He had a detailed understanding of the current production, sales and inventory situation in the upstream and downstream of the industrial chain, as well as the production and operation mentality of enterprises and their views on the future market trend.

A New Capacity Centralized Delivery Industry May Face Reshuffling

At present, the ethylene glycol industry is facing the predicament of overcapacity. Affected by the expansion of production capacity of various production processes of ethylene glycol in recent years, especially the rapid development of coal-based ethylene glycol in China in recent years, while the downstream demand is difficult to improve, coupled with high port inventory, since mid-March this year, the price of ethylene glycol futures has ended rebounding and turned into a unilateral downward trend. The 1909 contract is from 5483 yuan/ton in a year. After the high dropped to the lowest level of 4314 yuan/ton, the low-level narrow-amplitude oscillation pattern appeared recently, which fluctuated around 4400 yuan/ton.

Futures Daily reporter learned from the survey enterprises that, at present, both ethylene-based ethylene glycol enterprises and syngas-based ethylene glycol enterprises are facing the pressure of overcapacity and oversupply in the whole industry. Nevertheless, the production enterprises still maintain high-load operation, exchange market for profit, and cope with the capacity growth of blowout at home and the competition of import sources abroad.

In response, Rongsheng Petrochemical Co., Ltd. (hereinafter referred to as Rongsheng Petrochemical) said that the main consideration of glycol production enterprises is comprehensive profits, rather than single production line profits of glycol. If the production of ethylene glycol is suspended, the sale of ethylene stock will be very difficult, because ethylene liquidity is poor, there are only 20 ethylene vessels in Asia, so it is not cost-effective to sell ethylene alone. In addition, 80% of the profits in the ethylene chain come from polyethylene and 20% from ethylene glycol, unless there is no profit in the downstream of ethylene, shutdown may be considered. He believes that although the current profit of coal-making method is not good, in order to maintain cash flow and customer relationship, enterprises can optimize production, but it is unlikely to stop production.

Industry insiders have analyzed that the current excess supply of ethylene glycol is just beginning, the real challenge has not yet come. Over the next five years, global ethylene glycol production capacity will witness substantial growth. Abroad, there are many large-scale projects in the Middle East and South Asia. Most of these devices use inexpensive ethane as raw material, which has strong international competitiveness. Domestically, in 2019, 6-7 million tons of annual capacity were planned to be put into operation, and in 2020-2025, 15 million tons of annual capacity were planned to be put into operation.

Relevant statistics show that by the end of 2018, China’s total ethylene glycol production capacity of all routes reached 10.54 million tons. By 2022, if all kinds of domestic planned ethylene glycol routes can be put into operation according to actual planning, the production capacity of ethylene glycol will reach 30.58 million tons, while the apparent demand of China’s ethylene glycol will reach 16.68 million tons in 2018, and it is expected to reach 20.24 million tons in 2022.

“With the development of shale oil, the production of overseas natural gas will increase, and this method has obvious cost advantages. In the future, the competition pattern of the ethylene glycol market will be coal chemical industry, large refinery and overseas gas head. The ethylene glycol industry may face reshuffling.” Rongsheng Petrochemical related person in charge said.

“With the global surplus of ethylene glycol production capacity, when we purchase raw materials now, the price range negotiated with foreign suppliers is relatively large.” Rongsheng Petrochemical related person in charge told reporters that at present the bargaining power of upstream petrochemical enterprises is weakening, while the bargaining power of downstream enterprises is gradually increasing.

B Port’s High Inventory Polyester Enterprises Lack of Stock Power

Relevant statistics show that on June 27, the inventory of ethylene glycol ports in East China’s main port region was about 1.251 million tons, down 57,000 tons annually from the previous period. Among them, Zhangjiagang stock is 810,000 tons, which is 49,000 tons less than the previous period; Shanghai and Changshu stock is 169,000 tons, which is 26,000 tons more than the previous period; Jiangyin and Changzhou stock is 103,000 tons, which is 80,000 tons more than the previous period; Taihu stock is 93,000 tons, which is 18,000 tons less than the previous period. Although stocks have declined slightly recently, 1.25 million tons are still at their peak in the past five years.

