SunSirs: Crude Oil Prices Surge; Chemical Industry Suspends Quotations En Masse

Driven by a sharp rise in international crude oil prices, both WTI and Brent crude surged by more than 3%, breaking through the $103/barrel and $108/barrel thresholds, respectively. Prices for major domestic chemical raw materials rose rapidly in tandem, market volatility intensified, and a strong wait-and-see sentiment prevailed among upstream and downstream players. Over 200 domestic chemical and energy-related enterprises have collectively announced a suspension of external pricing, covering dozens of sub-sectors including oil and gas refining, fine chemicals, coal chemicals, phosphate chemicals, building materials chemicals, and rubber and plastic raw materials. This involves hundreds of mainstream chemical products, with enterprises primarily concentrated in major chemical production regions such as Shandong, Hebei, Henan, Anhui, Sichuan, and Shaanxi. At the same time, prices for over 100 types of domestic chemical raw materials have continued to rise, while more than 200 products have remained at high levels. Year-over-year price increases for products such as ferrous sulfate, hydrochloric acid, propylene glycol, and bromine have all exceeded 100%, significantly increasing production cost pressures for downstream enterprises.

Regarding the reasons for the suspension of quotations across various product categories: for petroleum products and aromatic solvents, on one hand, costs have risen rapidly driven by sharp increases in international crude oil prices, making price calculations unstable; companies have temporarily suspended quotations to mitigate risks. On the other hand, some supporting facilities have entered their spring maintenance cycle. Combined with generally low market inventories and a “sell-first, buy-later” approach, spot market liquidity has tightened, making it impossible to maintain continuous pricing. For ether and alkane products, the suspension is largely due to concentrated maintenance of upstream supporting facilities, such as isobutane dehydrogenation units, which has disrupted raw material supply and reduced production capacity. Additionally, high-purity alkane products are prioritized for long-term contract customers, leaving very little inventory available for external sales. Coupled with rapid fluctuations in upstream oil and gas prices and difficulties in cost calculation, enterprises have chosen to adopt a wait-and-see approach and suspend pricing.

The suspension of quotations for olefin products stems primarily from severe supply shortages. Multiple key production units have been shut down or operating at reduced capacity, with no definite timeline for resumption. The market has experienced spot supply disruptions, leaving no inventory available for quotation. Furthermore, some enterprises are prioritizing the use of ethylene, propylene, and other products to meet their own downstream production needs, resulting in a significant reduction in external sales. Coupled with the risk of cost-price inversion, companies have collectively suspended quotations. For coal-based chemical products such as synthetic ammonia, methanol, and LNG, the primary factor is the concentrated spring maintenance of production facilities. With some units shut down and no clear restart schedule in place, this has directly led to declining output and tightening supply. Coupled with significant fluctuations in raw material and energy costs—such as coal and natural gas—pricing these products has become increasingly difficult, prompting companies to temporarily suspend quotations.

For fine chemicals, rubber and plastics, and new materials—such as epoxy resin, hydrogen peroxide, and titanium dioxide—market supply has decreased due to production facilities operating at low capacity or undergoing periodic maintenance. Some products are now exclusively reserved for long-term core contract customers, with no inventory available for external sales. Furthermore, excessive increases in upstream raw material costs, coupled with insufficient downstream demand, have hindered price pass-through, leading companies to adopt a wait-and-see approach and suspend pricing. For phosphate chemicals, fertilizers, and inorganic salts, the overall supply-demand balance remains tight. With some production facilities entering extended maintenance periods, short-term supply has contracted significantly. Products like bromine, facing tight supply, have shifted directly to a “negotiated per order” model, abandoning public pricing.

For niche products such as needle coke, sulfur, DOP, and NMP, as well as construction materials and recycled chemical raw materials, the reasons for suspending quotations primarily center on several factors: First, the costs of upstream raw materials such as petroleum and coal fluctuate dramatically, making it impossible to fix costs and difficult to provide stable quotations; second, overall industry inventories are at low levels, with insufficient supply to support normal external sales; third, some products are prioritized for internal use or core partner clients, leaving no surplus inventory for external sales; fourth, due to uncertainty regarding future market trends, companies are adopting a cautious approach and suspending quotations to stabilize market prices.

Analysis of the core reasons for the concentrated suspension of quotations across various chemical product categories

I. Petroleum Products and Aromatic Solvents

1. Severe cost volatility: The sharp rise in international crude oil prices has directly driven up the costs of refined oil products, fuel oil, and aromatic products, making it difficult to anchor prices. Companies have proactively suspended quotations to hedge against risks.

