Ethylene is the basic raw material for the petrochemical industry, and ethylene production has become a measure of the level of development of a country’s petrochemical industry. In recent years, with the rapid development of the national economy, the domestic ethylene industry has developed rapidly and has become the world’s second largest ethylene producer and consumer after the United States. From a global perspective, naphtha is also the main raw material for the production of ethylene. The Middle East and North America are mainly light hydrocarbon (ethane) raw materials, and China’s resource-restricted raw materials are still mainly naphtha. With the rise of the domestic coal chemical industry in recent years, the proportion of domestic coal (methanol) ethylene production capacity to total production capacity has reached about 20%. The domestic ethylene industry has developed a distinctive road different from international counterparts.

From a global perspective, the production of ethylene capacity has a clear cyclicality, generally divided into raw material-driven and demand-driven. For example, the ethylene plant that was put into operation in the Middle East from 2007 to 2010 was mainly benefited from low-cost ethane feedstock. At present, there is a shortage of ethane in the region, and new plants are mostly based on naphtha or mixed cracking. Since the shale gas revolution in North America, it has brought a lot of cheap ethane since 2011. The ethylene cracking unit in the region has been changed to ethane raw materials, and a large number of ethane cracking units have been built. The overall production time is concentrated in Between 2017 and 2020. The newly added ethylene production capacity in China is mainly driven by demand. Due to high crude oil prices and weakened demand for refined oil in 2011~2017, the newly added capacity is mainly based on coal (methanol) to olefins.

According to statistics, as of the end of 2017, the total domestic ethylene production capacity reached 24.3 million tons, an increase of 4% year-on-year; the output reached more than 18.2 million tons, an increase of 2.4%. The annual import of ethylene reached 2.16 million tons, an increase of 30% year-on-year. As the demand for ethylene-derived products such as polyethylene and ethylene glycol continues to grow, domestic demand for ethylene has steadily increased. In 2017, the apparent consumption of ethylene was about 20.37 million tons, up 4.8% year-on-year; the equivalent consumption of ethylene was about 39 million tons, the equivalent gap was more than 20 million tons, and ethylene and its derivatives were heavily dependent on imports.

The commissioning of some new installations this year will have a positive effect on the supply of ethylene. Among them, the 1.2 million-ton ethylene plant of Zhonghai Shell Phase II has been put into operation, and its commissioning will greatly improve the supply gap in South China. Before the end of the year, the 450,000 tons of Yanan Energy and the 300,000 tons of ethylene equipment from Jilin Cornell will be put into production. The annual new capacity is expected to be around 2 million tons. Beginning in 2019, the country will usher in an outbreak of new ethylene plants. According to incomplete statistics, by the end of 2020, more than 14 million tons of ethylene capacity will be put into production in China, including about 9 million tons of oil routes and 5.5 million tons of coal (methanol) routes. In addition, there are still about 7 million tons of light hydrocarbon (ethane) cracking projects due to the Sino-US trade war, the possibility of short-term shelving is relatively large. If the above-mentioned 14 million tons of equipment can be put into production as scheduled, the shortage of domestic ethylene supply will be greatly improved by then.

After several years of development, there have been some changes in the consumption structure of domestic ethylene. Among them, linear low-density polyethylene (LLDPE) accounts for about 27% of total consumption, high-density polyethylene (HDPE) accounts for about 26%, low-density polyethylene (LDPE) accounts for about 11%, and ethylene glycol accounts for about 11%. Ethylene oxide accounts for about 9% and styrene accounts for about 8%. Among them, ethylene glycol, HDPE and LDPE have the lowest self-sufficiency rates of 34%, 49% and 53%, respectively. The contradiction between supply and demand is outstanding.

On the whole, with the further opening of the domestic crude oil import policy and the maturity of coal chemical technology, more private enterprises began to enter the ethylene industry, and the overall supply pattern of ethylene began to show positive changes. Large-scale refining and chemical integration projects bring cost and technology impacts due to large-scale scale and diversification of raw materials, while coal (methanol) olefins projects also show better cost and raw material advantages under higher crude oil prices. The Chinese model of walking on two legs will bring new development opportunities to the ethylene industry, and the spring of the ethylene industry is not far behind.

As a global trade commodity, styrene has attracted much attention in its distribution pattern and supply and demand trends. China is not only the world’s largest producer of styrene, but also the world’s largest consumer. How will the future supply and demand pattern be interpreted?