In the investigation, Zhu Chao, director of polyester Department of Ningbo Shanneng Chemical Company, also confirmed this point. “At the beginning of June, the stock of ethylene glycol ports reached the highest level of 1.43 million tons in recent years, and there was almost no tank capacity at that time. Since June, with the delayed resumption of coal production, the contract of about 60,000 tons in South Asia of Taiwan has been decreasing, and the start-up load of polyester has increased. The phenomenon of depot has appeared in the port. At present, the stock has dropped to 1.25 million tons, but it is still at a historic high level. He told Futures Daily that in early July, with the increase of coal start-up load in mainland China and the resumption of production in South Asia, Taiwan’s stocks will still return to a slow state of accumulation, and port stocks are expected to rise to 1.3 million tons on Thursday.

High inventory affects the market price of ethylene glycol, and the warehousing strategy of downstream enterprises has been adjusted accordingly. “For such a high inventory and high production variety as ethylene glycol, the downstream polyester factory lacks the power of reserve, on the one hand, because there is no shortage of goods in the market, it is easier for the factory to replenish the warehouse; on the other hand, the factory is not optimistic about the future price of ethylene glycol, and will worry about the problem of stock preservation.” Huang Weilin, a researcher at Shanghai Pinellia Investment Management Center, explained.

Reporters learned in the survey that the stock of ethylene glycol in large polyester factories such as Rongsheng Petrochemical Company and Hengyi Petrochemical Company is generally about 20 days, while the stock of ethylene glycol in small and medium-sized enterprises such as Zhejiang Tiansheng Chemical Fiber Company (hereinafter referred to as Tiansheng Chemical Fiber Company) and Zhejiang Jiabao Polyester Company (hereinafter referred to as Jiabao Polyester) is generally maintained for 3-4 days.

Zhu Chao said that the cost of ethylene glycol spot warehousing is 1.5 yuan/ton per day, 45 yuan/ton per month, interest on capital is 20 yuan/ton per month, and 400 yuan/ton for half a year. If there is no obvious inventory removal, the cost of holding ethylene glycol is too high in the case of high inventory, so factories and traders are willing to hoard. Not strong.

In addition, the recent decline in profits of polyester enterprises is also an important reason for their lack of enthusiasm for inventory. At present, the inventory of finished products in polyester factories is not high, and the inventory of polyester has been transferred to the weaving market. In terms of enterprise profits, the person in charge of Rongsheng Petrochemical Company said that the production profits of polyester enterprises were better from January to March this year, but after April, although the price of ethylene glycol continued to fall, the profits of polyester enterprises were greatly reduced or even lost due to the soaring price of PTA raw materials and the slowing down of downstream demand for polyester.

C supply side has not yet improved most enterprises look down on the late market

In the survey, reporters learned that enterprises generally believe that the overall supply of ethylene glycol is in the stage of excess, and this situation is continuous, has not improved. In the future, with new production capacity of ethylene glycol and continuous negative feedback downstream, combined with the traditional off-season pressure in June-July, the pressure in the third and fourth quarters of this year may be greater than last year.

Tiansheng Chemical Fiber responsible person described to Futures Daily reporter that, due to the serious expansion of downstream warp knitting capacity in the early stage, this year’s textile market is weak, and the recent two high-yield sales are due to the upstream raw material price increases to drive the downstream enthusiasm for goods, the rest of the time to just need to purchase. For the weaving market, the biggest problem is the high stock of grey fabrics, which is not unacceptable for enterprises. The profits of weaving enterprises can still be maintained, and large-scale parking is not expected in the short term. Therefore, large-scale inventory of weaving products in the future should be expected to strengthen the terminal orders.

Similarly, Jiabao polyester related leaders are not very optimistic about downstream consumption. “July is about to enter the off-season of sales, gray cloth inventory is difficult to reduce, but the terminal can withstand.” The person in charge said that the downstream weaving enterprise capacity continues to expand, in the past according to anticipated needs ahead of time production, now the capacity is large, can meet the order demand at any time, so orders will not be issued in advance, but will be placed only if there is demand. In addition, at present, some export orders are decreasing, while the pre-prepared export products are difficult to be re-exported to domestic market, products are accumulating continuously, and stocks are rising.

In Zhu Chao’s view, it is difficult for short-term spot prices of ethylene glycol to rebound substantially. Although the absolute price of polyester factory products is relatively low, polyester factory is willing to take the initiative to inventory when prices rebound, indicating pessimistic downstream.

