Singapore reported on April 26 that in March this year, China imported 6.94 million tons of natural gas, an increase of 16.7% over the same period last year, because LNG imports play an increasingly important role in China’s energy structure.

Azodicarbonamide (AC foaming Agent)

According to the latest data released by the General Administration of Customs on Friday, 4.06 million tons of liquefied natural gas and 2.88 million tons of pipeline natural gas were imported that month, up 25.2% and 6.5% respectively from the same period last year. From January to March, China imported 24.27 million tons of natural gas, an increase of 17.8% over the same period last year. Customs data show that the import of liquefied natural gas increased by 21% to 14.95 million tons in the same period, while the import of pipeline natural gas increased by 13.2% to 9.32 million tons in the same period.

In March this year, Australia surpassed Turkmenistan to become China’s largest natural gas supplier, transporting about 2042,000 tons of liquefied natural gas to China by boat, an increase of 13% annually.

Turkmenistan was the second largest supplier of natural gas this month, exporting about 20.37 million tons of natural gas to China through pipelines, down 10% from a year earlier.

EDTA

Customs data show that imports of liquefied natural gas from Qatar fell 39% annually to 4323.23 million tons, the second consecutive month of this year, much lower than the 1.12 million tons in January.

Customs data show that imports in March fell by 8.3% compared with 7.56 million tons in February, imports of liquefied natural gas by 6.8% and pipeline natural gas by 10.3%, the second consecutive decline since this year. Market sources said that the year-on-year decline in imports in March was mainly due to the end of winter heating in mid-March, the reduction of natural gas consumption in the warm season and the weakening of household demand.

Melamine

Recently, oil prices have soared and plummeted in the international crude oil market.

As the United States announced that it would ban Iranian oil exports in early May, the previous sanctions exemption granted by the U.S. government to some countries and regions for importing Iranian oil will not continue after the expiration of this year in early May. International oil prices rose sharply, but then fell sharply as President Trump called OPEC to take action to reduce oil prices. Analysts predict that international oil prices will continue to oscillate sharply in the near future due to geopolitical uncertainty.

As of April 26, light crude oil futures for June delivery on the New York Mercantile Exchange had fallen $1.91, or 2.93%, to $63.30 a barrel. London Brent crude oil futures for June delivery fell $2.20, or 2.96%, to $72.15 a barrel.

Benzalkonium chloride

In the international gold market, spot gold has rebounded sharply, driven by short covering and bottom-buying. The annual first quarter real GDP of the United States, announced on the 26th, was 3.2% year-on-year, a new high since the third quarter of 2018, higher than the previous expected value of 2.3%, but the U.S. media believe that the real economic performance is not ideal.

Sodium Molybdate

On April 26, the most active June gold futures market on the New York Mercantile Exchange rose $9.1 to $1288.8 an ounce, or 0.71 per cent, from the previous day. Analysts said that the main reason for the rise in gold futures prices was the weakening of the dollar on that day.

On that day, silver futures for May delivery rose 12.6 cents to $15.005 an ounce, or 0.85%, while gold futures for July delivery rose $13.9 to $903.6 an ounce, or 1.56%.

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Core view

At present, there are short-term upstream re-production and production reduction, medium-term external disk increment and olefin production, long-term production safety and environmental protection management and other factors, short-term operation is biased, but attention should be paid to whether Jiutai MTO plant can start smoothly, and whether the price can break through the safe marginal production cost of methanol.

Azodicarbonamide (AC foaming Agent)

Bulk internal reference: Methanol is obviously weak in recent years. Today’s daily line receives a big negative line, leading the decline in commodities. In fact, the whole chemical sector is relatively weak in recent years. What do you think is the cause? Do you think methanol will continue to fall in the future?

Zhao Ting: In the early period, OPEC eased the global oil supply and demand situation. The sanctions imposed by the United States on Iran directly aroused the bullish mood of the market, and had a good basis for reducing production. As a trigger, the sanctions imposed by the United States on Iran directly promoted oil prices to break through the previous period of shock and create a new high. Oil prices have recovered in the last two days, mainly due to the increase in U.S. crude oil inventories. In the case of strong crude oil, downstream chemical products have declined in varying degrees, mainly because the rising price of crude oil affects the profits of the chemical industry through three mechanisms: cost, inventory and consumption. At present, the methanol inventory has increased. Under the background of increasing inventory and weak downstream demand, it is difficult to pull up the price of crude oil even if it goes up.

As of April 25, methanol stocks in Jiangsu were 617,300 tons (without Lianyungang area), up 34,800 tons from April 18, up 5.97%. A small number of downstream factories in Zhejiang, Jiangsu and other places continue to replenish goods from Taicang area. At present, the total circulation supply of Jiangsu is 146,000 tons. Methanol inventory in Zhejiang (Jiaxing and Ningbo) was 207,500 tons, up 0.84 million tons from April 18, an increase of 4.22%. Recent arrivals were mainly imported goods. As a whole, Zhejiang’s negotiable goods supply is 0.7 million tons. At present, methanol inventory in South China (excluding Fujian) is 98.3 million tons, 30,000 tons less than that on April 18, a decline of 23.38%. Fujian has an overall circulation supply of 26,000 tons. Pay attention to the large number of internal references, do not miss every wonderful research report! 

