Aluminum prices rose slightly on September 15

According to the data from the business community, the average price of domestic aluminum ingots in the East China market on September 15 was 18813.33 yuan/ton, up 0.89% daily, 2.47% higher than the average market price of 18360 yuan/ton at the beginning of the month (9.1), and 15.41% lower than the average market price of 22240 yuan/ton in the same period last year.

At the peak price of 2021 (October 19, 2021), the average market price of aluminum ingots was 24240 yuan/ton, and the recent deviation from the peak fell by 22.39%. At the beginning of the recent recovery (July 14, 2022), the average price of aluminum ingot market was 17450 yuan/ton, and the recent recovery increased 7.81%.

Fundamentals Overview

On the domestic supply side: Yunnan has given a notice on load reduction. At present, the affected capacity has reached about 500000 tons, or expanded to 1.5 million tons, and the supply and demand pattern is expected to tighten; The production capacity of Sichuan and Chongqing is under recovery, and it will take time to fully recover. The tight domestic supply pattern is expected to rise.

On the domestic demand side, downstream consumption has improved slightly on a month on month basis, but not as much as the same period last year; As of the 15th, the social inventory in the mainstream areas of China was around 685000 tons, which has risen slightly on a month on month basis recently.

On the news side, the production capacity of aluminum plants with high energy consumption caused by the European energy crisis has been significantly affected. Recently, new production reduction news has brought worries about aluminum supply to the market.

Future market forecast

The bearish expectation triggered by the macro pessimism in the early stage was gradually diluted under the impact of the production reduction news.

In the short term, the aluminum price will be supported by periodic production reduction, and we will wait to see whether the actual demand in the downstream will turn warmer. It is expected that the aluminum price will be subject to strong and wide shocks in the short term.

According to the monitoring of the business community, the natural rubber commodity index on September 14 was 35.46, up 0.17 points from yesterday, down 64.54% from the highest point of 100.00 (2011-09-01) in the cycle, and up 29.99% from the lowest point of 27.28 on April 2, 2020. (Note: Period refers to 2011-09-01 to now)

Figure 2: Trend of mainstream price of natural rubber in September 2022

According to the monitoring of the business community, in the first half of September, the market of domestic natural rubber (Standard 1) in the East China market fell first and then rose: on the first day, the main report in the East China market was about 11810 yuan/ton, and on the 14th, the main report was 11956 yuan/ton. Since the spot price fell below the 12000 yuan/ton barrier again last week and reached the lowest level of 11706 yuan/ton, the technical rebound of Tianjiao on the 12th and 13th consecutive days. Since September, the highest price was 11956 yuan/ton on the 14th, and the lowest price was 11706 yuan/ton on the 9th, with the maximum amplitude of 2.14%. According to the data of the business community, the main spot market of natural rubber in East China (Hainan Island) has dropped by more than 13% since the beginning of 2022, 13748 yuan/ton. The price of 11706 yuan/ton on the 9th of this month has fallen above the low price of 11910 yuan/ton on the 22nd of July. Although it is in the traditional “golden September”, the natural rubber market is still at the annual low point under the situation of weak industrial supply and demand.

Figure 3: Trend of International Crude Oil Mainstream Prices in the Last Three Months of 2022

Macro: In August, the trend of international crude oil futures was similar to that of “W”. In particular, from the 17th to the 25th of the current month, it rose by about 10% in a row. Near the end of the month, it fell slightly, then rose, and then fell sharply. On September 13, the international crude oil futures closed lower. The settlement price of the main contract of the U.S. WTI crude oil futures was 87.31 dollars/barrel, down 0.47 dollars or 0.5%; The settlement price of the main contract of Brent crude oil futures was 93.17 dollars/barrel, down 0.83 dollars or 0.9%. The economic data released by the US Department of Labor on Tuesday showed that the CPI was higher than expected. Affected by the expectation of the Federal Reserve’s possible radical interest rate increase, the stock market and bulk commodities fell sharply, and WTI crude oil fell to 85 dollars at one time. However, as the market is generally worried about the tight supply in the future, the oil price has recovered most of the decline by the end of the day.