However, according to the relevant person in charge of Hengyi Petrochemical, there are opportunities in the domestic and export aspects of polyester products in the future.

Domestic demand is affected by two factors: first, home textiles, from the previous real estate start-up data, more completed in the future, the demand of home textiles driven by real estate will be better than that of clothing; second, the overall material consumption of autumn and winter clothing in the second half of the year is greater than that in the first half, and the demand for polyester will be better than that in the second half of the year.

D. Futures Price Discovery Function

New production capacity has been centralized, while downstream demand has not improved, coupled with high port inventory, and the price of ethylene glycol has been declining all the way, the industry is facing a reshuffle. On December 10, 2018, the timely listing of ethylene glycol futures provided the industry with new hedging tools. In this context, it is particularly important for industrial chain enterprises to use futures tools to manage risks in their operations.

According to Futures Daily reporter, since the listing of ethylene glycol futures, the trading scale has increased steadily, the market structure has become more and more reasonable, and it has emerged in the chemical industry market. In the first half of this year, the average daily trading volume and the average holding volume of ethylene glycol futures were 217,200 and 242,200 hands respectively, accounting for 25% and 21% of the chemical industry sector in the same period. The total number of corporate customers involved in trading was nearly 3,000, and the average holding volume of corporate customers was 49%. In June, the first delivery of ethylene glycol futures was successfully completed. The customers involved in the delivery covered the whole production, trade and consumption chain of upstream, middle and downstream, and the industry customers actively participated. By the end of June, the delivery volume of ethylene glycol futures has reached 150,000 tons. The various systems have been tested by the market and achieved a smooth start, and have gradually matured.

From the perspective of futures price trend, since the listing of ethylene glycol futures, prices have declined in bands, which objectively reflects the fact that the supply of ethylene glycol market is seriously excessive. Ethylene glycol futures 1906 contract basis difference average value is – 49 yuan / ton, less than 1% of the contract average price. The settlement price of the main contract of ethylene glycol futures dropped from 5084 yuan/ton at the beginning of the year to 4445 yuan/ton at the end of June, a decrease of 13%. Wind data show that domestic spot prices fell by 15% in the same period, and spot prices are highly correlated. All these show that the futures market reflects the changes of the spot market well and the futures price discovery function is beginning to show.

According to relevant persons, since the listing of ethylene glycol futures, the enthusiasm of industrial customers to participate in futures trading has increased. Ethylene glycol production enterprises are actively trying to use futures tools, and China Sea Shell has also applied for the establishment of Ethylene Glycol Delivery Factory Warehouse, and downstream customers are the main participants in the Ethylene glycol futures market. Dai Yumin, general manager of olefin business of Yuanda Energy Chemical Co., Ltd. (hereinafter referred to as Yuanda Energy), told reporters that in the futures market, industrial customers can achieve good inventory management and price management through futures tools.

“In the process of falling prices, upstream enterprises in the industrial chain can lock in profits through hedging, especially in the situation of excessive supply, through the forward water-raising structure can achieve production hedging well; middle-stream traders can flexibly practice base trade, and can make selling and buying hedging for inventory or contracts; Downstream polyester enterprises can optimize the raw material cost by using the far-month contract discount water, and lock in the raw material cost of the order. Dai Yumin believes that since the listing of ethylene glycol futures, prices have shown a downward trend in the band, which fully reflects the market structure of serious excess market supply, and provides a more efficient, safer and larger-scale market channel for the industry. Industrial customers actively participate in the ethylene glycol futures trading, which provides more liquidity for the market, promotes the upgrading of the polyester industry, improves the risk prevention ability of upstream, middle and downstream enterprises, and makes the combination of entities and finance closer.

According to the reporter’s understanding, as one of the main traders in the ethylene glycol market, Yuanda Energy needs a large stock of ethylene glycol to supply the terminal polyester enterprises steadily. However, in the environment of serious oversupply and falling prices in the near future, the stock of standing energy will cause large losses for enterprises. Thanks to the listing of ethylene glycol futures, the company sold hedging on the contract of ethylene glycol futures 1906, which protected the inventory value, reduced or even avoided losses, and enhanced the confidence and ability of service entity industry. During this period, the company also tried to participate in the sale and delivery of Ethylene Glycol Futures 1906 contract.

