Stable operation of ethylene oxide prices in April 2024

In April 2024, the price of ethylene oxide remained stable and the price gradient increased within the year. According to data from Business Society, as of April 29th, the average market price of ethylene oxide in China was 7000 yuan/ton, an increase of 9.38% compared to the market average price of 6400 yuan/ton at the beginning of the year.

Loose prices of some downstream products

At present, the industrial chain is in a state of poor cost oriented transmission. After the upstream raw material ethylene price rose, it remained at a relatively high level, but some downstream product prices slightly fell. Coupled with the main downstream polycarboxylate water reducing agent monomer prices remaining stable, the demand for ethylene oxide is generally supported.

Supply is tight

In the early stage, there were frequent spring shutdowns and maintenance of epoxy ethane in China, and some enterprises started to reduce their workload due to equipment maintenance. In the first quarter, the operating load of domestic equipment was about 60%, which was lower than the operating rate of 68% in the same quarter last year. The supply of ethylene oxide in the market supports relatively strong prices.

Future market forecast

Under the support of cost, the price of ethylene oxide may continue to remain strong, but in the later stage, with the resumption of production of early maintenance equipment, there is an expected increase in supply side pressure, with significant upward pressure and short-term fluctuations and stability maintenance as the main focus.

The price of ethylene glycol began to loosen in April

The price of ethylene glycol was weak in April. According to data from Business Society, as of April 26th, the average price of domestic oil to ethylene glycol was 4490 yuan/ton, a decrease of 0.52% compared to the average price of 4513.33 yuan/ton in the East China market on April 1st. The prices for each region are as follows:

The price range for spot goods executed by mainstream manufacturers in East China is between 4400-4630 yuan/ton; The spot price of ethylene glycol in the South China market is 4400 yuan/ton, while the mainstream manufacturers in Central China have a spot price range of 4350 yuan/ton for external execution; The mainstream manufacturers in North China offer a spot price of 4500 yuan/ton for external transactions.

Cost support narrows the downward space for ethylene glycol

Since March, the market has started trading overseas devices and there has been news of a restart, coupled with a shift in port inventory from obvious destocking in the early stage to platform volatility, causing market prices to move downwards.

However, based on cost considerations, the current raw material prices are relatively high, with high costs. The profit of the ethylene glycol factory is in the low range of the year, and the willingness to restart the factory’s maintenance equipment is low. It is expected that there will be little pressure on the supply side in the short term, and cost support will gradually strengthen. It is expected that the probability of ethylene glycol prices entering a narrow range of fluctuations will increase in the short term.

Price trend:

Recently (4.18-4.24), according to the commodity analysis system of Business Society, the market average price of anhydrous calcium chloride with a 94% content is 1325 yuan/ton, which is the same as last week. During the week, the calcium chloride market was mainly focused on procurement for immediate needs, with average support for exports. Dealers often offered more discounts for shipments, and the cautious attitude of mid to downstream merchants still persists.

Supply side:

Recent price trend of hydrochloric acid: According to the commodity analysis system of Business Society, the domestic hydrochloric acid market price has increased by 5.41% (4.15-19), and the cost of raw material hydrochloric acid has slightly increased, but it has not yet caused significant pressure on the calcium chloride market. At present, the market price of calcium chloride is relatively stable, mainly due to its wide application demand and relatively sufficient supply chain.

On the demand side:

From the perspective of supply and demand, the market trend of calcium chloride remains stable, with both production and sales remaining normal. Although some production enterprises have attempted to adjust prices to adapt to changes in raw material costs, the overall market price has not experienced significant fluctuations, demonstrating strong resilience.

However, market participants generally hold a cautious attitude towards future price trends. Due to the increase in the cost of major raw materials such as hydrochloric acid, some enterprises may face cost pressure, which may have an impact on the production cost and final market price of calcium chloride.

Overall

Although the current price of calcium chloride is relatively stable, the market has entered a wait-and-see stage, hoping that the cost transmission mechanism can operate smoothly to determine the final market price direction. Market participants suggest closely monitoring cost changes and arranging production and procurement plans reasonably to cope with potential market changes.

Aluminum prices fell on the 23rd

On April 23rd, aluminum prices fell. According to the Commodity Market Analysis System of Business Society, the average price of domestic aluminum ingots in the East China market on April 23, 2024 was 20280 yuan/ton, a decrease of 2.06% compared to yesterday’s average market price of 20706.67 yuan/ton.