Figure 4: Weekly K Histogram of Natural Rubber Market in 2022

Industry analysis: according to the data from the business community, the spot market of natural rubber in East China (Hainan Island) on September 14 was 11956 yuan/ton, up 0.47% from the previous trading day and down 6.19% year on year. It just experienced the lowest level of this year (11706 yuan/ton on September 9). Natural rubber rebounded slightly and was at the annual market trough. Macroscopically, the economy should be stabilized in policy; Since the end of last month, the crude oil has continued to fall in shock, and the range has exceeded 12%. On the supply side, it was “golden nine”. However, from the perspective of the natural rubber industry, although there were disaster reports in some parts of Southeast Asia, it had little impact on the price of rubber, and there was no major typhoon in the main domestic production areas. The seasonal supply peak season was at home and abroad, and the impact of public health events on the export of natural rubber was not as obvious as last year. It was reported that the price of glue produced at home and abroad had temporarily stabilized recently. On the demand side, the supply pressure of downstream tire enterprises is still high, the demand for tires continues to be light, and some tire production lines are stopped for maintenance; In terms of replacement rubber, the price of cis polybutadiene rubber continues to be high, while that of styrene butadiene rubber continues to fluctuate and decline. At present, the price is close to that of natural rubber, which will promote the purchase demand of natural rubber to some extent; From the perspective of passenger car sales, according to the Passenger Association, the retail sales of passenger cars in August 2022 will reach 1.871 million, with a year-on-year growth of 28.9%, the highest growth rate in the past 10 years; Retail sales grew 2.9% month on month in August, which was the second lowest month on month growth in the same period of nearly 10 years. The accumulated retail sales from January to August were 12.95 million, up 0.1% year on year and 13000 vehicles year on year. The increase of 1.102 million vehicles from June to August made a huge contribution, which gave confidence to the market.

Recent hot spots: 1. According to the data released by the General Administration of Customs on September 7, China imported 592000 tons of natural and synthetic rubber (including latex) in August 2022, up 11.9% from 529000 tons in the same period in 2021. From January to August, China imported 4.567 million tons of natural and synthetic rubber (including latex), an increase of 5.1% compared with 4.347 million tons in the same period of 2021.

2. According to the latest data of China Automobile Association, in August, the production and sales of commercial vehicles were 238000 and 258000, respectively, with the output decreasing by 2.7% month on month and the sales volume increasing by 5% month on month; The year-on-year growth was 3.1% and 4% respectively. The production and sales of commercial vehicles are the first double year-on-year growth since April last year. With a batch of mature infrastructure construction gradually forming physical quantities, the production and sales situation of commercial vehicles will gradually improve. In this month, the production and sales of heavy trucks were 37000 and 46000, respectively, down 21% and 10% year on year. In January August, 2.165 million and 2.206 million commercial vehicles were produced and sold, down 34.1% and 36.2% year on year respectively.

3. According to the latest data of China Automobile Association, in August, the production and sales of automobiles were 2.395 million and 2.383 million, down 2.4% and 1.5% month on month respectively, and up 38.3% and 32.1% year on year respectively. From January to August, the production and sales of automobiles were 16.967 million and 16.86 million respectively, up 4.8% and 1.7% year on year respectively, the first double growth of production and sales since the second quarter.

4. According to the news of the Malaysian Bureau of Statistics on September 14, the total monitored output of natural rubber in July was 38006 tons, down 21.8% year on year and up 21.2% month on month. The output of small plantation accounts for 88.5%, and that of state-owned plantation accounts for 11.5%. In July, the total domestic consumption of natural rubber increased by 33.7% year-on-year to 35130 tons, down 3.3% month on month. Latex gloves industry is still the main force of natural rubber consumption in Malaysia, accounting for 70.8%, tyres and rubber hoses 8.3%, rubber thread 9.2% and other industries 11.7%.

Future market forecast: In the comparison of strong supply pressure and a positive sales volume of passenger cars, we initially believe that the possibility of a sharp decline in natural rubber in the short term is not high. However, in the absence of a significant improvement in downstream demand and the impact of extreme weather on the supply side, the possibility of a significant rise in natural rubber is also low, and the probability will remain volatile.

In September, the domestic liquid ammonia rebounded at the bottom, the prices in many places in China increased significantly compared with the end of last year, the market supply and demand were tight, the operating rate fell due to excessive maintenance of liquid ammonia devices, the agricultural demand rebounded, and the psychology of buying up or not buying down made the trading volume rise moderately. According to the monitoring of the business community, as of September 13, the growth rate of liquid ammonia in Shandong was 7.5%, and the current mainstream quotation range was 3800-4100 yuan/ton.

Supply side

On the supply side, the supply of liquid ammonia in China has been tight recently. Although some domestic overhaul devices have recently resumed operation, most of the devices that have not been restored have increased their own use and reduced their export sales. On the premise of the start-up of downstream fertilizer plants, the supply is even more strained. Up to now, the units of Henan golden earth, Shandong Shikefeng, Wanhua Fujian unit, Hubei Heyuan and other large plants are still under maintenance. The continuous contraction of supply is the main reason for the rebound in prices.