Yu Yongjun, senior researcher of Ethylene Glycol Futures in Huatai, also said that at present, the middle and lower reaches of enterprises participate in futures more, mainly because they have rich experience in futures participation before Ethylene Glycol Futures listing. Based on the overall futures tool application environment of the industry, the future prospects for industrial enterprises to participate in ethylene glycol futures are very optimistic, and ethylene glycol has the potential to become a star variety of chemical industry.

With the increasing participation and familiarity of enterprises with Ethylene Glycol, the influence of futures prices has become increasingly prominent. Xu Li, CITIC Futures Research Department, told reporters: “The domestic market is still highly dependent on Imported Ethylene glycol. At present, imports are usually purchased by signing long-term contracts with large foreign suppliers. Downstream polyester enterprises are relatively passive in pricing ethylene glycol.”

According to Xu Li, the listing of ethylene glycol futures provides a new pricing option for polyester enterprises. At the same time, it can play a hedging role by means of hedging, and the market information tends to be more abundant and transparent. Industrial customers can judge the trend of ethylene glycol more accurately through futures, which is convenient for inventory management and profit management. For example, companies can protect the price by selling futures when they look at the weak market of ethylene glycol, and they do not need to spend a lot of money to hoard spot when prices are low in the later period, so long as they do more futures, they can achieve profit lock-in. In a word, after walking with two legs of futures and spot, the pace of Ethylene Glycol enterprises is more steady.

On July 8, the rare earth index was 393 points, unchanged from yesterday, down 60.70% from the cyclical peak of 1000 points (2011-12-06), and up 45.02% 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 435,000 yuan/ton, dysprosium metal is 2.4 million yuan/ton and praseodymium metal is 710,000 yuan/ton. The average price of praseodymium and neodymium oxide in rare earth oxides is 337,500 yuan/ton; dysprosium oxide is 1.965 million yuan/ton; praseodymium oxide is 4.05 million yuan/ton; and neodymium oxide is 339,500 yuan/ton. The price of praseodymium and neodymium alloys in rare earth alloys is 435,000 yuan per ton, and the average price of dysprosium and iron alloys is 1.965 million yuan per ton.

In the near future, the price trend of rare earth is temporarily stable, the domestic rare earth market is generally trading, and the price trend of most commodities in the rare earth market is stable. However, in the near future, the prices of some products in the market have fallen sharply, and the prices of dysprosium and terbium metals have fallen sharply. In the near future, the market trend of praseodymium and neodymium series products has declined, the supply in the market is normal, and the price of light rare earth has recently gone down. The situation 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 the strict environmental protection inspection, rare earth separation enterprises in many provinces have stopped production, resulting in a general market of rare earth oxides. Recently, the rare earth market has turned to the seller’s market. The manufacturers have reasonable control over sales and are reluctant to sell. Especially for some mainstream rare earth oxides, the supply performance is still tense. The price trend of rare earth market has slightly declined. Recently, large enterprise groups are reluctant to sell, and the market of rare earth has improved. However, the major manufacturers are cautious about the pricing of products.

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, and the trading market of the rare earth industry is general.

Rare earth analysts from business associations expect that the recent stringent domestic environmental protection efforts will not decrease, coupled with the domestic reorganization of the order of the rare earth industry, Myanmar restricts exports and reduces supply, but the recent rare earth market transactions are limited, and rare earth products are expected to remain volatile.

On Wednesday, July 3, the U.S. Department of Commerce released May metal import and export data.

Copper: Imports and exports of U.S. copper declined in May, cathode copper imports in May were 51,457,570 kg, lower than the previous month’s 64,526,429 kg, and imports in the first five months of this year totaled 249,231,969 kg. The U.S. cathode copper exports in May were 6,483,069 kg, down from 9,039,985 kg in April. The total exports in the first five months of this year were 33,581,045 kg.

Aluminum: Aluminum imports fell sharply in May, while exports increased; forged non-alloy aluminium imports in May were 91,424,542 kg, lower than 145,821,464 kg in April; and the total amount of forged non-alloy aluminium imports in January-May this year was 585,568,465 kg. The U.S. exports of Unforged non-alloy aluminium in April were 5,531,637 kg, higher than 4,626,307 kg in April, with a total of 23,528,884 kg in the first five months of this year.

