Price trend

In early July, the domestic ABS market was positive, with spot prices rising across the board. According to the Commodity Market Analysis System of Business Society, as of July 10th, the average price of ABS sample products was 10700 yuan/ton, a+1.66% increase or decrease from the average price level at the beginning of the month.

Cause analysis

In terms of supply: Recently, the load in the ABS industry has shown a trend of large stability and small fluctuations. In the early stage, there were more enterprise maintenance and independent load reduction, which partially alleviated the high operating rate. Recently, trading and investment have rebounded, and construction has resumed. The current industry operating rate is about 82%. At the beginning of the month, enterprises mainly delivered contracts, but there was a decrease in on-site spot goods, and inventory was digested. The recent supply side support for the spot market is still acceptable.

In terms of raw materials: In early July, the overall performance of ABS upstream three materials was decent. Among them, the market for raw material acrylonitrile has risen, while the price of propylene on the cost side has remained strong. In addition, acrylonitrile enterprises have reduced their burden independently and had unplanned shutdowns, which has boosted the supply side and cost of acrylonitrile, resulting in a slight increase in prices.

Last week, the price of butadiene in China increased. Major production enterprises such as Sinopec have raised their factory quotations, which has boosted the mentality of merchants in offering, but downstream companies are resistant to high prices. The transaction of some offshore cargo in South Korea and Southeast Asia is still acceptable, and the price is still lower than the domestic spot price, so it is temporarily difficult to bring a significant boost to the domestic market.

From the figure below, it can be seen that the market price of styrene rebounded slightly in early July. The main reason is that the previous supply relaxation factors have not been fulfilled, and the production of new equipment has been delayed. In addition, the domestic policy foundation has supported styrene. Downstream demand is still mainly in demand, but there are still maintenance news in the future, which may continue to strengthen.

In terms of demand: Currently, downstream factories, including the main terminal home appliance industry, are generally operating at the beginning of the month, with increasing enthusiasm. Due to factors such as season and power restrictions, the operating rate is still at a low level. The manufacturer has a cautious mindset, but there has been an increase in empty orders on the market and overall demand has improved.

Future Market Forecast

Recently, there has been a simultaneous increase in the upstream three materials of ABS, which provides reasonable support for the cost side of ABS. The construction of petrochemical plants has stabilized compared to the beginning of the month, and some market inventory has been digested. The demand side support has rebounded, and the overall weak and rigid demand pattern has been maintained. It is expected that the ABS market may continue this strong trend.

Price trend

 According to the bulk list data of Business Society, the domestic PC market continued to recover in early July, with spot prices of various brands rising. As of July 7th, the reference quotation for the PC sample enterprises of Business Society was around 15466.67 yuan/ton, with a+3.69% increase or decrease compared to the beginning of the month.

Cause analysis

In terms of raw materials: From the above figure, it can be seen that the market for bisphenol A has been rising recently. After the raw material phenol/acetone rose, the cost was still supported by horizontal consolidation. After preliminary bidding for bisphenol A, the current spot quantity is limited, and the holder has a good intention of bidding. It is recommended to pay attention to the recent transaction situation, and it is expected that bisphenol A will continue to operate steadily.

In terms of supply: Recently, the overall operating rate of domestic PCs has been around 60%, and the industry load has gradually lifted from a three-year high. However, on-site supply is still abundant, and companies are cautious in pricing ex factory prices, with limited support for spot prices.

In terms of demand: Recently, downstream PC buyers have just needed to maintain production, and the business owners have a heavy wait-and-see mentality. Auction prices have risen, and transaction prices have generally increased. The current operating position of terminal enterprises is maintained, and the actual stock situation is limited. The main force of on-site trading is biased towards midstream traders.

Future Market Forecast

The PC market continued to recover this week. The upstream bisphenol A market has risen, providing better support for PC costs. The domestic polymerization plant has a horizontal load and maintains sufficient supply. Midstream traders have followed up with an increase, while downstream enterprises’ consumption has not improved significantly. PC will resume production lines in the near future, and it is expected that the market may rise and be hindered.

This week, the lead market (6.26-7.03) fell first and then rose, with a “V” shaped trend. The average price in the domestic market was 15385 yuan/ton at the beginning of last week and 15395 yuan/ton at the beginning of this week, up 0.06%.

The K-bar chart of commodity prices uses the concept of a price trend K-line to reflect weekly or monthly price fluctuations in the form of a bar chart. Investors can buy and sell investments based on the changes in the K-bar chart. Red indicates an increase; Green indicates a decline; The height of the K-pillar indicates the range of fluctuations, with recent market trends showing volatility, and the lead ingot market experiencing mixed gains and losses.