Fundamental changes are not significant, and macro sentiment dominates recent fluctuations in aluminum prices

At present, the fundamentals have not changed much, and macro sentiment has dominated the recent fluctuations in aluminum prices. Today, the precious metals and non-ferrous sectors led the decline, with tin prices plummeting. Precious metals such as silver and gold also experienced a simultaneous high diving, resulting in poor market sentiment. Aluminum prices have been affected by the capital market and have followed a decline.

The significant changes in prices are mainly due to the loosening of macro news support factors in the early stage of the non-ferrous sector, coupled with high prices, leading to a surge in demand for profit taking in the capital market. The specific reasons are as follows:

1. The geopolitical tension is gradually easing, and the market’s risk aversion is cooling down;

2. The repeated postponements of interest rate cuts by the Federal Reserve have made the market realize that there are variables in the expected rate cuts, and the tolerance for macro news to fall short of expectations has decreased;

3. The demand for profit taking in speculative markets has significantly increased, and the selling pressure on non-ferrous metals has increased.

Aluminum prices continue to rise on the 22nd

Aluminum prices rose overall in April, with a slight decline last week. On the 22nd, aluminum prices continued to rise. According to the Commodity Market Analysis System of Business Society, the average price of aluminum ingots in the East China market on April 22, 2024 was 20706.67 yuan/ton, an increase of 10.38% compared to the average market price of 19550 yuan/ton at the beginning of the month; Compared to last Friday (4.19), the average price of aluminum ingots in the East China market was 20360 yuan/ton, a daily increase of 1.70%.

Macro factors dominate, and recent policy disturbances in the non-ferrous sector have limited impact

Recently, the nonferrous metal sector has been affected by macro factors and is showing a positive trend. The fundamentals of electrolytic aluminum have not changed much, and there have been frequent overseas policy news last week, resulting in a slight decline in aluminum prices. The policy message is as follows:

On April 15th, the United States and the United Kingdom announced new trading restrictions on Russian aluminum, copper, and nickel. The new regulations prohibit the London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME) from accepting newly produced metals from Russia, and Russian aluminum, copper, and nickel produced on or after April 13th are all prohibited. The United States also prohibits the import of these three metals from Russia. But sanctions will not prohibit non US individuals and entities from purchasing physical copper, nickel, or aluminum from Russia.

On April 17th, the White House website criticized China for unfair practices and announced plans to implement new restrictions on Chinese steel and aluminum products, including raising the 301 tariff on Chinese steel and aluminum products to three times the current level and cooperating with neighboring countries to prevent indirect exports of Chinese steel and aluminum products to the United States.

Rising price gradient of ethylene oxide in 2024

The price gradient of ethylene oxide will increase in 2024. According to data from Business Society, as of April 19th, the average market price of ethylene oxide in China was 7000 yuan/ton, an increase of 9.38% compared to the market average price of 6400 yuan/ton at the beginning of the year.

Downstream prices are rising, and the increase in ship prices is lower than that of ethylene oxide

At present, the industrial chain is in a state of poor cost oriented transmission. Recently, the prices of the main downstream polycarboxylate water reducing agent monomers have remained stable, but the upstream raw material ethylene price has risen and remained relatively high. The cost pressure on ethylene oxide enterprises has increased, and the rising prices are transmitted to ethylene oxide. However, downstream product prices of ethylene oxide are relatively weak, making it difficult to transmit cost pressures downwards.

Device maintenance and cost factors driving up the price gradient of ethylene oxide

Since 2024, there have been frequent spring shutdowns and maintenance of ethylene oxide in China, especially in the East China region. The overlapping of device maintenance and partial enterprise operation has reduced the load. In the first quarter, the operating load of domestic devices was around 60%, which is lower than the operating rate of 68% in the same quarter last year. Some maintenance devices are as follows:

On the raw material side, due to the influence of crude oil prices, the price of ethylene has increased month on month, and the cost of ethylene oxide is strongly supported.

Future market forecast

Under the support of cost, the price of ethylene oxide may continue to remain strong, but in the later stage, with the resumption of production of early maintenance equipment, there is an expected increase in supply side pressure, with significant upward pressure and short-term fluctuations and stability maintenance as the main focus.

According to the Commodity Market Analysis System of Business Society, as of April 17th, the average market price of resorcinol was 44750 yuan/ton. The price remains unchanged from last week.