From the data on the apparent consumption of styrene in China in recent years, the output, apparent consumption and self-sufficiency rate are all oscillating, while the import volume is declining year by year. Specifically, in terms of output, the total domestic production exceeded 5 million tons for the first time in 2013, and exceeded 6 million tons to 6.55 million tons in 2017, while apparent consumption surged from 8.1 million tons in 2013, 2017. Increased to 9.7 million tons, entering 2018, still continues to increase trend, the apparent consumption in the first half increased to 4.85 million tons.

In recent years, styrene has been affected by the increase in production and the decline in imports, and the self-sufficiency rate has also increased significantly. As of 2017, the self-sufficiency rate has increased from less than 60% in the previous years to 67.62%. In the first half of 2018, the self-sufficiency rate has made a new breakthrough and further increased to 71.3%.

It is worth mentioning that in recent years, the decline in import volume is obvious. According to the import data of the Customs Statistics Bureau, the import volume of styrene in the past few years was basically 3.7 million tons/ton. In 2016, it fell back to 3.5 million tons/year. Below the level, it has fallen to 3.2 million tons/year in 2017. In 2018, affected by anti-dumping and arbitrage changes in various regions, the import volume continued to shrink. The total import volume from January to July was 1.56 million tons, down 115,000 tons year-on-year. From this trend, the annual import volume fell in 2018. Breaking 3 million tons will be a high probability event.

Since 2018, after the Qingdao Bay Chemical 500,000 tons/year styrene plant was officially put into commercial operation after being ignited in mid-January, the 260,000 tons/year installation of Anhui Wuyuan was also stably supplied after the product was released around August 10. Maintain full load operation. Before the deadline, China’s styrene production capacity has reached 9.37 million tons / year. According to the latest news, CITIC Guoan Ruihua currently has 200,000 tons of styrene co-production of 80,000 tons/year propylene oxide plant, Hengli petrochemical 700,000 tons/year styrene plant and the largest domestic Zhejiang Petrochemical refining and chemical integration project. The 10,000-ton/year styrene plant is scheduled to be put into operation before the end of 2018. The annual production capacity of China’s styrene exceeds 11 million tons. It is just around the corner. Although there are still some uncertainties in the actual production progress, the national production and self-sufficiency rate will soon be on the rise. At a new level, China’s styrene supply and demand gap will gradually disappear, and the dependence on imported sources will also drop significantly.

Zhou Xiaochuan, the former governor of the People’s Bank of China, said that if there is a full-scale trade war between China and the United States, even if the direct impact on the economy is small, market sentiment changes may also hit China.

Zhou Xiaochuan, who just retired this year, said that the tariff imposed by the United States on Chinese goods is not very important in terms of economic scale. Despite this, the impact on market confidence may have an impact.

“Everyone may get nervous,” Zhou Xiaochuan said in an interview with Bloomberg Lacqua. “No one really understands. Suddenly a trade war broke out. In terms of stock market investment, everyone may change their minds.”

He said that this kind of behavior is far more profound than the actual impact on the economy. Zhou Xiaochuan was interviewed at the Amboise Forum in Cernobbio, Italy.

At the time of the trade war, China has already faced a policy-induced economic slowdown. This prompted leaders to relax their leveraged program in case of future economic downside risks.

“Minsky moment”

Zhou Xiaochuan warned in October last year that China should guard against the threat of “Minsky moment”, that is, the risk of sudden collapse of asset value. The concept is named after Heyman Minsky, who believes that a long-term bull market could lead to a major collapse. China’s renminbi has fallen more than 6% since mid-June, making it the worst performing currency in Asia; China’s stock market has entered a bear market.

Zhou Xiaochuan said on Friday that it needs to be vigilant. China’s top priority is to avoid asset bubbles. “We should keep the currency floating with market supply and demand and avoid any form of distortion,” he added.

He said that globally, it is necessary to strengthen the supervision of financial assets, and stressed that the global monetary authorities have long maintained the risk of policy easing after the financial crisis.

“This should be a relatively short-term measure,” he said. “If it lasts too long, it is very dangerous.”

A senior government official revealed in an interview that the Mexican mining group may restart the San Martin mine in early 2019, the largest underground mine in Mexico, which was discontinued more than a decade ago due to strikes by workers.