EDTA

Overall, methanol stocks in coastal areas (Jiangsu, Zhejiang and South China) rose to 953,100 tons, and the total methanol circulatable supply in coastal areas is estimated to be around 259,000 tons. According to incomplete statistics, from April 26 to May 12, the arrival volume of Chinese imports was 307,500 tons. From mid-late May, Iranian and non-Iranian cargo arrived in eastern and southern China to unload, especially Iranian cargo. In addition, transshipment cargo was reported to exist in a few areas.

Port inventory is high, it is difficult to continue to depot, upstream start-up rate rises annually, but still maintain a relatively low level, upstream inventory is high. On the mainland side, the peak of spring inspection has passed. Intermittent demand can not consume the supply pressure of the mainland. Inventory in the downstream is high. The commissioning of several new MTO units downstream may delay start-up, chemical industry overhaul and renovation, delay the speed of depot elimination and sluggish demand. At present, both the port and the mainland need to add new MTO demand-driven, to see if Jiutai MTO device can successfully start. Short-term skewed view.

Bulk internal reference: Do you have any suggestions on operation?

Zhao Ting: At present, there are short-term upstream reproduction and reduction of production, medium-term increment of external disks and production of olefins, long-term production safety and environmental protection management and other factors, short-term operation is biased, but we should pay attention to whether Jiutai MTO plant can start smoothly, at the same time, we need to pay attention to whether the price can break through the safe marginal production cost of methanol.

Melamine

Oil prices in domestic and international markets plunged sharply from 2 a.m. on April 27, and then continued to weaken throughout the day. Oil prices continued to fall sharply during the European trading period starting at 4 p.m. WTI and Brent markets fell more than $4 from intraday highs. The decline of 6% in one day was a crash. Oil prices totally reversed their rise in the last week. Technologically, it constitutes a typical phased form of roofing. Domestic INE crude oil futures have withdrawn most of their gains this week, although they have significantly increased compared with the external market, showing a relatively resilient performance.

When oil prices fell sharply for the first time, market investors sought a reasonable explanation. Then Trump told reporters on Friday that he had called OPEC to ask it to lower the price of crude oil, but did not say who he was talking to. After this information, oil prices continued to fall rapidly. The market generally believed that this remark was the trigger of the sharp fall in oil prices on Friday night. But in the early morning, the media said that the Secretary-General of OPEC, the Crown Prince of Saudi Arabia and the Minister had not talked with him before oil prices were able to recover from the sharp fall and shrink slightly. However, oil prices still hit the biggest one-day decline in a year all over the world.

The sharp drop in oil prices and the soaring news show that investors are hesitant about future market expectations and unstable mindset under the combination of increased Iranian sanctions and OPEC production expectations. In fact, from April 22, when the United States announced that it would terminate Iran’s sanctions exemption on May 2, oil prices took another step. After the U.S. oil broke through $66/barrel and the oil distribution reached $75/barrel, the majority of investors’long expectations in the market had been fully released. The market showed that once there was a loosening of investors’ initiative to flee long positions, they were very active and profitable. The shift of multi-air power has become a natural thrust for the fall in oil prices.

Oil price has formed a stage-high pattern

If not for the 26 th drop, crude oil prices were in a booming situation throughout April, and the three benchmark oil prices showed a trend of substantial growth, of which SC price benefited from OPEC + production reduction, the biggest increase this month.

From the seasonal point of view, the seasonal inflection point usually occurs in May-June. Prices usually keep rising until then. This year’s crude oil price trend is basically similar to seasonal trend, but in absolute range significantly exceeded seasonal trend. In addition to the seasonal support of the fundamentals, this year’s fundamentals speculation has also fully overlapped the impact of OPEC + production cuts and the withdrawal of Iranian and Venezuelan production capacity. These combined factors have amplified the seasonal trend of crude oil, but at present it seems that the probability of oil prices peaking at inflection point has greatly increased.

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Logically, the supply-side story has completely dominated the price trend, and the demand level has been completely forgotten by the market. Therefore, whether we analyze the historical market or judge the future market, we still need to grasp the core of the market – supply.

Analyzing the historical situation, the supply-side stories mainly focus on two aspects: one is the high implementation rate of OPEC + production reduction; the other is the decline of production in Iran and Venezuela under U.S. sanctions. To judge the future market, the supply side should pay attention to three aspects: first, whether the United States blockades Iran or its export exemption and whether Iran will react excessively; second, whether OPEC + will increase production to compensate for the withdrawal of Iran’s production capacity in accordance with the U.S. plan; and third, the U.S. crude oil production.