Pure benzene: The price of pure benzene in China has slightly decreased this week. On April 17th, the price of pure benzene was 8707 yuan/ton, a decrease of 0.15% from last week. The trading volume in the petroleum benzene market is flat, and holders are reluctant to sell at a low level. Demand side continues to be bearish, leading to differences in negotiations. Today, some manufacturers have raised their prices, and the price of pure benzene has stabilized at a high level.

Nitric acid: The domestic price of nitric acid has increased this week. On April 17th, the price of nitric acid was 1693 yuan/ton, an increase of 3.54% compared to last week. The rise in upstream liquid ammonia prices supports the rise in nitric acid prices.

M-phenylenediamine: The domestic price of m-phenylenediamine remained stable this week. On April 17th, the price of phenylenediamine remained unchanged at 3600 yuan/ton compared to last week.

The purchasing intensity of resorcinol on the demand side is average this week. Downstream tire production is temporarily stable, maintaining essential support. There has been no significant increase in demand for dyes, pesticide intermediates, and other products. It is expected that the market for resorcinol will remain stable temporarily, with a focus on maintaining essential demand.

1、 Price trend

According to the Commodity Market Analysis System of Business Society, the average market price of caprolactam in China on April 16th was 13237 yuan/ton, which is a 4.04% increase compared to the average market price of 12724 yuan/ton on April 7th.

2、 Market analysis

Recently, the market price of caprolactam has been continuously rising. The price of raw material pure benzene has increased, leading to increased cost support. Maintenance of caprolactam units in some enterprises has led to a decrease in market supply. Downstream procurement is on demand, and the demand side is relatively stable. As of April 16th, the weekly settlement price of Sinopec caprolactam is 13600 yuan/ton, which is a high-quality liquid product.

Cost side

Raw material pure benzene market. Recently, the price of pure benzene has risen, but it has been operating in a narrow range. On April 16th, the price of pure benzene was 8707 yuan/ton, an increase of 0.68% compared to April 7th (8648 yuan/ton). The price of Sinopec pure benzene is 8800 yuan/ton. The strong raw material market provides some support for the price of caprolactam.

Demand side

Downstream PA6 market. Recently, the PA6 market has experienced a narrow range of fluctuations after rising. As of April 16th, the average reference price of PA6 in China was 14900 yuan/ton, an increase of 1.53% compared to April 7th (14675 yuan/ton). At present, the demand for raw material caprolactam in PA6 slicing is stable, and replenishment is mainly based on demand.

Supply side

Recently, there has been an increase in equipment maintenance for caprolactam enterprises, leading to a continuous reduction in market supply. Although some of the early maintenance equipment has been restored, there are still plans for maintenance in the later part of this month, providing favorable support for the supply side.

3、 Technical analysis

According to the Commodity Market Analysis System of Shengyishe, since March 6, 2024, the 7-day moving average of caprolactam has crossed the 30 day moving average and started a downward trend. Currently, there is a trend of the two moving averages moving in opposite directions. On April 15th, the 7-day moving average crossed the 30 day moving average, and the current two moving averages continue to rise in the same direction. It is expected that there is a high probability of caprolactam continuing to run upwards in the short term.

4、 Future Market Forecast

Business Society Caprolactam Analysts believe that the caprolactam market has been relatively strong and rising recently. Cost and supply side support, with an increase in favorable factors. Technical analysis is also likely to show an upward trend. It is expected that the market for caprolactam will continue to rise in the short term.

According to monitoring data from Business Society, as of April 15, 2024, the factory price reference for domestically produced industrial grade dimethyl carbonate is 4133 yuan/ton. Compared with April 1 (reference price for dimethyl carbonate is 4000 yuan/ton), the price has increased by 133 yuan/ton, an increase of 3.33%.

From the monitoring chart of Business Society data, it can be seen that in early April, the overall domestic dimethyl carbonate market showed an upward trend. After entering April, the overall trading atmosphere of dimethyl carbonate on the market has improved, and the volume of inquiries on the market has increased significantly. The downstream demand for dimethyl carbonate has also improved overall. With the support of demand, the supply and inventory of dimethyl carbonate have gradually been digested, reducing the pressure on the supply side. Therefore, supported by both supply and demand, the focus of the dimethyl carbonate market is constantly moving upwards. As of April 15th, the domestic market price of dimethyl carbonate is based on around 4000-4200 yuan/ton.

