The PMI index of the world's major economies has basically returned to the level before the epidemic, business activities have gradually recovered, and demand has increased. With the continuous restoration of the global economy and manufacturing industry, the basic chemical industry as a whole continues the trend of economic restoration that has been shown since the second half of 2020.
The chemical industry boom continues
The year-on-year growth rate of chemical PPI in the 2021H1 month continued to increase. The chemical PPI index has continued to maintain a positive year-on-year growth since the beginning of 2021. Wind data shows that in June, the chemical raw material and product manufacturing industry grew by 20.3% year-on-year, and the fiber manufacturing industry grew by 17.0% year-on-year. In the first half of the year, the recovery process of the manufacturing industry progressed. Over the same period last year, the PPI base number was small, and the PPI growth rate of the chemical industry exceeded the highest level since 2014.
The situation of epidemic prevention and control has improved, and downstream demand has recovered, driving the price of chemical products to continue to rise. On June 30, the price index of chemical products rose to 5100, and the spot price of WTI crude oil rose to $73.47 per barrel. With the resumption of production at home and abroad and the increase in economic activities, the crude oil price center has risen, driving up the price of chemical products.
Agrochemical industry: elemental fertilizer is booming, compound fertilizer is waiting
The global price of agricultural products has risen, which is good for the demand for upstream agrochemical products. According to Wind Information, on July 2, 2021, the prices of CBOT corn and CBOT wheat were 579.75 cents per bushel and 652.75 cents per bushel, up 68.77% and 32.67% year-on-year. The increase in food prices boosted farmers' expectations for planting income, and the planting area is expected to expand in the coming year, which will drive the overall demand for fertilizers upward. From the perspective of planting costs, mechanical operation fees and chemical fertilizer fees accounted for the bulk of corn production costs, accounting for 41.98% and 35.79% respectively in 2018. When food prices rise, the cost pressure of farmers is relatively reduced, and it is possible to increase the amount of fertilizer or use higher-priced compound fertilizers to stimulate demand for agricultural materials.
Chemical fertilizer inventories in India and China are low, and global fertilizer prices are expected to rise. According to Zhuo Chuang Information, the world's major fertilizer importer India's diammonium phosphate (DAP) and potassium chloride (MOP) stocks are at historically low levels. The total stock in May 2021 is about 2.06 million tons, a year-on-year decrease of 53.72%. International demand for DAP is strong. In April, China’s exports to India were only 56 tons, and the inventory in the Chinese market was also low. This was supported by raw material prices such as sulfur and phosphate rock. India (June-October), Brazil (8-10) Countries such as September), Argentina (September-November) and other countries have entered a period of concentrated fertilizer use. In the later period, China’s exports of diammonium to India, Bangladesh, and Pakistan may increase, which will also squeeze part of the domestic supply of DAP in the fall. The market may experience tight supply in the future.
Chemical fiber industry: Spandex boom continues, polyester viscose improves
The long-term price increase of spandex is inevitable, and the situation of short supply is emerging this year. According to Zhejiang Textile Printing and Dyeing Association, the national spandex production capacity increased from 165,000 tons in 2004 to 850,000 tons in 2019, with a CAGR of 11.55 percent, maintaining a steady growth trend. In 2020, the spandex output will be 872,000 tons, an increase of only 22,000 tons. , An increase of 2.59% year-on-year; in recent years, the growth rate of China's apparent consumption of spandex has increased year by year. In 2020, it will increase to 792,900 tons, an increase of 14.97% year-on-year, which is significantly higher than the supply-side growth rate. Spandex is in short supply. The average price was 56945 yuan/ton, a year-on-year increase of 94.7%, and a month-on-month increase of 78.5%; from the perspective of the spread, the spread of 2020H1 spandex was 25,410 yuan/ton, a year-on-year increase of 96.9% and a month-on-month increase of 85.3%. Spandex profitability improved significantly , Into the economic cycle.
