Chemical prices plunged in China market

The price of thermal coal has dropped from its highest price of USD312/mt on October 19 to USD166 /mt in the China market. The price is almost down by 47%, nearly half. The price drop of thermal coal also dragged down the price of coal chemicals. Meanwhile, this dropping trend also inspires the spot market The price of PVC, methanol, styrene, isobutylol, and new glutaradiol has a sharp downward trend, which makes a surprise in the market.

The price of coal chemical products has fallen sharply with the collapse of the coal price

With the Chinese government taking all measures to maintain a steady supply of coal and electricity power, the coal price has dropped accordingly. And this also becomes the key reason for the sudden price dropping in chemicals and other chemical raw materials. Epoxy resin has had a continuous sharp increase in the past months. But its price has lowered recently. The price of solid epoxy resin is USD4200/MT, which is USD300/MT lower than one week ago. With the price dropping, the downstream customers are expecting loa lower price of USD4100 or a lower price of USD3950. And this also makes the market transaction atmosphere weak.

In addition to the epoxy resin, many other chemicals such as epoxy chlorpropamide, phosphate, yellow phosphorus, and butadiene have a price decline after China’s gold nine silver ten sales season. since early November, prices began to decrease. The price has plunged more than USD1300/MT on week from USD5080 to USD3780/mt. This makes the whole chemical industry into winter beforehand. The price of DMC was USD6300/mt, down by USD1000/mt from the previous week, and the price of silicone oil (Polydimethylsiloxane) was USD6500/mt, which is 34% down from the highest point. Also, The PVC futures has fallen five times by the daily limit. With the future price continuing to weaken, it is negative for the spot market. And now the quotation of PVC in the n future market and spot market two weak spot markets was in chaos. In some regions, the price of PVC has dropped to less than 140000/MT. Under the suppression of falling futures prices, traders are selling stocks immediately.

From the current series of actions of restraining unreasonable price increases of bulk commodities, the price increase expectation of chemical raw materials in the next six months is very limited, and most products will gradually return to a reasonable range.

With the impact of the price reduction news, real order is very limited when some enterprises quote at a high price. The less transaction also dragged the market down and the expectation of transactions is weakening. Some Industry experts said that one of the reasons for the price decrease is that the newly expanded production capacity leads to an obvious supply increment. And the buyers have a strong bearish mood on the transaction with the supply and demand imbalance.

40 chemical products have a drop in price with a decrease of more than USD130/MT 

With the continuously increased ease in the recent chemical market, there are many chemicals with sudden price drops. And many of them are the products with hot increase and reach their historic highest point. This rapid change has made buyers unpredictable.

The price of liquid ammonia was USD620/MT, and there is a price drop of USD130/MT 20% less compared to early August. With the impact of enterprise maintenance and shortage of domestic goods, liquid ammonia experienced a soaring market in mid-to-late July.  But the increase didn’t last long, and the price of liquid ammonia continued to decrease. With the poor traffic situation and high inventory caused by the epidemic, together with the high output at high operating, as well as less demand, the price of liquid ammonia dropped again and again.

Previously, the price of trichloromethane had started a speeding process. The price soared to USD546/MT, and even over USD635/MT. There was a single-day increase of 8.7%, which was the highest one-day increase in the past 10 years. But with the high-temperature weather cooling down, the demand from the refrigerant market becomes weak, domestic sales and foreign trade are not as expected, and its raw material liquid chlorine price is low. With all these impacts, trichloromethane prices dropped by 16% from early August.

Since the beginning of 2021, the price of PTA cost-end crude oil and PX has been increasing, and its auxiliary material acetic acid also has had a significant increase. Till the end of July, the PTA price was more than USD800/MT and some large-scale factories even cut orders due to insufficient supply. However, with the operation of new PTA devices, the supply will increase. And now the domestic PTA price has dropped below USD710/MT. Its price has dropped by 13% compared with the beginning of August.

Due to the influence of the Shanxi flood, many urea factories in Jincheng stopped production. With the reduction of the market inventory and other multiple positive factors, the domestic urea spot market had a rise, and the loareaurea prices hit a new high. But with the end of peak agricultural season, and the industrial demand is insufficient, the market trend of urea is depressed. The price even drooped two times in one day. To ensure order volumes, the big factories have offered preferential price policies. Thus, the actual transaction price is much lower than expected, and the price decreased by USD60/MT or 12.37% from the beginning of August.

The export market of domestic MMA has expanded rapidly, and the monthly export volume has reached new highs. With more MMA export, fewer imports, and less output, the market inventory of MMA in China market has decreased sharply, and the price has exceeded USD2222/MT. But by the end of Oct., the buyers are mostly watching, and the negotiations were deadlocked. And the price is down by USD270/MT from the beginning of August with a drop of around 11%.

Iso octanol prices had soared to USD2950/MT, up by 156% from the same period last year. While due to the weakened raw material price, and the supply increase, its prices also fell slightly. The newest offer is now decreased by USD200/MT with a decrease of 6.9% from early august.