Lead: Exports of lead in the United States declined in May and imports increased; imports of Unforged refined lead in May were 28,519,462 kg, lower than 47,057,235 kg in April; this year’s total was 178,746,104 kg in January-May. The United States exported 196,977 kg of Unforged refined lead in May, up from 72,603 kg in April and 8,739,076 kg in January-May.

Zinc: The U.S. imports of zinc increased and exports decreased in May; the imports of non-forged non-alloy zinc in May were 39,235,893 kg, higher than 38,319,210 kg in April; the total imports in the first five months of this year were 191,265,485 kg. The United States exported 660,201 kg of Unforged non-alloy zinc in May, lower than 703,032 kg in the previous month, and 15,192,575 kg in January-May.

Tin: The U.S. imports of tin decreased in May, while exports rose in May; the imports of non-forged non-alloy tin in May were 2,469,625 kg, lower than 2,924,496 kg in April; the total imports in the first five months of this year were 16,615,300 kg. The United States exported 347,137 kg of Unforged non-alloy tin in May, up from 245,574 kg in April, and 1,105,968 kg in January-May.

Nickel: The import and export of nickel in the United States increased annually in May; the import of Unforged non-alloy nickel in May was 8,962,77 kg, higher than that in April, 8,681,539 kg; the cumulative amount in the first five months of this year was 42,299,144 kg. The U.S. exports of Unforged non-alloy nickel in May were 241,595, 224,782 kg in the first month of the month, and 1,216,177 kg in January-May.

In the second half of the year, the pressure at the supply end of polyolefin is high, and the trend is rising first and then decreasing.

In the first half of the year, three sets of devices were put into operation: Satellite Petrochemical, Jiutai Energy and Hengli Petrochemical Phase I. Satellite Petrochemical 150,000 tons of powder plant has been running normally during the Spring Festival; Jiutai Energy successfully commissioned on March 20, PE plant produced 7042, PP plant produced L5E89, but later stopped for overhaul, then started at 80% load in May, and increased to 90% after June; Hengli Petrochemical Phase I 450,000 tons of PP was commissioned in April, which was officially low in May. The load is put into operation and gradually increased in June. In the second half of the year, judging from the third quarter, it will probably be put into production in Guangdong Juzhengyuan and Zhongan United. At the end of June, 600,000 tons of PP from Juzhengyuan, Guangdong Province, was commissioned for trial production of PPH-T03. The polymerization unit of the manufacturer was reverse-start, and PDH was commissioned later. After production in July, it is expected that the production of drawing and injection moulding will be dominated by fibers. Zhongan Coal previously said it would be delayed to September, and now there is news that it will drive in July. In addition, Qinghai Damei and Baofeng Phase II may be put into production in the third quarter. Damei, Qinghai Province, which was supposed to start production in the second quarter, will realize China’s diplomatic relations on December 26, 2018, and is scheduled to start production in September 2019. From the fourth quarter, Zhejiang Petrochemical 750,000 tons of PE and 900,000 tons of PP, Ningbo Fuji Phase 2 800,000 tons of PP, Hengli Petrochemical Phase 2 400,000 tons of PE and 400,000 tons of PP have a certain probability of putting into operation, but considering the common delays in the production of chemical plants, the new capacity in the fourth quarter is much smaller than the expectations of the industry.

As for the external market, due to the imperfection of international information statistics, the uncertainty of the external production is higher. At present, in the second half of the year, it is expected that Iranian APC, American Basel, Ma You, Xibul and other devices will be put into operation. The external market is expected to increase the production capacity of PE and PP by 5.26 million tons and 2.88 million tons in 2019, significantly higher than last year’s 3.57 million tons and last year’s. 1.46 million tons.

Imports or short-term or medium-term contraction, but later or will be re-pressurized. From the point of view of import volume, the import data of May have been published. According to the published data, the import of PE1-May reached 6882,000 tons, an increase of 18.4% over the same period of last year; the import of PP1-May reached 2026,000 tons, an increase of 6.1% over the same period of last year. After the Spring Festival, especially since the end of February, the arrival time of ships has gradually increased, the imports in March are still more, and the overall pressure of the port is still under pressure. After that, the import pressure in the second quarter is still obvious. However, due to the significant decline in import profits from the end of April to the middle and late May, combined with the import orders at that time, the imports in June and July will be much larger than that in June and July. The weakening, and the current external supply of goods due to low prices, began to bid, but also from the side to a certain extent confirmed this point of view.