On the implementation rate of OPEC + production reduction, the latest OPEC monthly report shows that Saudi crude oil production in March was 9.794 million barrels per day, up from 10.087 million barrels per day. Saudi crude oil production fell by 324,000 barrels a day in March. Saudi Arabia’s confidence in such a firm cut was unexpected. 9.8 million barrels per day of crude oil production was also on schedule. Brent also lived up to Saudi expectations and once again broke through the pressure level above. All along, Saudi Arabia and its firm attitude show that Saudi Arabia is making every effort to rebalance the oil market. Although Saudi Arabia knows that shale oil is stealing its share, and that Saudi Arabia’s efforts are ultimately to make a wedding dress for shale oil, Saudi Arabia can’t do both as part of the interests of the United States and as part of its own demand for high oil prices at home. Yes. So the result is that the tightening of the physical market will continue.

On the Iranian issue, with the news that Iran’s exports are about to be completely blocked by the United States, crude oil prices have soared, and Brent and WTI have made significant breakthroughs. Now the Trump government has offered a plan to negotiate with Saudi Arabia and the United Arab Emirates to increase production to fill market gaps. In our previous report analysis, we pointed out that Trump and Saudi Arabia have different target prices, and the current oil price is close to Saudi Arabia’s target price, so Saudi Arabia will probably make up for Iran’s vacancy according to the U.S. plan. In this case, if Saudi Arabia increases production, the contradictions between other oil-producing countries will arise, following Saudi Arabia’s example to increase production or probability events. Russia is one of the most unswerving links. The implementation rate of OPEC + Production Reduction Alliance will decline dramatically in the foreseeable future. So the current market focus is on the next step of OPEC + action. If Saudi Arabia remains firmly determined to cut production, then the feast of bulls will continue. If the U.S. plan is accepted by OPEC + then the direction may change.

Benzalkonium chloride

The supply side also needs to pay close attention to U.S. crude oil production. American crude oil production has been hovering around 12 million barrels for a long time because of the low price of crude oil in the previous period. However, with the recent price rising to a high level, American crude oil production should show signs of recovery. Although the global supply is shrinking under the influence of American political means, American crude oil just took advantage of this opportunity to quickly occupy the market. 。 If U.S. crude oil production increases substantially again, then U.S. crude oil overcapacity will spill over sufficiently.

In addition, on the demand side, behind the sharp rise in oil prices, we also see the shortcomings of the range of product oil follow-up. Whether in Singapore, the United States, Europe or China, the price gap of product oil cracking has declined to varying degrees. The price gap of American diesel oil cracking has declined to a relatively low level, and the situation in China is worse than that in any other region, whether gasoline or diesel oil. Prices are showing signs of fatigue, although crude oil prices remain strong, but China’s refined oil prices did not follow. In this case, we have been doubting how long the demand will last under high oil prices. Although gasoline cracking in other areas is still relatively good, the main reason is that the fund spends a lot of real gold and silver on the price of gasoline!

According to the position data, the report released by the Commodity Futures Trading Commission (CFTC) on Friday (April 26) shows that the bullish crude oil will continue to heat up in the week ending April 17 to April 23, with a net long speculative crude oil increase of 32101 contracts to 547 359 contracts.

But on Friday, from the three major crude oil futures market movements, the bulls’departure continued to be obvious, especially the domestic INE crude oil futures which can see the changes of the market positions immediately. Within 24 hours, the capital positions were reduced by more than 10,000 hands, with the reduction rate approaching 15%, indicating the strong willingness of the bulls to leave the market. Although the international crude oil futures can not see the changes of the market positions in time, it is obvious from the perspective of the international crude oil futures market. Looking at the face-to-face action, the bull resistance is obviously insufficient, which indicates that market confidence and expectations have begun to change significantly.

Sodium Molybdate

To sum up, crude oil prices are now moving towards a cooling-off period after the crazy transition. Whether it is Brent’s monthly difference or the net long position of gasoline futures, after the crude oil market has achieved its best performance in more than 10 years under the impetus of multiple interest and multi-resonance, the oil price has ushered in an important turning point. In the next 5-6 months, the market will pay attention to the change of OPEC+in the action of reducing production. In June, the market will focus on the change of OPEC+in the action of reducing production The probability of the OPEC meeting will reach an agreement to reduce the implementation rate of production cuts, when market capacity will be released to a certain extent, and is usually expected to be released in advance of the price.

In short, at the current price level, the momentum for the market to continue to rise has been exhausted, and the periodic high of oil prices has probably occurred. Whether it is a decline of $5-10 on one side or an interval crossing above an integer level, adjustments should not be absent. Therefore, in strategy, we can pay attention to Brent short-selling opportunities in the near and far monthly difference, and customers who hold multiple positions should pay attention to controlling market risk.

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Recently, the domestic potash fertilizer market has entered a stalemate, and the domestic chemical fertilizer summer market has entered the late stage of production, and most of the raw materials have been reserved in the early stage. The purchasing demand for new raw materials is not strong. Potassium fertilizer supply is relatively sufficient, but demand stamina is insufficient. In the case of relative imbalance between supply and demand, the market is deadlocked based on the bid price of major traders.

