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中文版There are many reasons for the decline in chemical prices, and crude oil is only superficial
From the perspective of crude oil price fluctuations, from December 2022 to the middle of March 2023, the international oil price has been fluctuating around $75 per barrel, which can be called a weak fluctuation cycle or a game period between oil bulls and bears. During this period, China's bulk chemicals market fell collectively, which may be a negative factor brought about by the early decline in crude oil, but more importantly, it is due to the stagnation of international trade.
Since the second half of 2022, the accumulation rate of empty containers at multiple ports in China and the United States has increased. Due to insufficient demand for shipping, the Shanghai export container freight index plummeted by more than 80%. The 6-7 layers of empty container stacking at the Shenzhen Yantian Port wharf will break the maximum empty container stacking in the 29 years since the port was opened.
China Group expects its net profit to reach RMB 3-3.8 billion in 2022, a year-on-year decrease of 43% - 55%. Kangxin New Materials, a container floor manufacturer, expects to lose 170 million yuan of net profit attributable to the parent company in 2022, which will turn from profit to loss compared to 30.455 million yuan of net profit attributable to the parent company in the same period last year.
Currently, the accumulation rate of empty containers in major ports is still high, mainly due to weaker global demand. It is also due to the decline in international trade that the sales pressure of many chemicals that rely on exports increases instantaneously, especially the decline in the export market in the field of end products. The consumption of bulk chemicals will be suppressed around the upstream of the industrial chain. Perhaps this is one of the reasons why the prices of bulk chemicals in China have fallen.
Domestic market consumption is booming, in sharp contrast to international trade
In sharp contrast to international trade, China's consumer market is booming. It is understood that China's daily necessities and consumer goods are showing a very hot sales atmosphere, with many enterprises having empty inventory and sales, and orders have been scheduled for two weeks.
The domestic sales situation is good, mainly due to frequent business trips by enterprise sales personnel after the February epidemic, which has led to a significant increase in economic activity and formed a significant driving force for inventory digestion from the consumer market. Currently, China's terminal consumer market is active, and it is expected to become the key to driving China's bulk chemicals to change the vulnerable market.
Formation of polarization between the upstream and downstream of the chemical industry chain
Currently, the upstream end of the bulk chemicals market is weak, but the downstream end consumer market is hot, forming a significant polarization. This polarization will be improved in a short time. The best value transmission logic for the chemical industry chain is the value transmission of the industry chain driven by the end consumer market.
According to the empirical evaluation of the transmission time cycle in the chemical industry, fluctuations in crude oil prices are generally intended to be transmitted to the end consumer market. If there are 4-5 product links in the middle, the transmission time cycle is generally 2-3 months. In other words, the value industry chain transmission driven by the explosion of the end consumer market since the end of February is expected to reach the upstream of the chemical industry chain from April to May 2023.
Therefore, the polarization of the end consumer market and the chemical industry chain may be corrected in April to May this year. However, it should be noted that this is also different from inventory in the end consumer market, as well as some chemicals with prominent supply and demand contradictions.
The scale of China's chemical market continues to grow, and the contradiction between supply and demand of homogeneous products still exists in the short term. In addition to the weakening of international trade, the overall Chinese chemical market in 2023 will not be optimistic. The economic acceleration driven by the pandemic blockade is only a short-term outbreak in the domestic demand market. In the long run, most chemicals still face serious supply pressures.