The futures market fell first and then rose this week. At the beginning of last week, under the influence of macro factors, the futures market mainly went down. At the beginning of this week, under the influence of macro positive factors, the metal market generally rose. From a macro perspective, the early US economic data in the week’s market showed strong performance, while the metal market declined. By Friday, inflation expectations had cooled, the US dollar had fallen, and the metal market had strengthened. In terms of supply and demand, the maintenance of primary lead and recycled lead enterprises has basically ended in mid month. Currently, manufacturers are actively operating. With the rise of lead ingot prices and the recovery of manufacturers’ profits, there is an expectation of an increase in lead ingot supply due to active operation. In terms of demand, the downstream market is still in the off-season, and the sales situation of batteries is still not significantly improving. Battery companies maintain the demand for replenishment and mainly support the demand for lead ingots. Overall, the recent improvement in the export situation of lead ingots has boosted the market to some extent. However, under the influence of the off-season in the domestic market, it is difficult for the lead ingot market to have significant fluctuations. The main trend in the future is small fluctuations, and it is still necessary to pay attention to the impact of macro level news on the market in the future.

On June 30, 2023, the lead inventory of the London Metal Exchange (LME) was 41225 tons, flat (unit: tons)

On July 2nd, the base metal index stood at 1183 points, unchanged from yesterday, a decrease of 26.79% from the cycle’s highest point of 1616 points (2022-03-09), and an increase of 84.27% from the lowest point of 642 points on November 24th, 2015. (Note: The cycle refers to the period from December 1st, 2011 to the present).

According to the price monitoring of the business community, there are four kinds of commodities in the nonferrous metal sector that have risen month on month in the list of commodity price rises and falls in the 26th week of 2023 (6.26-6.30), with cobalt (4.95%), tin (1.10%) and Dysprosium(III) oxide (0.68%) in the top three. There are a total of 15 products with a month on month decrease, and 2 products with a decrease of over 5%, accounting for 8.7% of the monitored products in this sector; The top three products in the decline were praseodymium neodymium oxide (-7.22%), praseodymium neodymium alloy (-6.67%), and neodymium oxide (-4.50%). This week’s average rise and fall was -1.21%.

The latest report released by the World Bureau of Metals Statistics (WBMS) shows that in April 2023, the global refined lead production was 1.165322 million tons, the consumption was 1.223342 million tons, and the supply shortage was 580200 tons. The global lead ore production in April 2023 was 3666.82 million tons

Cobalt prices surged in June

According to data monitoring from Business Society, cobalt prices increased significantly in June. As of June 30th, the cobalt price was 290200 yuan/ton, an increase of 13.27% compared to June 1st, when the cobalt price was 256200 yuan/ton. Domestic cobalt prices have skyrocketed, can the future cobalt market continue to rise?

Rising sales of new energy vehicles

According to data released by the China Automobile Association, in May, China’s production and sales of new energy vehicles completed 713000 and 717000 units respectively, with a market share of 30.1%. According to data from the China Passenger Transport Association, in May, the wholesale sales of new energy passenger vehicles in China reached 673000 units, with a wholesale penetration rate of 33.7% for new energy vehicle manufacturers and a retail penetration rate of 33.3% for new energy vehicles. In May, China exported 92000 new energy passenger vehicles, accounting for 30.5% of passenger vehicle exports. The world’s automobile industry will further develop towards electrification, and new energy vehicles will become the mainstream. The market share of new energy vehicles and new energy vehicle exports exceeds 30%. The concentration trend of the new energy vehicle industry is obvious, and the new energy vehicle industry has entered a rapid development zone. The demand for cobalt in the cobalt market is steadily growing, and the driving force for cobalt price increase is increasing.

According to data released by the National Bureau of Statistics, the profit of the automotive manufacturing industry increased by 1.02 times in May; The electrical and mechanical industry was driven by new energy products such as photovoltaic equipment and lithium-ion batteries, resulting in a profit growth of 27.3%; The profit of the new energy vehicle related industry has increased significantly, and the future market is expected to be positive. The demand for cobalt in the market is expected to rise.

International cobalt prices fluctuate and rise

From the trend chart of MB cobalt prices, it can be seen that in June, MB cobalt prices stopped falling and rose, international cobalt prices fluctuated and rose, and domestic cobalt manufacturers and traders followed suit.

Overview and outlook

According to Bai Jiaxin, a data analyst at Business Society, the production and sales of new energy vehicles are booming, and the sales of the automotive industry are generally growing rapidly. The stocks of automotive companies are strengthening, and the profits of the automotive manufacturing industry are increasing. Downstream profits are increasing, and there is greater room for cobalt prices to rise; The policy of reducing the purchase tax on new energy vehicles has been extended, and the production and sales of new energy vehicles are expected to increase. The demand for cobalt in the future market may exceed expectations, and 3C and intelligent electronic products have rebounded. The proportion of ternary batteries has increased, and the demand for cobalt has increased. The situation in some parts of the Democratic Republic of Congo is unstable, and the supply of cobalt raw materials may be limited. The news of domestic cobalt storage has stimulated demand in the cobalt market. In the future, with a decrease in supply and a rebound in demand, cobalt prices will fluctuate and rise. Or hit the 300000 yuan mark.