Melamine

From the point of view of price, the price fell all the way at the beginning of the year, with a high speed and a large margin, until the low-end fell about 150-200 yuan/ton. However, from mid-to-late March, the price of most varieties hit the bottom. Before the Qingming Festival, most traders received more new orders and the order volume was on the high side. Therefore, they began to bid up, slightly. Although the increase was only 30 yuan/ton, the low-end price in the earlier period was cancelled one after another. 。 The long-awaited large contract this year has never been heard of. Even though the large contract volume has been basically completed last year, there is still a certain consensus between the international and domestic sides under the situation that the options continue to flow into the country. At present, the situation is not suitable for the negotiation of large contract. International traders have no negotiating advantage. Therefore, it is expected that the negotiation of large contract in the new year will be in the next stage. Half a year started, but the scope of negotiations is not well predicted.

EDTA

According to the supply and demand situation of domestic potassium fertilizer market, the supply of potassium chloride market is relatively sufficient. Although the port stock has declined, there are 2.54 million tons in the total port as of last week, which is 7.17% higher than the same period last year, and the imported potassium supply is larger. There is no obvious trend of increase in domestic production. Since Qinghai factories resumed production in March, their output has been relatively normal, and the railway transportation is smooth, mostly to all regions one after another.

Overall, the potassium chloride market is in a state of oversupply, but most of the imported potassium is still concentrated in the hands of large traders, with limited stocks of intermediaries. Therefore, when the market prices of large traders are firm, it is expected that the price of potassium chloride will remain stable in the near future and will not fluctuate too much.

Azodicarbonamide (AC foaming Agent)

Recently, the international oil price has risen continuously to a new high in the second half of the year. Affected by this, this Friday (April 26) the domestic oil product price is expected to rise for the seventh time in the year, and the price increase of gasoline and diesel is expected to exceed 100 yuan per ton.

Since this year, sustained production cuts in non-OPEC oil-producing countries such as OPEC and Russia have resulted in tight supply in the oil market. Data show that OPEC crude oil production fell to about 30 million barrels per day in March, down more than 2.3 million barrels per day from last October’s high.

The escalation of U.S. sanctions against Iran has further heightened market concerns about future supply shortages. On April 23, international oil prices continued their upward momentum. As of the close, the price of light crude oil futures for June delivery on the New York Mercantile Exchange rose by $0.75 to $66.3 per barrel, or 1.14 per cent. London Brent crude oil futures for June delivery rose $0.47, or 0.63%, to close at $74.51 a barrel.

Benzalkonium chloride

Affected by this, the reference rate of crude oil price change for domestic refined oil retail price adjustment is moving forward and the range is gradually expanding. According to Jin Lianchuang’s calculation, as of the seventh working day of April 23, the average price of reference crude oil varieties was 69.65 US dollars per barrel, with a change rate of 3%. The corresponding gasoline and diesel oil should be increased by 125 yuan per ton. The price adjustment window for this round is 24:00 on April 26. “Influenced by the Iranian issue, international oil prices or maintain a high level of operation, this round of product oil retail price increase is no longer suspense.” Said Zou Xuelian, an oil analyst at Jinlianchuang.

According to the data released by Xinhua Oil Price System, the average price change rate of crude oil package on April 23 is 3.58%, and it is expected to expand further in the next two working days. When the price adjustment window of refined oil opens at 24pm on April 26th, the price of domestic refined oil will rise again. It is estimated that the price of gasoline and diesel oil will rise by 190 yuan per ton, or 0.15 yuan per litre of 92# gasoline, or 0.16 yuan per litre of diesel oil.

Up to now, in 2019, the retail price limit of domestic refined oil has experienced seven price adjustment windows, which is “six rises and one strand”. In addition, due to the adjustment of VAT rate, since 24:00 on March 31, 2019, the highest retail prices of domestic gasoline and diesel have been reduced by 225 yuan and 200 yuan per ton respectively. After offsetting the rise and fall, the prices of domestic gasoline and diesel have been increased by 680 yuan and 675 yuan per ton since this year.

In the wholesale market, the activity is low, the main business units began to reduce prices for sales pressure, and the domestic automobile and diesel market fell again. However, the recent tightening of U.S. policy toward Iran has led to a sharp rise in international oil prices, strong news and a rebound in domestic automobile and diesel prices. As of April 23, the average price of 0# diesel oil in China was 6588 yuan/ton, up 236 yuan/ton from the beginning of the month; the average price of 92# gasoline was 7114 yuan/ton, up 12 yuan/ton from the beginning of the month. Zero price difference of 0# diesel oil batch in China was 1142 yuan/ton, 86 yuan/ton lower than that at the beginning of the month, while that of 92# gasoline batch was 2128 yuan/ton, 153 yuan/ton higher than that at the beginning of the month.

Sodium Molybdate

Zou Xuelian believes that on the whole, both the news and supply and demand have been boosted, and there is still room for the domestic automobile and diesel market to go up. Therefore, it is expected that the zero price difference of domestic gasoline and diesel batches will remain down before the price adjustment on Friday. Later, with the implementation of the increase in retail prices and the “May 1″ reserve, the demand for gasoline is difficult to increase significantly. It is expected that the range of gasoline follow-up is limited, and the price difference between wholesale and zero or after the fall tends to be stable and volatile. Diesel oil has a strong fundamentals, and the batch-to-zero price gap may be further narrowed.