Cost side

The generally high cost also helps liquid ammonia to rise. The market price of You Coal fluctuated and rose. As of September 13, steam coal has risen by 5.13% since September, and the price is still high. The profit of the downstream liquid ammonia is constantly squeezed. With the help of the slight start of the downstream demand, ammonia enterprises can only passively raise the price to ensure profits. However, the state regulates and controls coal prices, and the rise of coal is restrained to a certain extent. The profits of downstream methanol, liquid ammonia and other products are still within a reasonable range. Natural gas prices rose slightly in September, which also played a cost driving role for southwest gas head ammonia enterprises. According to the monitoring of the business community, LNG rose 1.66% this month.

Demand side

From the terminal point of view, the downstream demand of liquid ammonia has rebounded slightly. The price of urea continued to rise, and the urea rose 5.83% in September. The demand for downstream compound fertilizer in autumn has been followed up one after another, and the industrial demand has also improved. In addition to the promotion of export and light storage on the market, the price of urea has continued to rise, and the shipment performance is good. The downstream stock increased before the Mid Autumn Festival, and the demand increased slightly.

From the above figure, we can see that the trend of liquid ammonia and urea is basically the same. In September, the price difference between the two narrowed significantly.

From the above figure and the liquid ammonia industry chain chart, the profit of the liquid ammonia industry chain is OK at present. The price of natural gas at the upstream of the gas head has not increased much, but the price of coal has increased significantly. In the later stage, coal may still have the power to move up, so the pressure of liquid ammonia and downstream or cost will increase. In terms of downstream products, urea (5.83%) showed strong performance, while other products such as ammonium chloride (- 14.85%), ammonium nitrate (- 4.61%), diammonium phosphate (- 4.6%) and other products showed weak performance..

Future forecast

The business community believes that, at present, the supply and demand pattern of the domestic liquid ammonia market has not changed much, both agricultural and industrial demand has grown moderately, and export demand has also been stimulated. However, with the resumption of production of devices in Guizhou, Chongqing and other places approaching, the supply is also expected to increase in the future. The negative supply will dilute the positive demand. From the perspective of the later part of the festival, ammonia enterprises have obviously slowed down their pace of inflation, and may face some upward pressure in the later period, but the market is still volatile and strong.

According to the monitoring data of business agency, as of September 6, the average ex factory price of domestic n-butanol was 6933 yuan / ton, which was 67 yuan / ton lower than that on September 2 (the reference average price of n-butanol was 7000 yuan / ton), a decrease of 0.95%.

It can be seen from the data monitoring chart of the business association that in August, the n-butanol market in Shandong Province in China as a whole went down. Towards the end of August, the trading atmosphere in the n-butanol market improved, and the factory quotation steadily increased. Entering September, on the first and second days of the month, the market focus of n-butanol in Shandong continued to rise slightly, with an increase of around 100 yuan / ton. However, the transaction volume on the market was generally general, and the n-butanol market in Shandong continued to consolidate after rising. On September 6, affected by loose downstream demand support and weak trading volume, some n-butanol factories in Shandong reduced the price of n-butanol by 200 yuan / ton. At present, as of September 6, the ex factory price of n-butanol in Shandong is around 6800-7000 yuan / ton. At present, the trading atmosphere in the n-butanol field is general, the downstream demand is released on demand, and the supply side is mostly stable.

In terms of upstream propylene, from September to now (9.1-9.5), the propylene market in Shandong has been in a downward trend. According to the data monitoring of business news agency, on September 5, the reference price of propylene was 7080.60 yuan / ton, a decrease of 0.28% compared with September 1 (7100.60 yuan / ton).

Post market analysis of n-butanol

At present, the downstream factories of n-butanol are generally under construction and the demand side is generally supportive. However, with the Mid Autumn Festival approaching, the downstream demand may increase. Therefore, the n-butanol statistician of the business society believes that the probability of a sharp decline in the market price of n-butanol in the short term is small, and most of them will be stable and small. Regional adjustment and operation are the main ones. The specific trend needs to pay attention to the news changes of the supply and demand side.

Price trend:

According to the data of the bulk list of the business club, the domestic ABS market was collated horizontally in early September, and the spot prices of various brands rose and fell. As of September 5, the average price of the mainstream offer of general grade ABS was about 11700 yuan / ton, up or down by – 1.27% compared with the price level at the beginning of last week.

