Epichlorohydrin: An unexpected surge in supply constraints

Since this year, the market trend of epichlorohydrin has been generally upward. The price of epichlorohydrin has risen from a low of 9800 yuan (ton price, the same below) to 14700 yuan at the end of June, an increase of 50%.

"As epichlorohydrin with excess capacity, the market surged unexpectedly in the first half of the year, and the extent exceeded expectations. The main reason is due to safety accidents, more plant shutdowns and limited supply of goods." Shandong Ruiyang Chemical Industry Trading Co., Ltd. General Manager Wang Chunming analysis.

Looking at the trend of epichlorohydrin in the first half of the year, from January to February, on the basis of the sharp fall in the fourth quarter of last year, the market bottomed out and rebounded. Especially in February, it rose more than 2,000 yuan in the month. In March, the market first hit the top and fell about 1,300 yuan, and then affected by the "March 21" particularly serious explosion accident, the safety of dangerous chemicals was comprehensively carried out in China. Overall production inspection, Haixing and Yihai Jiali Epichlorohydrin units were stopped for self-inspection, resulting in limited supply and high prices. But then in April, inadequate demand follow-up slowed down the market. Affected by the stricter safety inspection and other factors, downstream resin plants in some areas stopped, and the demand for raw material epichlorohydrin decreased. In addition, the profit situation of the epichlorohydrin plant itself is still good, the production enterprises take the initiative to reduce profits and prices, the market decline accelerated, the focus of negotiations dropped significantly, the price fell more than 2,000 yuan, before the cumulative increase disappeared.

The market reversed again in May. At this time, a large number of epichlorohydrin plant maintenance, coupled with frequent accidents, industry start-up load is only about 20%. Affected by the shrinking supply, the factory intends to offer more than 2300 yuan in the month. At the same time, the downstream terminal industry experienced seasonal warming and increased demand. In addition, as trade friction between China and the United States escalates, China expects to impose a 25% tariff on U.S. epichlorohydrin products. All these have pushed up the price of epichlorohydrin.

Since then, Jiangsu has issued a notice on the detailed requirements for the improvement of safety and environmental protection in the chemical industry. Epichlorohydrin is in the list, which also aggravates the wait-and-see sentiment in other areas. Epichlorohydrin factories and traders are reluctant to sell, spot resources are becoming increasingly tense, and market prices are rising by more than 1500 yuan.

For the capricious rise of epichlorohydrin, downstream epoxy resin can only follow passively. However, due to the low load operation of epoxy resin plants in many places under the pressure of environmental protection, the increase of epichlorohydrin is restricted.

Trichloromethane: Raw Material Drives Oscillation Higher

In the first half of the year, the market of trichloromethane was in a volatile and high trend. The price of trichloromethane rose from 2433 yuan in early January to 2880 yuan at the end of June, an increase of about 18%.

Industry insiders generally believe that the main factors driving up the trichloromethane market are rising raw material prices and better supply and demand fundamentals.

First, the upstream methanol market has risen, providing cost support. Since the second quarter, due to the influence of international geopolitical factors, the supply of methanol imports is tense, while downstream methanol has many units to put into operation or increase load. In anticipation of tight supply and demand, coupled with rising freight rates, since late April, the methanol market has broken away from the decline and entered the upstream channel, providing cost support for trichloromethane.

Second, the trichloromethane industry has a low start-up rate and a tight supply. Since March, explosion accidents of chemical enterprises, parks and transport vehicles have occurred successively in many places throughout the country. The state has further tightened the supervision of safety and environmental protection in the chemical industry. Affected by this, trichloromethane industry has a low start-up rate and a tight market supply. Especially after the "3.21" particularly serious explosion accident, Jiangsu, Shandong and other major industrial provinces introduced a number of control measures. However, the production enterprises of trichloromethane in these large chemical provinces are relatively concentrated, resulting in a low start-up rate of the industry. In addition, some production units were overhauled, which made the supply of trichloromethane market more and more tight. Enterprises and traders shipped more limited quantities, and inventories were also at a low level.

Third, the peak season is approaching, and the demand of the downstream refrigeration industry is considerable. Chen Fan, an analyst of methane chloride in business associations, said that with the advent of summer, air-conditioning start-up rate gradually increased, and the refrigeration industry ushered in a peak season of production and marketing, which led to increased demand for trichloromethane. In addition, in order to phase out the use of ozone-depleting refrigerants in China, it is stipulated that relevant manufacturers must organize production according to the national quota. This year, R22 production quota will be reduced again. In the case of stable demand, lower quotas lead to tight supply and demand in the market. R22 market price rises and trichloromethane market rises.

Natural gum: steady upward shift of demand center of gravity

Since this year, the natural rubber market has been volatile, rising from a low of 9,700 yuan at the beginning of the year to a high of 11,000 yuan at the end of June, an increase of about 13%.

Wang Yuanfei, an analyst at Futures Daily, believes that overall, changes in supply and demand fundamentals are decisive factors in the trend of natural rubber market.

In February, the natural rubber market rose strongly, with a monthly increase of nearly 1,000 yuan. The main reason is that since mid-late January, some rubber-producing areas in Southeast Asia have ceased to cut, while rubber-producing areas in China have not yet begun to cut, and natural rubber has entered the lowest annual production season. After the Spring Festival holidays, some downstream tire factories began to work gradually, the purchase of natural rubber increased, and the trading atmosphere in the market gradually recovered, which promoted the market to strengthen.

Tong Changzheng, senior researcher of CITIC Futures, believes that stable terminal demand is also a factor in the rise of the natural rubber market. Although on the surface, automobile production and sales data continue to decline, in fact, heavy trucks are the most closely related to the demand for natural rubber. The renewal demand of heavy truck industry provides strong support for natural rubber. Especially in the process of upgrading from Guosan to Guoliu, there are about 1 million vehicles in the market, which will stimulate the demand of natural rubber market.

In addition, affected by the favorable policy level, the natural rubber market in May set off a small climax, rising 1160 yuan a month, an increase of 10.81%. At the end of April, the General Administration of Customs issued a notice on the classification and identification of "mixed glue". Influenced by this policy, on the one hand, the import cost of mixed rubber increases, which drives up the price of natural rubber market of related products; on the other hand, the import volume of mixed rubber will be significantly reduced due to cost constraints, giving some market share to natural rubber.

In addition, in May, Yunnan, the main natural rubber producing area of our country, continued high temperature and drought, and the local rubber plantation was cut off in a large area with limited supply, which also promoted the natural rubber market to go up.

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