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Similarly, urea in mixed-trace nitrogen fertilizer circle is closely related to ammonium chloride. The market trend may converge and the price will influence each other. It can be replaced to some extent in the raw materials of compound fertilizer and mixed fertilizer. Of course, it is well known that this need not be discussed. Therefore, the trend of urea is particularly important for ammonium chloride enterprises. Recently, the urea market has been rising and falling again. At present, urea factory quotations, transaction prices and grass-roots wholesale prices have fallen, and large, small and medium-sized farmers and merchants have indicated that there is a market situation everywhere. Most of them are short-sighted about the future trend of urea. At this time, if the ammonium chloride enterprises are thinking, they are worried that the falling price of urea will “affect” the ammonium chloride, and whether the ammonium chloride will suffer a double blow under 80% of the start of construction.

At present, the domestic ammonium chloride market is generally good. Spot is tight, most enterprises can issue orders until the end of the month or mid-May, most enterprises still need to control the status of receiving orders or have not received orders for nearly a month; there is also a tentative small increase in the high price part, and the arrival speed in the circulation market is slow, such as the arrival price of dry ammonium along the Yangtze River is about 730-750 yuan/ton, the arrival price of dry ammonium in central China is about 850-900 yuan/ton, and Huazhong is about 850-900 yuan/ton. The price of dry ammonium in the eastern part is about 780-830 yuan/ton, the price of car plates in Yunnan and Guangxi is about 760-800 yuan/ton, while in the Northeast market, unlike other areas, the demand is at the end, the replenishment is limited, the supply of dry ammonium in the Bayuquan Port is sufficient, and the selling price is reduced to about 840-850 yuan/ton. Is ammonium chloride self-insured when urea market weakens and ammonium chloride starts to rebound?

Azodicarbonamide (AC foaming Agent)

On the one hand, 80% of the joint alkali enterprises started construction, and the short-term trend continues to rise. At present, the maintenance of an ammonium chloride enterprise in Anhui is scheduled to resume production on the 22nd. The load of an ammonium bichloride enterprise in Jiangsu is on the low side and will resume next week. Now a few large ammonium chloride plants in Sichuan and Jiangsu are still under overload production. In addition, the soda ash market is good, and the factory continues to push up its price, so the enterprise will maintain a high start-up, and the output of ammonium chloride will increase accordingly. However, some ammonium chloride enterprises in Guangxi, Hunan, Dalian and Gansu still stop for a long period of time, among which the plant of one ammonium chloride plant in Dalian will be delayed to the second half of the year, and the rest of the enterprises that have stopped for a long time may not resume production; and a short-term overhaul of a plant in Jiangsu at the end of April, and a large ammonium chloride plant in Jiangsu and Chongqing in early and late May are scheduled to carry out a half-month overhaul, when the supply of ammonium The volume will decrease.

On the other hand, the entanglement of the alternating stage of spring and summer demand. At the end of the Spring Festival in Northeast China, the demand for ammonium chloride will be reduced obviously, not to mention that only a small amount of ammonium chloride will be replenished in the later period. In terms of the sufficient supply of ammonium chloride from the market and ports, the high-price ammonium chloride in Northeast China will continue to fall under pressure, and the stop of some compound fertilizer plants or extruded granular ammonium chloride plants will obviously reduce the demand for ammonium chloride. At the end, the production enterprises have completed the execution of the orders to be issued. In the alternate gap stage between spring and summer, the terminal will produce resistance to the high-price raw material fertilizer, and the purchasing volume will gradually decrease. However, the expected value of high nitrogen fertilizer is high in the summer of May. At present, the start-up of compound fertilizer enterprises is slowly rising to about 55.14%. Considering the cost, some compound fertilizer and BB fertilizer enterprises will choose ammonium chloride and extruded granules as raw materials.

EDTA

Finally, the negative impact of urea on ammonium chloride is limited. At present, the urea market is weak and the price falls slightly. From the starting point of urea enterprises’gradual recovery, some manufacturers say that their prices still have a downward trend in May, but the liquid ammonia market is rising steadily, with more ex-factory prices of about 3000-3500 yuan/ton. If the urea prices continue to fall, the production focus of the factory will be tilted. To liquid ammonia, alleviate the pressure of urea shipment and save the price of urea. In addition to India’s possible tender in early May, prophase hype is indispensable, which means that the price of urea should fall to a limited extent, and there is still a certain price difference with ammonium chloride. As a raw material, low-cost ammonium chloride has relative advantages.

Generally speaking, the rebound of falling urea and ammonium chloride is bad for the future trend of ammonium chloride; however, the overall ammonium chloride market is still dominated by favorable conditions, such as sufficient waiting for issuance, enterprise control orders, successive start-up of fertilizer in summer, etc. It is expected that the ammonium chloride market will continue to maintain a good trend in the short term, with high prices and stable operation as the main, cautious and correct, but not “grass and trees are all”. Soldiers.

Melamine

Core reading

“China is changing very fast, and we need to be part of it. We are very optimistic whether it is to develop domestic business in China or to cooperate with China’s energy companies to develop international business.