Factor analysis:

Industrial chain: in terms of raw material styrene, the market price of styrene rose last week. The main reasons for the increase are that the downstream operating rate has increased significantly, the demand has improved compared with the previous period, the port inventory has decreased, the styrene has been smoothly removed from the warehouse, and the spot market has risen. However, the sharp drop in crude oil prices and poor cost support restrained the increase in styrene. Generally speaking, if the raw material level falls this week, the styrene market will follow the decline.

Recently, the acrylonitrile market has fluctuated, and the supply side of the domestic acrylonitrile industry has been in a loose state for a long time. However, due to the industry’s initiative to reduce the burden in the early stage, there is a phased supply tightening pattern, and the supply pressure has been partially relieved. The improvement of downstream demand was limited, and the start-up of terminal enterprises increased by a narrow margin. It is expected that acrylonitrile market will rise in a narrow range in the short term.

Last week, the price of domestic butadiene suppliers rose sharply in succession, but the basic support of butadiene faced with the market is unlikely to last. The pressure of downstream enterprises increases, and the demand may fall. In addition, it is expected that the arrival volume of ports will increase in the near future, and it is expected that the domestic butadiene market will rise or be hindered in the short term.

Recently, the upstream three materials of ABS cost end have a good trend, and the support of ABS cost surface is OK. In terms of industry load, the expected increase in the start-up of some ABS production lines in the early stage was realized, and the on-site supply continued to be abundant, and the pressure on the market at the supply side did not decrease. In terms of demand, in September, although the high-temperature power limitation of some terminal enterprises was lifted, the follow-up release of downstream demand, especially in the main terminal household appliances and other industries, has not yet been in place, and the intensity of on-site consumption needs to be improved. Businesses are not confident in the peak season and offer according to the market.

Future forecast:

Analysts of business community believe that the ABS spot market was generally sideways last week, and the overall trend of the three upstream materials was positive, which supported the cost side of ABS fairly well. The domestic spot supply is abundant, and the demand follow-up in the peak season has not yet been realized. The market has misgivings about the macroeconomic situation, and it is expected that the spot market of ABS will be adjusted and operated in the short term.

Price trend

According to the data of the bulk list of business club, the domestic PA66 market continued to rise this week, and the spot prices of various brands increased. As of September 2, the ex factory price offer of the sample enterprises of PA66 medium viscosity injection molding grade of business club was about 22250 yuan / ton on average, with a rise and fall of + 2.30% compared with the average price at the beginning of the week.

Cause analysis

Industrial chain: on the upstream side, the decline of domestic adipic acid narrowed this week, bottoming out and stabilizing. The industry load is low, and the manufacturer’s inventory pressure is slightly relieved. Domestic adiponitrile was shipped step by step and began to replace some imported sources. Recently, the supply of hexanediamine is tight, and merchants are reluctant to sell it. The market is good, and enterprises and businesses adjust their offers.

The overall trend of the upstream raw material market is OK, and the cost side support of PA66 is concentrated on hexanediamine. In terms of industry operating rate, due to the independent load reduction of PA66 enterprises and the peak load shifting production in some areas in August, the current domestic PA66 industry load continues to be low, the market spot supply shrinks, and the easing of supply pressure boosts the spot market. In terms of the port, the inventory position is OK, and the arrival volume of overseas sources is general. In terms of demand, the current follow-up of terminal enterprises is biased towards just maintaining production, and their acceptance of high price sources is general. The traditional off-season is coming to an end, but it will take some time for the demand of downstream factories to release and manifest. Merchants’ confidence has increased, shipments have attempted to rise, transactions on the floor are generally normal, and low-cost goods sources have decreased.

Future forecast

Business analysts believe that the spot price of PA66 has risen this week. The price of raw materials is mixed, and the cost side of PA66 is mainly supported by its own diamine. The load of PA66 enterprises is low, the situation of excess supply has improved, and the demand side is mainly for goods. It is expected that in the short term, PA66 will continue to rise due to the support of the cost side and the approaching peak season.

In August, the inventory pressure of ammonium chloride market continued in the off-season, and the price of ammonium chloride fell slightly. According to the data monitoring of the business agency, the price of ammonium chloride was around 1210 yuan / ton at the beginning of August and 1145 yuan / ton at the end of August, down 5.37%.