According to today’s oil price report on July 3, energy data provider KPLER reported that OPEC crude oil exports increased 761,000 barrels/day last month from May to 23.7 million barrels/day. In May, OPEC’s oil production fell below 22 million barrels a day.

The increase was attributed to strong exports from Saudi Arabia, the United Arab Emirates and Iraq, which increased exports by about 135,000 barrels a day in June. Iraqi exports increased by 100,000 barrels a day last month, but the United Arab Emirates saw the largest increase in crude oil exports, exceeding 400,000 barrels a day.

In June, Iranian exports fell sharply again, from 469,000 barrels a day to only 515,000 barrels a day.

Although Venezuela and Libya increased shipments in June. Venezuela’s exports increased from 883,000 barrels a day in May to 968,000 barrels a day in June, and Libya’s exports in June were 1.1 million barrels a day, up from 974,000 barrels a day in May.

Cartel exports were 3.577 million barrels a day lower than in June last year due to the double effects of OPEC+cut-off agreement and voluntary cuts by Venezuela and Iran due to sanctions.

Earlier this week, OPEC and its external partners agreed to extend the cuts to the end of March 2020. The total reduction is 1.2 million barrels per day, of which 800,000 barrels per day will be cut by OPEC member countries, while the rest will be cut by Russia, Kazakhstan and several smaller non-OPEC producers. OPEC’s compliance targets exceeded 100% and reached 168% in the first half, mainly due to the inevitable decline in production in Venezuela and Iran.

Usually, this will push up prices. However, as concerns about global economic growth and oil demand deepened and markets ignored OPEC’s news, Brent crude oil and WTI crude oil prices both fell immediately after OPEC announced a delay in production cuts.

According to the latest statistics from the Vietnamese Customs Administration, Southeast Asia is the main market for Vietnamese fertilizer exports, accounting for 64% of the total. Vietnamese fertilizer exports show a decreasing trend on the whole, but exports to Japan have increased sharply.

In February 2019, Vietnam’s domestic chemical fertilizer exports totaled 36.25 million tons, with an export volume of 9.73 million US dollars, which was 15.9% and 30.6% lower than that in January, respectively. The average export volume in February was US$280 per ton, down 13.9% from January and 14.1% from the same period last year. The average export volume in the first two months of the year was US$309 per ton.

Fertilizer exports to Cambodia are the largest, accounting for 26.49 million tons and 9.61 million US dollars, with an average export volume of US$362.92 per ton, an increase of 4.5% over the same period last year. Nevertheless, compared with the same period last year, export volume and export volume decreased by 50.71% and 48.5% respectively.

Fertilizer exports to Malaysia ranked second, with 14.3 million tons and US$2.6 million exported during the same period. The average export volume was 185.31 US dollars per ton, a decrease of 6.93% compared with the same period last year.

It is noteworthy that in the first two months of the year, Vietnam’s export of chemical fertilizers to Japan increased sharply, reaching 4,040 tons, with an export value of $1.84 million, up 5.5 times and 13.5 times respectively from the same period last year. On the other hand, Vietnam’s fertilizer exports to the Philippines decreased significantly, with 369 tons (96.24% year-on-year decrease) and exports of $107.8 million (96.48% year-on-year decrease).

Saudi Arabia, OPEC’s main oil producer, will continue to shoulder heavy responsibilities as the organization and its allies are almost forced to extend their efforts to curb the U.S. shale boom to a fourth year, Bloomberg reported in London on July 2.

Saudi oil minister Khalid Falkh said at a news conference Monday night that Saudi Arabia was willing to continue to reduce the amount exceeding its quota requirements.

Amrita Sen, chief oil analyst for energy, said: “This is a commitment to reduce inventories, no matter what they pay for it.” Saudi Arabia is likely to keep production at around 10 million barrels a day, below their target and “if needed in nine months, they will continue to trade.”

Alpha Lich hinted as early as 2016 that Saudi Arabia, Russia and other OPEC + coalition oil producers would only need six months to cut supplies, but he seems increasingly caught up in the struggle to seize control of the global oil market from the American shale industry.

