Chemical Industry Research Report Week 24

The top five chemical product price increases this week were butanone (+28.49%), isopropanol (+15.59%), isobutane (+13.1%), acetone (+13.01%), and phenol (+11.96%); The top five drops in chemical products were acetic anhydride (-13.12%), nicosulfuron (-11.06%), VD3 (-10.88%), chloroform (-10.84%), and isobutyraldehyde (-10.71%).

This week, international oil prices continued to rise in the context of the OPEC+ deferred production cut agreement. The average price of the WTI July contract this week rose to about US$38.7 per barrel, an increase of US$3.0 per barrel from the previous week, and the Brent August contract price This week's average price rose to about US$41.2/barrel, an increase of US$3.5/barrel from last week's average price. Brent's August contract price stood at US$41/barrel. WTI's July contract price also approached US$40/barrel. International Oil prices rose to their highest level in more than three months. Since OPEC+ implemented the new production reduction agreement, the supply of crude oil has been significantly reduced. North America has also implemented reduction measures. The global crude oil supply pressure has eased significantly. At the same time, the global resumption of production has also driven the growth of crude oil demand. OPEC+ has actually led Saudi Arabia and Russia have reached an agreement to extend the current 9.7 million barrels/day production cut by one month. Libyan crude oil production has encountered force majeure and is difficult to recover in a short time. Therefore, international oil prices have begun to rebound. Since May, rising crude oil prices have fully driven downstream chemical product prices upwards. At the same time, the global epidemic has eased downstream demand, and the previous inventory pressure has been effectively relieved. Therefore, most chemical products have recently entered the inventory replenishment cycle, and product prices have rebounded significantly. , We think this situation will continue for some time.

Announcement No. 194 of the Ministry of Rural Agriculture stipulates that from July 1, 2020, the use of growth-promoting antibiotics in commercial feeds is prohibited, and from December 31, 2020, the circulation of commercial feeds containing growth-promoting antibiotics is prohibited. Prohibition of feed will result in a decline in breeding efficiency, and the impact needs to be reduced by improving breeding equipment, environment, and selection of alternative antibiotic products. Among them, the substitution product mainly refers to the selection of feed additives with similar functions as antibiotics, such as acidulants, enzyme preparations, plants Essential oils, Chinese herbal medicine extracts, probiotics, etc., and single additives have limited functions and require multiple combinations. Europe began to ban the addition of antibiotics in feed as early as 2006. At present, the mainstream program uses acidifiers + plant essential oils. Acidifiers mainly include lactic acid, and plant essential oils include carvacrol and thymol. In the future, with the domestic feed ban policy, The demand for lactic acid is expected to continue to grow.

The Ministry of Agriculture of the People's Republic of China issued the "Exit Plan for Drug Feed Additives". Since July 1, 2020, feed companies have stopped producing antibiotic-containing feeds. The new demand for lactic acid, a substitute product, is expected to reach more than 100,000 tons. At the same time, the country issued an upgrade in January this year. The version of "Plastic Limitation Order" will fully open up the application space of biodegradable plastics. There are very few companies with PLA production capacity in the world; domestic MDI supply will continue to tighten in June, and downstream demand is expected to recover slowly in the context of global "resumption of production and resumption of work." Therefore, MDI prices are expected to continue to rise. Affected by the new Coronary Pneumonia epidemic, India extended the “closure of city” measures nationwide until the end of June. India is the fourth largest agrochemical producer in the world and the largest producer of generic drugs after China. Among them, pyrethrin The global production capacity of products such as manganese and zinc, and mancozeb is relatively high. India is one of the major exporters of cyhalothrin, a key intermediate of ether aldehyde. This closure of the city may not be complete for some integrated facilities. The impact of enterprises, if the production shutdown time in India continues to be extended, the prices of related pyrethroid products are expected to rise, and the domestic leading enterprises of upstream and downstream integration will benefit more.

Source from SWSC