The ultra-low inventory supports the price, and the new production capacity will not be released until the end of the year. The second quarter is the traditional inventory cycle of the weaving industry. The third quarter will enter the peak season. The current spandex industry inventory is maintained at about 10 days, showing a "off-season not weak" market, which is only 1/5-1/ of the historical inventory in the same period. 4 levels. The recent increase in production capacity will have to wait until the end of the year, and the shortage of spandex is still inevitable. With the arrival of the "Golden Nine and Silver Ten", spandex demand may become tighter, and there will be further upward momentum.
Chlor-alkali industry: "dual control" restricts production expansion, and demand grows steadily
The production of PVC in my country is mainly based on the calcium carbide method, and the production capacity of PVC has been continuously increased in the past five years. The foreign chlor-alkali industry generally uses the ethylene process to produce PVC. However, due to the resource characteristics of "rich coal, poor oil and less gas" in my country, the mainstream process for PVC production is the calcium carbide process. According to data from the Chlor-Alkali Industry Association, the production capacity of PVC produced by calcium carbide method accounted for 81.3% in 2019. According to Zhuo Chuang Information, my country's PVC production capacity will be 27.125 million tons in 2020, and my country's PVC production will be 20.74 million tons in 2020, representing an operating rate of 76.47%.
PVC resource attributes are increasing day by day, and supply constraints are strong. With the recovery of the global economy and the constraints of environmental protection policies on the upstream supply side, the PVC industry has entered a prosperous stage. In the first half of the year, the increase in PVC supply was limited. Only 160,000 tons of new capacity was put into production, and the new capacity did not reach full production. The tight supply and demand drove up prices. Looking forward to the second half of the year, taking into account the dual energy consumption control target of Inner Mongolia, one of the main producing areas of calcium carbide, some of the supply of calcium carbide in the high-power-consuming industries may be cut off due to power restrictions. The supply of calcium carbide, which is a raw material for PVC, is tight or will become normal. The “resource attributes” of the chlor-alkali industry are gradually emerging, while the overall downstream demand remains strong and resilient. It is expected that prices will remain strong in the future.
Polyurethane industry: prices have bottomed out, waiting for the peak demand season to arrive
Domestic MDI demand is slightly weak, and overseas demand has brought an increase. In the first half of 2021, the domestic MDI market price showed an inverted V trend. In the first quarter, due to low inventory before the Spring Festival and force majeure in the United States, the price of MDI rose rapidly in February. After reaching a high point in early March, traders took profits and demand was weak. , The price bottomed in mid-June after entering the downward channel. According to Wind, the average prices of polymerized MDI and pure MDIH1 were 19,606 and 22,469 yuan/ton, +62.4% and +52.8% year-on-year, respectively. The average price of Q2 was 18,219 and 20,797 yuan/ton respectively, which was +56.9% and +51.5% year-on-year, and was- 13.6%, -13.6%. Although domestic prices have been weak, the frequent force majeure and strong demand of overseas installations have driven export volume and price to record highs in the first half of the year. From January to May 2021, China's aggregate export volume of polymerized MDI was 456,800 tons, a year-on-year increase of 93%. Among them, the demand of local downstream PU system manufacturers in the United States has shown an upward trend, and their dependence on China's MDI imports has increased. According to customs data, the export of aggregate MDI to the United States in May reached 34,600 tons, an increase of 74.7% from the previous month and an increase of 217% from the same period last year. Force majeure was superimposed. In the maintenance season, the price is flexible when the demand peak season comes.
According to Tiantian Chemical, Covestro announced that the 400,000-ton MDI plant in Brunsbite, Germany will take effect on July 2, 2021, and the duration cannot be determined; the 330,000-ton plant in Texas is still in operation since February. In force majeure; Wanhua Yantai's 1.1 million ton plant also entered an overhaul period in July, and the overall supply side is tightening. We believe that with the arrival of the traditional peak season in the third quarter, MDI prices are expected to rebound at an accelerated rate.
Source: Mobile Public Account