Carlos Barcena, Minister of Economy of Zacatecas, where the mine is located, said that the Mexican mining group has started mine repair work and is expected to be completed and put into production in the first quarter of 2019.

A company insider familiar with the situation confirmed the plan but was not allowed to be interviewed. The company spokesperson declined to comment.

The San Martin mine was discontinued in July 2007 due to labor conflicts with the National Miners Union (SNTMMSRM) under Napoleon Gomez, and Napoleon Gomez is currently serving as a senator. Before the shutdown, the mine produced about 8,000 tons of copper and 19,000 tons of zinc in 2005.

Earlier this year, a group of workers who participated in the strike agreed to change their demands by the National Union of Independent Alliances in order to resolve the protracted conflict. Last week, at the request of the workers of the National Union of Independent Alliances, the government responsible for resolving labor disputes decided to end the strike.

But last Thursday, a spokesperson for the National Miners Union (SNTMMSRM) said that the real miners are still on strike and the coalition will file a lawsuit on the decision to end the strike.

Monex analysts said the project restarted to increase the Mexican mining group’s annual sales by 1%.

On September 6, the London LME market three-month futures zinc closing price of 2441.00 US dollars / ton, the price rose. Spot price 2469.50-2470.50 US dollars / ton, spot zinc prices rose. On September 6th, the LME market zinc ingot futures traded 120259.00 hands, the market trading activity was general, and the inventory decreased.

BobPatel, chief executive of Lyondell Basel, has predicted that the global polyethylene (PE) market will remain tight this year and next.

Patel said in the company’s second-quarter earnings conference call: “Last year, our global ethylene and polyethylene capacity utilization rate is close to full load. If we look at the supply and demand changes in 2017-2018, we will find that supply growth exceeds The proportion of demand growth is less than 1%. For high-density polyethylene (HDPE), the demand growth rate in 2018 will exceed the supply growth rate by about 1.5%. HDPE accounts for approximately 70% of the PE production of Leandersale.

Pate expects that global PE supply and demand growth will be close to equilibrium in 2019, while HDPE demand growth will once again exceed supply growth. “If the capacity utilization rate drops by 1% by the end of this year, in my opinion, we are still in a very tight market. There will not be too much capacity to put into production in the next few years,” he added.

According to a Reuters report in New York, the US Energy Information Administration said in a two monthly report released on Friday that US crude oil production increased by 231,000 barrels per day, an increase of 2%, reaching a record of 10.674 million barrels per day in June.

The agency also raised its estimate for May by 1,000 barrels per day to 10.4 million barrels per day.

US crude oil production has been growing and is close to Russia and Saudi Arabia, the two largest oil producers. According to a Reuters survey, Saudi Arabia’s daily production in August was 10.5 million barrels, and Russia’s daily production in July was 11.2 million barrels. It is expected to maintain this level in August.

This increase reflects the increase in production in Texas, where production increased by 165,000 barrels per day to 4.4 million barrels per day, an increase of 3.9%. Production in the Gulf of Mexico also rose, rising by 154,000 barrels per day to 1.7 million barrels per day, an increase of 10.3%.

Exports of crude oil and refined products increased from a month ago. Crude oil exports rose nearly 200,000 barrels per day this month, setting a new record of 2.2 million barrels per day, more than double the amount in June last year.

Export increased coke production to reduce downstream fertilizer

After the consolidation in January, the domestic ammonium sulfate market reappeared in the late August. Last week, the domestic mainstream transaction price was 520~690 yuan (ton price, the same below), and the weekly increase was about 3%. Recently, the prices of enterprises in various places have been firm, and some regions have exceeded 700 yuan, showing a steady trend.

Shandong trader Zhang Yi said that most of the recent production enterprise inventory has been transferred to traders’ warehouses or ports, and coal chemical enterprises in Shanxi and Inner Mongolia have even reached zero inventory, which laid the foundation for the steady rise of ammonium sulfate.

Export orders drive demand

China Chemical News reporter learned from the port importers and exporters that due to tight supply in northwestern Europe and the small supply of Russia and Belarus in September, the international ammonium sulphate orders began to increase in mid-to-late August, driving the market price to rise steadily.