“I have no doubt that American shale will peak, peak and then decline like any other basin in history.” Al-Fallich told reporters at OPEC headquarters in Vienna. “Before that, I think that for those of us at stake, as well as for those who want to protect the global economy and provide visibility for the future, we need to be cautious about continuing to adapt to this situation.”

I. The price trend of epichlorohydrin:

According to the data from the business associations’list, the market price of epichlorohydrin rose by 4.62% as of July 3, compared with last Wednesday (June 26). Today, the mainstream price of epichlorohydrin in China is 15500-16000 yuan/ton.

II. Market analysis:

Products: Epichlorohydrin market is rising. At present, the spot supply is still tight, the low price supply is difficult to find, and the high offer of the holder. However, the lower reaches of the high-priced deposits conflict with reason, just need to replenish the main, the actual single narrow-range negotiations. At present, the mainstream quotation in the East China market is around 15 500 yuan/ton, and the acceptance is delivered to the surrounding areas. Mainstream quotation in Shandong market is around 15 300 yuan/ton, self-raised. Mainstream market quotation in Huangshan area is around 15 500 yuan/ton, acceptance delivered.

Industry chain: The market price of upstream propylene in Shandong has risen significantly. Recently, the price of propylene enterprises in Shandong began to rise on July 2. Today, the price of propylene enterprises has risen by 100 yuan/ton again. At present, the main market turnover is around 7800-7900 yuan/ton. Downstream epoxy resin, supported by high raw material costs, some manufacturers have a rising atmosphere.

3. Future market forecast:

According to business associations, the domestic epichlorohydrin market will be dominated by high-level finishing in the short term.

Price Trend

According to the price monitoring of business associations, as of July 3, the average price of domestic aggregated MDI market was 12 425 yuan/ton, and the overall market was not hot.

II. Market Analysis

Products: Domestic aggregate MDI market climate is not warm, continue to range fluctuations. Supplier manufacturers’supply is tightening, agent’s supply is not much, quotation is more stable, follow the market, but downstream picking mood is not positive, just need small orders. Influenced by recent environmental inspections, 141b began to rise, which would inhibit the demand for aggregated MDI. The market continues to be weak and deadlocked, and the prices of the holders dare not rise or fall, which is more painful, and the middlemen in the northern market are relatively calm in the near future.

On the market side, South China has consolidated the weak market segments of MDI. The market in North China and Shandong is in a downward trend. The markets in East and South China are weak and stable. The shipment of goods is mainly accompanied by the shipment of goods by the holders, and the negotiation of the actual orders is weak. East China aggregates weak shocks in the MDI market. The downstream demand follow-up is weak, the main shipment is accompanied by the holder, the inquiries are scarce, and the confidence of the operators in the future market is insufficient. The aggregated MDI market in North China continued to decline narrowly. Despite the tightening of the overall supply side of the supplier, the market demand follow-up has been weak, coupled with environmental inspection to curb the northern hard bubble market, it is expected that the short-term market is mainly weak.

Industry chain: raw materials, pure benzene: driven by the strong East China pure benzene, and the rising prices of some downstream products in Shandong Province, the refined pure benzene is running steadily, and the low-price supply in the market is difficult to find. Shandong mainstream in 4750-4950 yuan/ton, individual refinery due to parking overhaul, no inventory. Local hydrobenzene rose to 4850-4950 yuan/ton. Aniline: Although the raw material pure benzene rises sharply and the cost of aniline is under pressure, due to the high pressure of shipment, aniline enterprises operate cautiously and the price is stable. Shandong mainstream negotiation price reference at 5850-6070 yuan/ton. East China market mainstream reference 6000-6100 yuan/ton acceptance.

3. Future Market Forecast

Business Cooperative Perspective: Business Cooperative Aggregate MDI analysts predict that short-term domestic aggregate MDI market prices continue to be weak and deadlocked, and it is not easy to rise or fall.

Price Trend

In June 2019, the domestic methanol market was mainly volatile. According to the price monitoring of business associations, the average domestic methanol price was 2334 yuan/ton at the beginning of the month, and 2180 yuan/ton at the end of the month. The price dropped by 6.60% in the month, 19.93% compared with the same period last year.