2. Tightening inventory and circulation: Overall market inventory is low, with most companies adopting a “purchase based on sales” model. Insufficient spot market supply lacks the foundation for sustained external pricing.

3. Impact of Plant Maintenance: Some supporting aromatics facilities have entered maintenance cycles, resulting in reduced output and tighter spot market supply.

II. Ethers and Alkanes

1. Shutdown of Upstream Supporting Facilities for Maintenance: Products such as MTBE and isobutylene often rely on supporting facilities like isobutane dehydrogenation units. Concentrated spring maintenance has disrupted raw material supply, leading to insufficient production and the suspension of public quotations.

2. Prioritizing Contract Customers: High-purity alkane products are primarily supplied under long-term contracts, leaving very little inventory available for external sales, necessitating the suspension of public quotations.

3. Rapid Pass-Through of Raw Material Prices: Significant fluctuations in upstream oil and gas prices make product cost calculations difficult; companies are adopting a wait-and-see approach regarding future market conditions and have temporarily suspended quotations.

III. Olefins (Ethylene, Propylene, etc.)

1. Severe Supply Shortages: Multiple key production units have been shut down for extended periods or are operating at reduced capacity, with no clear timeline for resumption. This has led to a shortage of spot supplies and a situation where there are no products available for quotation.

2. Increased Internal Allocation: Some enterprises are prioritizing their own downstream production needs with olefin products, resulting in a significant reduction in supplies available for external sales.

3. Risk of Cost-Price Inversion: Rising crude oil prices have driven up raw material costs, but downstream buyers lack the capacity to absorb these increases. To mitigate risks, enterprises have opted to suspend trading.

IV. Coal Chemical Products (Synthetic Ammonia, Methanol, LNG, etc.)

1. Concentrated plant maintenance: Routine spring maintenance of facilities producing methanol from coke oven gas and synthetic ammonia has directly led to a decline in output and tightened supply.

2. Fluctuations in raw material and energy costs: Unstable coal and natural gas prices, combined with changes in energy consumption and transportation costs, have made product pricing more challenging.

3. Tight supply-demand dynamics: With some facilities shut down and no clear plans for resumption, spot market supplies are insufficient, and companies have suspended quoting.

V. Fine Chemicals, Rubber & Plastics, and New Materials

1. Facilities operating at low capacity or shut down: Market supply has decreased for products such as epoxy resin, hydrogen peroxide, and titanium dioxide due to facility maintenance and low-capacity production.

2. Supply limited to core customers: Products such as THF are primarily supplied to long-term contract customers, with no inventory available for external sales; therefore, no external quotes are provided.

3. Disrupted supply chain transmission: With excessive price increases in upstream raw materials and insufficient downstream demand, a stable pricing structure is difficult to establish, leading companies to adopt a wait-and-see approach and suspend quotations.

VI. Phosphate Chemicals, Fertilizers, and Inorganic Salts

1. Supply-demand dynamics remain tight: Fertilizer raw materials such as monoammonium phosphate and diammonium phosphate face overall tight supply due to factors including production and transportation.

2. Periodic plant shutdowns for maintenance: Some phosphate chemical plants have entered maintenance cycles lasting approximately one month, resulting in a significant short-term contraction in supply.

3. Shift in Pricing Models: Due to tight supply, products such as bromine have abandoned public pricing and switched to a case-by-case negotiation model.

VII. Other Niche Chemical Products (Needle Coke, Sulfur, DOP, NMP, etc.)

1. Volatile Raw Material Costs: Prices of upstream raw materials such as petroleum, coal, and salts remain unstable, making it impossible to fix costs and difficult to provide stable quotes.

2. Insufficient Spot Inventory: Overall inventory levels are low, with insufficient supply to support normal external sales, forcing companies to suspend quotations.

3. Priority Given to Internal Use and Supply Security: For certain products, priority is given to meeting internal production needs or supplying key partner clients, leaving no surplus inventory for external sales.

4. Strong Market Caution: With uncertainty regarding future market trends, companies are adopting a cautious approach, suspending quotations to stabilize market prices.

In summary, in the short term, the supply of various chemical products for which quotations have been suspended remains tight. Market transactions are primarily conducted through direct negotiations on a case-by-case basis. It is expected that as maintenance facilities gradually resume operations and upstream raw material prices stabilize, some companies will resume quoting, and the price trends in the chemical market will gradually become clearer.

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