The price of ethylene glycol has rushed to USD950/MT at a new high. But due to the rapid decrease in the downstream polyester end. The market expectation is not optimistic. Along with the supply recovery, the tight market inventory situation has finished. Its current price is down by USD60/MT at around 6% from early August.

It is reported that Wanhua Chemical, BASF, Shanghai Hensmai, and Dow Chemical have all raised the price of MDI products. The supply of MDI is also tightening, and its prices have increased from June 2021, soaring from USD1900/MT to USD4500/MT. This price is almost the highest in nearly three years. But recently the MDI market atmosphere turned weak, and the price can be negotiated. The current market offer has decreased by USD200/MT around 5.64% from early August.

Ethyl acetate prices reached USD1450/MT and are highest in a decade. But the recent transaction price of the main factories has declined, and the trading atmosphere is not positive. The current price is down by USD80/MT and is around 4.91% lower compared with early August. The ethyl acetate in China market may continue to weaken in short term.

In the silicone industry, the price is decreasing continuously since early November. DMC price has dropped to USD4900/MT, which is almost half of the price from the highest point last month. With the DMC price plunging, the price of dimethicone silicone oil and 107 RTV also dropped. The newest silicone oil PDMS price is around USD6900/MT. The sudden price drop makes the procurement stop the purchase and those who bought at higher prices would have a stock loss.

In the titanium dioxide industry, with the winter coming, construction coating consumption is decreasing. And the main market price of Rutile titanium dioxide like Lemon 996 is USD 3,200/MT. Other brands have a price of USD3100 to USD3300. with the demand weakening, the price of titanium dioxide can be negotiated as per the orders.

The organic pigment price also stopped increasing and some item has a slight price drawback. The price of pigment yellow 74 has dropped from USD10.95/kg to USD10.50/kg. Products like Pigment Yellow 12 and Pigment Yellow 13 also stopped for a further increase.

A collection of the price declines of different chemical products

The price of dimethyl carbonate was USD 1370/MT, down by USD 740/MT from the previous week.

The phosphate price was USD2000/MT, down by USD690/MT from the previous week.

The liquid epoxy resin was quoted at USD5000/MT, down by USD630/mt from the previous week.

The price of propylene glycol was USD3450/MT, down by USD330/MT from the previous week.

DMF was quoted at USD2570/MT, down by USD280/MT from the previous week.

Butadiene was quoted at USD1060/MT, down by USD250/MT from the previous week.

MMA was quoted at USD1960/MT, down by USD20/MT from the previous week.

The price of natural anhydride was USD 2400/MT, down by USD 130/MT from the previous week.

Liquid chlorine price was USD200/MT, down by USD110/MT the previous week.

The caustic soda price was USD190/MT, down by USD60/MT from the previous week.

Phenol was quoted at USD1500/MT, down by USD60/MT from the previous week.

The PTA was quoted USD770/MT, down by USD56/mt from the previous week.

From the above data, it is not difficult to see that the recent decline in chemical products mainly focuses on the previous chemical products with a sharp increase, such as hydroxybenzene, ethylene glycol, polymerized MDI, ethyl acetate, etc. This is also in line with the previous market analysis which says that chemical products would not always be on the rising side and would come down after it reaches the peak.

Why do the prices of chemical products plunge?

The sudden plunge in tin prices of chemical products, the experts say is related to the recent huge changes in the chemical industry chain. The supply and demand situation between coal and other energy terminals is quietly changing. The downstream demand is lessening, and goods transportation is blocked in some regions due to heavy snow. All the different reasons jointly lead to the diving of chemical product prices.

With the upstream raw material, coal price has halved, and the pressure on the chemical enterprises has been lessened to some degree. But the complex downstream situation still makes chemical enterprises anxious. With the end of the year getting closer and closer, the dual control policy on energy consumption is also becoming stricter. With the power limit, the order of downstream industries such as coating, plastics, clothing and textile, foreign trade processing industry, and other industries are suppressed. So, the transaction atmosphere in the market is not positive.

With the accumulation of inventory, the price has a trend of moving downward. With the temperature drop in the fourth quarter, the production and sales of many industries have entered into the off-season, and they have resistance to the high cost of upstream raw materials. At the same time, with the mentality of buying at the use and not buying at decreasing, the purchase is very limited and a shrinkage in the transaction is very obvious. With downstream customers continuing to negotiate for discount prices, the market transaction is at a dead block. With the transaction pressure and pessimistic views on the market, some chemical enterprises have prices continuously.

Some chemical enterprises said that for the last two months of 2021, the focus is no longer on securing more orders but to maintain a stable capital chain. With the uncertain industry situation, chemical enterprises choose to stabilize the old customers. For the new customers, they will only receive cash orders. They may also limit production and sales to avoid risks and maintain a stable capital chain to the greatest extent. Prices are no longer the key at the present. How to ensure to pass the winter safely and continue to spend in 2022 is the key.