II. Market Analysis

Products: The domestic methanol market trend in June is mainly shocky. With the end of spring maintenance, local methanol supply increased, while import arrivals maintained a high level. Traditionally, demand was weak, and the second half of the methanol spot market was deadlocked, mostly weakened. The new 600,000-ton methanol-to-olefin plant in Jiutai, Inner Mongolia, was put into operation this month. At present, the methanol purchasing volume is stable with full-load production. The olefin plants expected to be put into operation from July to August are Shandong Luxi, Nanjing Chengzhi and Zhongan United.

Industry chain: formaldehyde: formaldehyde Market as a whole fell this month. The upstream methanol market is lower as a whole, and the cost is difficult to support. However, the downstream market is affected by the busy farming in the north, the flood season in the South and the environmental protection policies in some areas. The overall start of the market is not high, and the demand is difficult to support the formaldehyde market. As a result, the formaldehyde market is running lower this month, the profits of enterprises are reduced, and the market as a whole. Volume declined. Dimethyl ether: Dimethyl ether market overall shocks slightly fell this month, price fluctuations in the range of 20-100 yuan/ton. During the month, the main enterprises in Henan such as Yima and Xinlianxin all maintained half-load operation. The total daily output in this area decreased by 40% to about 3300 tons (with a full output of 5500 tons). Later in the month, the Tangshan Xuyang and Shanxi orchid dimethyl ether plants were shut down again for overhaul. The supply in the northern market was further narrowed, and the manufacturers supported by low supply were obviously weak. In order to maintain the daily balance of production and marketing, only a small price adjustment was made under the current situation, while the mainstream transactions in the northern market fluctuated between 3000-3200 yuan/ton. Acetic acid: This month, the domestic acetic acid market rose and fell, with frequent market shocks. At the beginning of this month, the main acetic acid plant in East China stopped unexpectedly and for a long time, which led to the shortage of supply in East China, passively transferring supplies from North China, and gave the enterprises the initiative to report an increase, with the market rising by 400 yuan/ton. In the mid-month period, the mainstream production enterprises in East China resumed normal operation, and downstream demand continued to weaken. The conflict with high-price acetic acid was obvious, the market supply was not digested smoothly and the domestic supply gradually accumulated. After that, the enterprises in Central China and Shandong pulled back their offers one after another, driving down the market transaction price by about 250 yuan/ton. Towards the end of the month, the short-term failure of the main production enterprises in East China has given the market part a bullish mentality, but the device has been restored in time, breaking the market bullish enthusiasm, and returning to stability after the acetic acid market rose slightly.

Industry: According to the price monitoring of business associations, in June 2019, there were four kinds of commodities rising annually in the energy sector, one of which rose more than 5%, accounting for 6.3% of the monitored commodities in the sector; the top three commodities were WTI crude oil (5.02%), MTBE (2.46%) and coking coal (0.82%). There are 12 kinds of commodities with a decline of more than 5%, accounting for 31.3% of the monitored commodities in the plate. The products with the first three declines are petroleum coke (-8.44%), liquefied natural gas (-7.64%) and naphtha (-7.09%). This month’s average rise and fall was -3.07%.

3. Future Market Forecast

Business Society Viewpoint: On the positive side, due to the impact of the Iranian collision, the cost of shipping from Iran to China has increased, and it is expected that Iranian cargo will remain tense in July; there are still some scheduled overhauls of methanol plants in July, including Shenmu, Yankuangyulin, Xianyang Chemicals and other enterprises; and the MTO plant in Jiutai, Inner Mongolia, has been upgraded to 90% by the end of September. The second MTO of Shandong Luxi and Nanjing Chengzhi is expected to start production from July to August. On the negative side, in traditional downstream products, the market of dimethyl ether and acetic acid continued to decline, and the profit of enterprises was not good; the import volume in June was estimated to be more than 800,000 tons; however, the import volume in July will decline due to the increase of international equipment maintenance and the restriction of Iranian transportation; the safety and environmental protection inspection will continue to be rigorous, and local market terminal enterprises. Production reduction or shutdown are affected, which is not conducive to methanol consumption. Methanol analysts in business associations predict that the main logic of the recent spot market is that the supply of methanol exceeds demand, and the short-term market of methanol is mainly declining; if Nanjing Chengzhi goes into operation smoothly, methanol is expected to stop falling in late July.