Chemicals Perspective Focus: Crude oil drops low, which chemical prices fall to the lowest?

On March 9, the minimum Brent crude oil futures price fell to US $ 31.02 / barrel, a 53% decrease from the US $ 66 at the beginning of the year, and was close to the lows of US $ 27.1 in 2016 and US $ 45.04 in 2008. The recent rapid decline in international oil prices has exceeded industry expectations. We expect that in the next month, the overall price center of chemical products will follow the downward trend of crude oil, and the decline will exceed 10%. We have paid close attention to the price of 30 chemical products of 30 kinds of 150 chemical products, some of which have good supply and demand have left-side layout opportunities, and are optimistic about MDI, spandex, dyes and fluoride.

Chemical prices will continue to fall due to the impact of falling costs, weak markets and increased production. At present, the chemical index of the business community is 694, and the average price is 6% lower than the beginning of the year, only 15% higher than the lowest price since 2015.

In light of the recent sharp drop in oil prices, we expect the overall price of chemicals to continue to fall by 10% in the next month due to adjustments in crude oil and weak market supply and demand. However, as the price index has fallen to the low point of 1H2016, the prices of some chemical products have reached historical lows, and there is limited room for sharp declines in chemical prices.

The prices of some varieties hit a record low, and the downstream industry chain of ethylene and benzene fell sharply. The prices of more than 30 chemicals of the 150 chemicals we closely follow have reached their lowest levels since 2013, and the prices of more than 25 varieties have risen within 15% from the bottom range. Among them, the crude oil, phosphate rock, and potassium fertilizer prices of upstream resources bottomed out; ethylene-PE-ethylene glycol-ethylene oxide, toluene-PX-styrene, butadiene-synthetic rubber, etc. of upstream chemical raw materials, and midstream Products: The prices of pure MDI-TDI, chemical fiber PTA-polyester-spandex-viscose-CPL, phthalic anhydride, methanol, reactive dyes and other varieties are at the bottom of history.

We are optimistic about the supply and demand improvement varieties at the bottom of the price: MDI, spandex, dyes and fluoride. At the supply level, in 2019, the investment growth of the chemical industry continued to pick up, which led to the acceleration of the production capacity of some chemical products. Private large-scale refining and chemical and new coal chemical industries have increased their production capacity. According to our statistics, it is estimated that the production capacity of chemical products such as ethylene glycol, PTA + polyester filament, propylene oxide, adipic acid, R32, and methanol will increase by more than 10% in 2020. And the new capacity growth of upstream of MDI, spandex, dyes and fluorine chemical industry is less than 5%, and product supply and demand are expected to continue to improve.

Source from Sina