Statistics show that by the end of 2018, the number of foreign-invested enterprises in China has reached 960,000, and the actual utilization of foreign capital has exceeded 2 trillion US dollars. Although the number of foreign-invested enterprises is less than 3% of the total number of Chinese enterprises, they have contributed 10% of China’s employment, 20% of tax revenue and 50% of China’s exports.

“Foreign investment plays a decisive role in achieving high-quality economic growth and opening to the outside world at a high level.” Recently, Pang Guanglian, secretary-general of Sinopec Federation International Capacity Cooperation Enterprise Alliance, summarized and pointed out at the “Petrochemical Industry Development Conference”.

With the further liberalization of China’s policy of encouraging foreign investment, the highly noticed Foreign Investment Law was passed during the two sessions this year and will be implemented on January 1, 2020. Recently, a number of insiders told reporters in an interview that, as a basic law in the field of foreign investment, the implementation of the Foreign Investment Law means that China will usher in the most relaxed era of foreign investment, and the petrochemical industry is no exception.

Benzalkonium chloride

Continuous Improvement of Foreign Business Environment

In recent two years, our government has promulgated a number of policies intensively. Through constantly improving the legal system of foreign investment, we can provide institutional guarantee for expanding opening up and actively utilizing foreign investment.

In June 2018, the Special Management Measures for Foreign Investment Access (Negative List) (2018 Edition), issued by the National Development and Reform Commission and the Ministry of Commerce, significantly reduced the restrictions on foreign investment, thus eliminating the policy barriers to foreign-funded chain gas stations. In December of the same year, the negative list of market access (2018 edition) was issued to realize the “non-prohibited and immediate access” of investment in areas other than the list. All market participants can enter the list equally according to law.

In March of this year, the new Catalogue of Industries Encouraging Foreign Investment solicited opinions from the public. According to reports, in the new edition of the catalogue, more than 400 items in 13 categories, including manufacturing, chemical fibers, rubber and plastics, are listed as the national catalogue of industries encouraging foreign investment, including 21 items involving chemical raw materials and chemical products manufacturing. “These areas may attract foreign investors’willingness to invest in China. Once the new catalogue is released and implemented, it will mean that China will open the door for foreign enterprises to enter China’s chemical manufacturing industry in a large scale.” Pang Guanglian said.

In the view of Zhao Weiliang, chairman of Daudal (China) Investment Co., Ltd., the Foreign Investment Law is another important example of the more standardized and fair competitive environment for foreign-funded enterprises and the formation of a new pattern of comprehensive opening-up in the past 40 years since China’s reform and opening-up.

 

According to Pang Guanglian, China’s ranking in the global business environment convenience ranking has continued to rise in the past three years, ranking 46th in the world in 2018. Among them, the company ranks 28th in terms of starting enterprises and 6th in terms of executing contracts. 

Increasing Foreign Investment

At present, China is the world’s largest chemical market, accounting for about 40% of the market share, and plays a leading role in the growth of the global chemical market. It is estimated that by 2030, China will account for nearly 50% of the global gross domestic product. It is self-evident that the huge potential of market growth is attractive to the whole world.

“Sinopec has entered a stage of high-quality development, but it still faces a series of outstanding problems such as safety, energy saving and environmental protection. Domestic and foreign enterprises have considerable cooperation prospects in the fields of technical cooperation and market development at home and abroad, which can truly achieve complementary advantages and sustainable development.” Liu Maoshu, vice president and general manager of Honeywell UOP China, said in an interview with reporters.

Especially in the past two years, the continuous optimization of foreign business environment has accelerated the investment decision-making of petrochemical foreign investment. Especially in the field of high-end petroleum and petrochemical industry, Shell, Basf, ExxonMobil, Saudi Foundation Industry Corporation, Saudi Arabia Amy Oil Company and many other well-known multinational oil companies have expanded their investment territory in China, and announced that major petrochemical projects involving joint ventures or sole proprietorships have blossomed in many places in China, with an estimated total investment of more than 37 billion US dollars.

Bacillus thuringiensis

According to the Development Report of Foreign Investment Enterprises in China’s Petroleum and Chemical Industry (2018 Edition), by the end of 2017, there were more than 7200 production-oriented foreign investment enterprises in China’s petrochemical industry from 95 countries and regions around the world. Although only 4.6% of the total number of production enterprises in the petrochemical industry, in 2017, the main business income exceeded 2.6 trillion yuan, accounting for nearly one fifth of the main business income of the whole industry. Meanwhile, the average registered capital of foreign-funded enterprises is much higher than the average registered capital level of domestic production enterprises in the petrochemical industry, more than five times.

According to the above-mentioned report, by the end of 2017, foreign-invested enterprises in China’s petrochemical industry had made use of more than 280 billion US dollars in various types of investment, an increase of more than 15% over the previous year.