Future Market Forecast

At present, the trading atmosphere of dimethyl carbonate on the market is still good, the mentality of the operators is good, and the overall transmission between supply and demand is still good. However, the recent decline in the market price of epoxy propane on the raw material side has slightly loosened the cost support for dimethyl carbonate, and there may be a slight decrease in the market price in the future. The data analyst from Business Society believes that in the short term, the market trend of dimethyl carbonate will mainly be stable with small fluctuations, and the specific trend still needs to pay more attention to changes in supply and demand and other news.

Recently, Yizheng Chemical Fiber’s annual production of 3 million tons of PTA project has been successfully put into operation. In addition, Ningbo Taihua’s 1.5 million ton PTA plant was put into operation at the end of March and has since been discharged. How significant is the impact on the industry of PTA production capacity placement due to high market attention?

Intensify the situation of overcapacity

In 2023, we are in the second round of rapid capacity expansion for PTA, with a total annual production capacity of over 80 million tons as of 2023. In 2024, after deducting the newly put into operation 4.5 million tons, a new set of 3.2 million ton PTA plant in Sanfangxiang is planned to be put into operation by the end of the year, with an expected additional production capacity of 7.7 million tons by 2024. With the production of new PTA devices and the obstruction of domestic PTA exports, coupled with the rapid expansion of the downstream polyester industry in recent years, the competition in the industry has intensified, and the growth rate on the demand side will slow down in the future. The situation of oversupply in the domestic PTA industry may become more severe.

Processing costs continue to decrease

The PTA processing fee in the first quarter has repeatedly fallen below the 2023 average line, with the lowest reaching around 250 yuan/ton. Under the influence of low processing costs, especially the production of these two new devices, it will accelerate the clearance of some old production capacity or the elimination of old production capacity. Currently, the long-term shutdown capacity exceeds 7.5 million tons. The willingness of PTA factories to reduce production and shut down will also increase. According to statistics, the domestic PTA maintenance capacity in April was 6.65 million tons, and the planned maintenance in May was 6.1 million tons. There is still a possibility of annual maintenance for multiple long-term production units.

Narrow range price fluctuation adjustment

Since the beginning of this year, PTA prices have fluctuated and adjusted within a narrow range. As of April 12th, the average market price in East China was 5927 yuan/ton, a decrease of 0.05% compared to the beginning of the year. In early January, downstream polyester provided poor support for PTA demand, coupled with a broad correction in international crude oil prices, leading to a decline in PTA prices. Subsequently, due to the terminal replenishment market before the Spring Festival, downstream polyester factories had low inventory, leading to a wave of increase in PTA prices. However, post holiday terminal resumption of work and orders are not optimistic, and the market has ample spot circulation. Prices have fluctuated and fallen due to the disappointment of supply and demand expectations. Starting from the end of March, the cost side has been supported by favorable factors, geopolitical conflicts have once again escalated, international oil prices continue to strengthen, and PX routine spring inspections are approaching. At the same time, the downstream demand for replenishment after stocking up in the early stage of consumption has turned optimistic again, and PTA has experienced a slight recovery in stages. But under the pressure of new production capacity, prices have fallen.

What is the future price trend? Analysts from Business Society believe that the cost side will remain strong, mainly due to the relatively concentrated maintenance plans for PX devices in Asia in the second quarter, coupled with the expectation of growth in US oil demand, some Asian goods will flow to the US, leading to an overall decline in domestic supply levels. From a technical perspective, PTA prices have shown an upward trend since March 31, 2024, when the 7-day moving average crosses the 30 day moving average. Currently, both moving averages are moving in the same direction. On April 7, 2024, it was estimated that the probability of a change in operating trend (i.e. a 7-day moving average crossing the 30 day moving average) occurring within the next 7 days is 27.69%.

However, the decline in supply and demand is difficult to change. With the introduction of new production capacity, supply pressure continues to increase, and inventory remains at a high level. It is still necessary to pay attention to whether PTA processing fees will continue to decrease, which will force unplanned maintenance of PTA devices. The current production of downstream polyester has climbed to a high level around 88%, and the room for improvement is relatively limited. After May, the traditional peak season in the terminal weaving industry will come to an end, and there is a possibility of a slight decline in the weaving start-up rate. And the new polyester production capacity will enter a slow release stage, and there is still uncertainty about whether it will be smoothly put into production. Therefore, it is difficult for the demand side to provide strong upward momentum to the PTA market.

Overall, the short-term cost side still provides support for PTA. With the end of the traditional peak season and the gradual release of new PTA production capacity, prices will also weaken. Overall, it is highly likely that domestic PTA prices will show a trend of first rising and then falling in the second quarter.