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SunSirs: Weak demand combined with bearish costs, phenol market is expected to continue to decline

March 26 2020 14:23:11     SunSirs (Molly)

1. Price trend

After the plunge in crude oil in March, the phenol market as a petrochemical product has entered a sharp decline cycle. According to the monitoring of the business agency, the petrochemical companies in East China reported an offer of 7,200 yuan / ton on March 1, and the petrochemical company of East China reported an offer of 6,250 yuan/ton on March 25. The overall decline of nearly 1,000 yuan, down 13.19%, down 31.32% year-on-year; East China phenol market quoted at 6,900 yuan / ton on March 1, the current East China market offer fell to 5850 yuan / ton, down 15.22%; currently The offer in the surrounding area of ​​Shandong is 6,100 yuan / ton, the offer contract for manufacturers in the surrounding area of ​​Yanshan has been basically completed, and the local market offer and petrochemical offer balance are maintained at 6,250 yuan / ton, and in southern China 6,350 yuan / ton.

2. Factor analysis

From a cost perspective, the continuous decline in upstream pure benzene continued to be affected by the crude oil plunge. According to SunSirs monitoring data, the ex-factory price of pure benzene in Shandong fell from 3,380 yuan / ton to 3,450 yuan / ton in March, an overall fall of 35.9%. . The inventory of pure benzene ports continues to increase. In the later period, the storage capacity is limited, and the current downstream demand is sluggish. Under the background of supply far exceeding demand, operators continue to be bearish on the market outlook, and it is understood that the current market offer has fallen to 3300 yuan / ton, some region even low as 3200 yuan / ton.

From the perspective of pure benzene external disk, overseas public events continue to add overlap and the previous crude oil plunged. At present, Russia and Russia have not cut short-term output, and the external disk market continues to decline. And continue to have limited storage capacity; the industry's mentality towards the market outlook is too empty. After the crude oil plummeted, the cost of low-cost crude oil was converted as soon as possible, and the operating rate of pure benzene companies increased close to the operating rate before the Spring Festival. From this, it can be seen that the downward cost of supply increased and the pure benzene market was still not optimistic in the later period.

From the perspective of supply and demand, Huizhou Zhongxin has a production capacity of 180,000 tons per year in the phenol ketone plant. The plant suspended production on March 9 and is expected to be one month. Yanshan Petrochemical has an annual production capacity of 180,000 tons, and restarted production on March 17. Shanghai Gaoqiao Petrochemical has a production capacity of 240,000 tons per year, and production was suspended on March 24. The installation of other petrochemical manufacturers has been maintained at 60% to 80%. Although the market supply has declined, the overall supply is sufficient.

For export, on March 17, the Ministry of Finance and the State Administration of Taxation issued a notice on increasing the export tax rebate rate for some products. The export tax rebate rate applicable to the goods listed in the announcement is defined by the export date indicated on the export goods declaration form. The announcement will be implemented on March 20. Phenol, downstream products, phenolic resins and other monovalent phenol products were increased from the original 10% to 13% in the list of products announced by the Ministry of Finance and the State Administration of Taxation to increase the export tax refund rate. This will stimulate the export of products to a certain extent, in order to stimulate domestic phenol demand and purchase efforts. However, the current overseas epidemic situation has far exceeded expectations, and the world has continued to increase. The policy of increasing export tax rebates has not yet been reflected.

HS Code

Product

Before Adjustment

After Adjustment

29071110

Phenol

13%

13%

39094000

The Primary phenolic resin

10%

13%

2907199090

monohydric

10%

13%

Industry: The current crude oil-pure benzene-phenol-bisphenol a industry chain continues to fall, while the acetone produced by the same plant as phenol has ushered in Xiaoyangchun. Acetone is continuously affected by the downstream disinfectant isopropyl alcohol, and the market price has stopped falling and rebounded. The current market is consolidating at a high level. According to SunSirs monitoring data, the acetone market in East China is 4,550 yuan / ton, and the current cost of phenol and ketone factories is considerable under the condition of low cost and acceptable demand. At present, the orders for isopropyl alcohol in Europe and the United States are scheduled to April. Acetone maintains a high level in the short term, and phenol supply will remain at a high level for a long time. It is difficult to be optimistic in the market outlook.

3. Market forecast

In summary, the impact of public events overseas has continued to intensify, and there has been no substantial positive progress after the crude oil plunge. Petrochemical products will continue to explore in the short term. From a cost perspective, the profit of pure benzene at 3,300 yuan / ton is fair compared to phenol. The acetone market in the same plant has remained strong for a short period of time due to the good demand for downstream isopropanol. Overall, phenol and ketone plants have better profits and short-term phenol recovery has not yet existed. In the near future, we will continue to pay attention to petrochemical manufacturers' price adjustments. In the case of sluggish demand and bearish conditions, it will continue to find a bottom, with a short-term forecast of 5,500 yuan / ton, or the market situation will gradually become clear in mid-April.

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