Foreign capital will play a leading role in industry demonstration

 

In the interview, Liu Maoshu believed that China’s increasingly open foreign business environment would help foreign-funded energy enterprises to further play the role of industry demonstration and pioneer, introduce new investment and operation modes, product standards and advanced intelligent manufacturing concepts, inject new vitality into the development of China’s petrochemical industry, and at the same time, promote the domestic petrochemical industry to shape a new market pattern and operation. Logic, and then form the competition pattern of the whole industry chain.

“As a product supplier of the whole oil and gas industry chain and one of the first international energy companies to enter China, Daudal has been actively involved in the whole industry chain business of China’s energy industry for the past 40 years. Looking forward to the future, we believe that in such a more open environment, Doddle will have more opportunities. We are confident in China’s economic development and more committed to the Chinese market. Zhao Weiliang said.

As a leading global supplier of specialty materials and chemical technology, industrial control technology and Internet of Things solutions, Honeywell has been expanding its business in China since 1935. At present, its four major business groups have settled in China, and its Asia-Pacific headquarters is located in Shanghai. Liu Maoshu also told reporters: “In the future, we will continue to deepen the innovation and development of environmental protection technology, promote extensive cooperation with Chinese enterprises, and provide tailor-made advanced environmental protection technology, products and solutions.”

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The elimination of policy barriers and the recent optimization of foreign investment environment for China’s foreign-funded chain gas stations have directly led to many investment decisions such as BP’s layout of thousands of gas stations in China.

Recently, in an interview with reporters, Dedley, the global CEO of BP Group, pointed out: “In the past, BP has been developing its business in China in a cooperative way. China’s Foreign Investment Law and the new round of reform in China’s oil and gas industry enable us to independently develop the retail territory in China. The first practical result is to directly help us implement the investment strategy of increasing 1000 retail gas stations in China, and expand the charging business of gas stations. BP has accumulated very good experience in this respect.

“China is changing very fast, and we need to be part of it. We are very optimistic whether it is to develop domestic business in China or to cooperate with China’s energy companies to develop international business. Dadley said.

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Influenced by the news that the United States is ready to terminate the sanctions exemption for Iranian oil imports, the price of crude oil at home and abroad has risen sharply. Analysts believe that supply constraints combined with geo-conflict will accelerate the pace of oil price rise, the global heavy oil supply gap is difficult to solve in the short term, and oil prices are expected to remain strong.

News Surface Stimulation Strengthen

Influenced by the news, crude oil futures at home and abroad rose sharply this week. WTI crude oil futures rose by 2.62% to $65.75 a barrel in the United States, reaching the highest level of $66 a barrel since November last year; Brent crude oil futures rose by 3% to $74.13 a barrel, up to $74.31 a barrel; domestic crude oil futures rose by 3.31% to $490.2 a barrel.

Reportedly, the U.S. government is ready to announce an end to the exemption from sanctions on Iranian oil imports. All Iranian oil importers must stop importing in a short time, or they will be subject to U.S. sanctions. The United States resumed sanctions on Iranian oil exports in November last year, while granting eight Iranian crude oil importers temporary exemptions for six months.

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Analysts pointed out that with the end of the sanctions exemption period, Iranian crude oil will face zero export dilemma in the future, which will greatly increase the tension of the current global crude oil supply system, but also lead to geopolitical risk. Because Iran controls this important oil pipeline in the Holmes Strait.

According to statistics, the Strait of Hormuz is responsible for nearly 40% of global oil exports, and more than 90% of the total oil exports in the Persian Gulf pass through the Strait of Hormuz. At the same time, about 17 million barrels of crude oil tankers pass through the Strait every day, accounting for about 30% of the world’s crude oil shipments by sea. In the context of further deterioration of US-Iran relations, supply tensions and overlapping geopolitical conflicts will accelerate the pace of oil price rise.

The supply pattern is difficult to understand

API data show that as of April 12, U.S. crude oil stocks fell by 3.1 million barrels to 452.7 million barrels; Cushing crude oil stocks by 1.6 million barrels; and gasoline stocks by 3.6 million barrels.

Analysts believe that the data suggest that the pace of global crude oil demand may slow down, and that if OPEC producers achieve production reduction targets, the crude oil market may achieve a balance in the second quarter.

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Analyst Ann believes that the global heavy oil supply gap is difficult to solve in the short term. Globally, Saudi Arabia has the potential to substantially increase production in a short period of time, so whether Saudi Arabia’s output policy will adjust to the demands of the United States next will be crucial. The current situation is very similar to that in May last year, but after last year’s “roller coaster” oil prices, even if Saudi Arabia may ease production cuts due to the escalation of sanctions imposed by the United States in the future, in order to avoid repeating the same mistakes, its policy adjustment is likely to lag behind.

It believes that the market will pay more attention to Saudi Arabia’s output policy. After a sharp fall in oil prices in the fourth quarter of last year, Saudi Arabia will be more cautious in adjusting its production policy, which means that Saudi Arabia is less likely to release its supply substantially to the market in the short term. Against the background of a sharp decline in the scale of global refinery overhaul, the global crude oil supply gap is expanding. Therefore, in the future, oil prices will maintain the overall upward trend, Brent crude oil is expected to hit the top level of $85 per barrel.

