China’s Chemical Market Very Dynamic in October

Prices of chemical products in China increased drastically in October. Between September 29 and October 13, the prices of 92 of the 160 products we tracked increased – that is 57.5% of the products. The prices of 35 products (21.9%) declined. The prices of the other 33 products (20.6%) were stable.

TDI

The TDI price increases reached as high as 88.7%. The price of that product exceeded RMB40 000/t in mid-October, its highest level in the last eight years. The reasons were as follows. First, due to the explosion of the MDI unit of Yantai Wanhua Chemical Group Co., Ltd. on September 20, the supply of spot goods was inadequate. Second, Covestro of Europe reduced the production load of its MDI and TDI units on October 6. Third, after Mitsui shut down a TDI unit, amount of TDI exported from China increased drastically. In addition, a TDI unit in Korea was overhauled in October, and production at two TDI units in India was suspended due to malfunctions. TDI producers in China such as Changzhou Dahua Group Co., Ltd. raised their prices further, and the average market price of TDI increased steadily. It is expected that China’s TDI prices will be kept high for the near future.

Butadiene, BR and SBR

The biggest daily price increase of butadiene in October was over 12.0%. The total price increase in the period was around RMB3 000/t. On October 11 the selling price of butadiene in East China went up by RMB600/t and the ex-factory price was RMB11 900/t. The market price increased further to RMB14 300/t afterwards. In addition to the tight supply, the main reason for such rapid and drastic price increases was the force majeure encountered by a butadiene unit of Shell Singapore Refinery in late September. The overall inventory in China is on the low side today and there is still possibility for further price increases.
With the rise of butadiene prices, the prices of downstream products BR and SBR went up respectively by 24.1% and 24.8%. The market supply of BR was still quite tight. Producers raised their prices, and traders were unwilling to sell at a low price. Tire manufacturers, however, were experiencing poor sales and mostly made purchases only as needed. BR prices will therefore likely stay high in the near future. SBR prices were also high and firm.

MDI

The MDI market price fell by RMB800/t in the period. There were two main reasons. First, the previous tight supply led to a very rapid price rise. Second, due to the drastic price rise, some idle units were restarted, the supply was larger and a downturn of prices was accelerated.

Caprolactam and PA6

Caprolactam producers in China increased their operating rates after mid-September, but the market for downstream product PA chips was on the verge of loss and PA units were operated at low load. So caprolactam price declined slowly. The drop of PA6 chip prices was more rapid. A new 150 kt/a high-speed spinning chip unit of Zhejiang Hengyi Petrochemical Co., Ltd. started production in mid-September. As the supply grew and PA demand was inadequate, PA prices fell.

Aromatics

Some pure benzene producers in China pushed the price up by around RMB100/t. The price of pure benzene reached RMB5 450/t. Also, the market price of toluene was 3.7% higher. Backed by two favorable factors – the rise of the crude oil price and the increase of the US dollar conversion rate – the market price of p-xylene went up by 2.9%. By October 13 the price of solvent-grade xylene in East China reached RMB5 800/t and the price of isomerization-grade xylene reached RMB6 150/t – increases of 5.1% and 10.4%, respectively. Also, the price of o-xylene rose by 3.3%.

Natural rubber

The drastic rise of rubber futures prices had considerable impact on the spot goods market. Due to heavy storms in Southeast Asia, the supply of natural rubber was down in September. The stagnancy of imported resources caused by the bankruptcy of Hanjin Shipping Co., Ltd. of Korea also helped the domestic market. It is expected that natural rubber prices will remain high in the near future.

Plastics

The market price of PP increased 5.1%. The drastic rise of crude oil prices and the constant rise of crude oil futures prices led to a restricted supply for PP producers. The price of drawing-grade PP spot goods kept going up.
As the price of raw material butadiene was high and the household electric appliance sector downstream was in a brisk production season, the market for ABS was boosted and the price went up by 6.3%.
The ex-factory price of LDPE was 8.1% higher and clients made purchases only as needed.
The operating rates of PVC producers were quite high, the supply was still tight and some producers increased their prices further. Prices of both PVC from the calcium carbide process and PVC from the ethylene process are over RMB7 000/t today. Jining Jinwei Chemical Co., Ltd., Taishan Salt Chemical Co., Ltd., Shaanxi Beiyuan Group Co., Ltd., Ningxia Jinyuyuan Chemical Group Co., Ltd. and Xinjiang Tianye (Group) Co., Ltd. all planned to overhaul in October. The supply of PVC was therefore still tight at that time.