It is understood that the recent closure of the SECO Fertilisants plant in France has reduced the capacity of 100,000 tons/year of ammonium sulphate; due to production problems in many local factories, the supply of granular ammonium sulphate in northwestern Europe has become increasingly tight; Brazil’s willingness to find goods has increased due to insufficient local supply. The new demand for coking ammonium sulfate in northern China appears. It is planned to find 100,000 tons of goods from China from September to October, and the price is higher than the domestic market.

This round of international orders has increased, allowing many exporters to increase their efforts to purchase inventories, further stimulating domestic supply and the transaction price has also increased. This has brought about a new round of growth in the long-stayed export market, providing a basis for the future of ammonium sulfate.

Environmental protection boost production pre-reduction

According to the person in charge of Henan Xuchang Changsheng Environmental Protection Technology Co., Ltd., the second round of environmental protection inspectors continued to deepen. In August, the inspection team settled in Henan and Shanxi, and the operating rate of local coke enterprises continued to decline. In Jiangsu, in late August, the coking enterprises in Xuzhou were once again suspended from production, and the driving time was not fixed, resulting in a reduction in the supply of coking ammonium sulfate and a steady increase in prices. In Xinjiang and Inner Mongolia, most coal chemical companies were in an overhaul state in August, further reducing social supply. For example, when the Inner Mongolia Datang Coal Gas Company shut down and repaired in late August, ammonium sulfate was cleared, which became one of the reasons for the promotion.

Meng Jianjie, manager of Zhengzhou Dayou Gas Marketing Department, said that the recent use of natural gas in many coal-fired boilers in various places has led to further reduction of ammonium sulfate produced by desulfurization of coal-fired boilers. It is expected that this reduction in production will continue.

Autumn stocking starts early

Feedback from Inner Mongolia, Hebei and other places indicates that in August, due to the reduction in supply, traders prepared for the fall preparation in advance. The increase in port demand, the reduction of production by environmentally-friendly coke enterprises and the supply of fertilizer in autumn have created a source of competition, which has caused traders to worry about tight supply and prepare for storage in advance. Recently, the ammonium sulfate of mass production enterprises has rapidly flowed to the stocks of traders, resulting in a decrease in social circulation, and it is impossible to rule out the possibility of speculation in the market.

According to Wang Liwen, business manager of Xinjiang Xintian Coal-to-Gas Co., Ltd., due to transportation reasons, most of the ammonium sulfate produced by the company is digested locally. Now it is basically out of stock, and even if it is in stock, it is difficult to transport it to the inland market. Affected by the overall market situation, the local ammonium sulfate price has steadily increased, and the current ex-factory price has reached more than 450 yuan.

Market participants believe that the recent depreciation of the renminbi will continue to favor the export market and form price support. However, environmental factors have also affected downstream compound fertilizer companies, resulting in no significant increase in demand for ammonium sulfate. Therefore, domestic exports and fertilizers are lagging behind, and whether there is a need to make up the surplus can continue to be uncertain. September is expected to be a key node in the trend of ammonium sulphate market, and should be focused on.

According to the report of the Chinese Academy of Social Sciences, natural gas will be the fastest growing energy product in China in the next 30 years. By 2030, China’s natural gas demand will be nearly 520 billion cubic meters, and by 2050 it will exceed 800 billion cubic meters.

At the 7th annual meeting of the Global Energy Security Think Tank Forum held in Beijing recently, the report “China Energy Outlook 2018～2050” issued by the Chinese Academy of Social Sciences shows that under the joint effect of supply-side reform and economic growth path changes, In the next 30 years, China’s energy demand structure will undergo major changes. By 2050, coal will account for less than 40% of energy demand; by contrast, the share of natural gas demand will rise sharply and is expected to increase to more than 20%.

From the perspective of the application of natural gas, the report believes that the future increase in the power sector will come from natural gas power generation. Natural gas power generation will emerge from the current position as a peaking power source and become one of the main forms of power generation. It is estimated that natural gas power generation will reach about 335.1 billion kWh by 2020, about 582.2 billion kWh in 2030, and 1 trillion kWh in 2050. At the same time, natural gas power generation will also be used for heating, to some extent to make up for the decline in thermal power.

Experts said that the sharp increase in demand for natural gas in the future will also bring new issues to the field of energy security. Liu Qiang, secretary general of the Global Energy Security Think Tank Forum, said: “In the future, the main influencing factors of China’s energy security will come from natural gas, which requires us to seriously study the energy security of natural gas supply.”