In August, the low-season of agricultural fertilizer, the downstream compound fertilizer plant started only around 30%, and the demand for ammonium chloride was weak. In the middle and late ten days of the month, despite the impact of the high temperature limit, the operation rate of the combined alkali plant of ammonium chloride enterprises once dropped to around 60%, but the overall inventory pressure of ammonium chloride was not significantly relieved, which was insufficient to support the market of ammonium chloride; At the end of the month, with the restart of the early maintenance unit, the commencement of the ammonium chloride industry gradually increased slightly, and the pressure on the supply side increased again. Throughout August, the ammonium chloride market continued to decline slightly under the haze of supply pressure.

In August, the price of raw liquid ammonia fluctuated and consolidated, the price of hydrochloric acid dropped significantly, and the cost dropped. According to the monitoring of business agency, as of August 31, the price of domestic liquid ammonia was 3800 yuan / ton, a slight increase of 0.71% over the price of 3773 yuan / ton at the beginning of the month. The highest point in the month was 3890 yuan / ton and the lowest point was 3733 yuan / ton. After the sharp drop in July, the liquid ammonia market took a partial turn for the better in early August. Due to the load reduction of several large factories in the north, the supply was tight, and the price rebounded from the bottom. Shandong, Hebei, Henan and other places all increased to varying degrees. After the second week of August, the market fell into a downturn again due to the increase of large plants and the loose supply. Until the end of the month, with the continuous impact of power restrictions in the south, social inventories were digested one after another, liquid ammonia rebounded generally, and Shandong increased significantly.

In July, the price of urea fluctuated and consolidated, with limited support for ammonium chloride. As of August 31, the domestic urea price was 2400 yuan / ton, down 0.33% from the price of 2408 yuan / ton at the beginning of the month. The high point of the month was 2438 yuan / ton and the low point was 2312 yuan / ton. On the one hand, the support of cost and agricultural demand is insufficient; on the other hand, the supply side reduction caused by industrial demand and power limitation has brought support to urea.

Due to the impact of high temperature limit, the supply pressure of ammonium chloride in August was weaker than that in the previous period, but the downstream demand was weak and the removal of ammonium chloride from the storage was not obvious. The low export volume of ammonium chloride has increased the supply pressure on the domestic market. According to the business agency, the export volume of ammonium chloride for fertilizer in China in July 2022 was 28700 tons. At the end of the month, with the gradual recovery of power supply and the gradual restart of some maintenance units in the early stage, the pressure on the supply side of ammonium chloride will continue.

Future forecast: the analysts of business club ammonium chloride believe that the current supply side is loose and the cost side remains low, but the demand side may improve in the later period of autumn fertilizer, and it is expected that the ammonium chloride market will rise slightly in the later period.

According to the data monitoring of the business agency, the domestic price of LLDPE (7042) was 8125.71 yuan / ton on August 1, and the average price was 7958.57 yuan / ton on August 31, with a decrease of 2.06% within the month and 8.34% compared with July 1.

According to the data monitoring of business agency, the average ex factory price of LDPE (2426h) on August 1 was 10050.00 yuan / ton, and the average price on August 31 was 9516.67 yuan / ton, with a decrease of 5.31% within the month and a decrease of 12.96% compared with July 1.

According to the data monitoring of the business agency, the average ex factory price of HDPE (5000S) was 8750 yuan / ton on August 1, and 8450 yuan / ton on August 31, with a decrease of 3.43% in the month and 10.27% compared with July 1.

In August, the overall trend of the domestic market in the polyethylene market was weak, and the three spot varieties were lowered to varying degrees. Among them, LLDPE rose at the end of the month, while the prices of LDPE and HDPE continued to fall within the month. In terms of cost, the international crude oil market fluctuated in August, bringing limited support to the market. During the month, the market supply increased, and the start-up of units such as Shanghai Petrochemical and Maoming Petrochemical brought certain negative effects. In terms of demand, due to the impact of high temperature limit in some areas, the increase of downstream orders is limited. In addition, the demand of agricultural film market is not as expected, and the benefits are limited. The overall trading atmosphere of the market is weak, the mentality of the merchants is general, and the prices are mostly low.

On August 31, the opening price of polyethylene futures 2301 was 7700, the highest price was 7741, the lowest price was 7624, the closing price was 7660, the previous settlement price was 7735, the settlement price was 7692, down 75, the trading volume was 355888, the position was 339030, and the daily increase was 7347. (quotation unit: yuan / ton)

On the last day of the end of the month, the international crude oil market was significantly lowered, and the cost was negative. In the later period, with the restart of the manufacturer’s equipment, the overall supply of polyethylene market is expected to increase. However, in terms of demand, September is about to usher in the traditional peak season. The demand for agricultural film is expected to grow, and the market trading atmosphere may improve. It is expected that the PE spot market may stop falling and rise in September.