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The US will end Iranian crude oil import exemption and increase geopolitical risks

U.S. Secretary of State Pompeo will announce that he will no longer exempt any country from the current Iranian crude oil import ban, which will take effect on May 2. The suspension of shipments by Indian refineries in May indicates that India, one of the main buyers of Iranian crude oil, has also begun to take the initiative to circumvent Iranian crude oil. In view of the fact that the United States listed the Iranian Revolutionary Guard as a terrorist organization and Iran threatened to restart the uranium enrichment centrifuge, the previous escalation of sanctions by the United States would be a shock blow to Iran and further intensify the contradiction between the two countries. Iran may take some extreme Countermeasures in the future, not excluding the possibility of a hot war.

Short-term Solution of Global Heavy Oil Supply Gap

Globally, Saudi Arabia has the potential to substantially increase production in a short period of time, so whether Saudi Arabia’s output policy will adjust to the demands of the United States next will be crucial. The current situation is very similar to that in May last year, but after the roller coaster of oil prices last year, even if Saudi Arabia is likely to ease production cuts due to the escalation of sanctions imposed by the United States in the future, its policy adjustment will probably lag behind in order to avoid repeating the same mistakes.

Investment suggestion

We believe that the shock sanctions imposed by the United States on Iran will intensify the contradiction between the two countries, and that the geopolitical risk in the Middle East will rise further in the future. Next, the market will pay more attention to the trend of Saudi Arabia’s production policy. We believe that after the sharp fall in oil prices in the last four quarters, Saudi Arabia will be more cautious in adjusting its production policy, which means that Saudi Arabia is less likely to release its supply substantially to the market in the short term. In the context of the sharp decline in the scale of global refinery overhaul, the global crude oil supply gap is expanding. We believe that the overall trend of oil prices will be maintained in the future, and Brent is expected to hit the top $85 per barrel.

Risk warning

OPEC will release production substantially in the short term, or global demand will shrink sharply.

1. The United States will end Iranian crude oil import exemption and increase geopolitical risks

According to the Washington Post, U.S. Secretary of State Pompeo will announce that he will no longer exempt any country from the current Iranian crude oil import ban, which will take effect on May 2. Boosted by news, international oil prices rose rapidly, with Brent breaking through $73 a barrel.

This year, against the backdrop of OPEC production cuts, Venezuela’s sanctioned output declines, and Libya’s chaotic situation escalating, the global supply of heavy oil has been tight, and it is obvious that the recovery of exemptions by the United States at this time further exacerbates the upward risk of oil prices. Iran’s crude oil exports have fallen to less than 1 million barrels a day since April. India and China remain relatively stable imports of Iranian crude oil. But just last week, India’s four major refineries announced a moratorium on Iranian shipments in May and turned to Mexico, the United States and OPEC, indicating that India, one of Iran’s main crude oil buyers, has also begun to circumvent Iran. Oil, which also means that even if Iran may maintain certain exports through some abnormal means in the future, it will be difficult to reverse the trend of a sharp decline in future crude oil exports. At present, Iran has not made any comment on the U.S. ruling, but in view of the previous U.S. listing the Iranian Revolutionary Guard as a terrorist organization and Iran’s threat to restart uranium enrichment centrifuges, the escalation of U.S. sanctions will shock Iran and further intensify the contradiction between the two countries, Iran may take extreme Countermeasures in the future, not excluding the emergence of such measures. The possibility of a hot war.

2. Global Heavy Oil Supply Short-term Difficulty

In a Washington Post report, Mepperpeo plans to announce increases in production promises from Saudi Arabia and other oil-producing countries, such as the United Arab Emirates, to make up for the shortfall in Iranian crude oil in order to mitigate the risk of a sharp rise in oil prices. Globally, Saudi Arabia has the potential to substantially increase production in a short period of time, so whether Saudi Arabia’s output policy will adjust to the demands of the United States next will be crucial. The current situation is very similar to that in May last year, when the United States announced its withdrawal from the Iranian nuclear agreement, Saudi Arabia eased production cuts at the OPEC mid-year meeting in June, releasing large quantities of supplies to the market, causing oil prices to collapse in the fourth quarter. We think that after last year’s roller coaster oil prices, Saudi Arabia will be very cautious in adjusting its production policy. After all, after the oil price crash, Saudi Arabia has to reduce its production excessively to reverse the decline of oil prices. Even if Saudi Arabia is likely to ease production cuts in the future due to the escalation of sanctions imposed by the United States, its policy adjustment is likely to lag behind in order to avoid repeating the same mistakes.

In addition, the scale of global refinery overhaul in the second quarter will drop dramatically compared with that in the first quarter. After centralized overhaul in the first quarter, the global cracking price gap has been significantly repaired, which will lay the foundation for improving the start-up rate of refineries in the second quarter. According to Energy Aspects statistics, the scale of global refinery overhaul after May will decrease by 2.5 million barrels/day compared with that in the first quarter, and the increase of the start-up rate of refineries will drive the original one. With the recovery of oil processing capacity and the continued decline of supply in Iran and Venezuela, the global crude oil supply and demand gap will also intensify.

3. Investment proposals

We believe that the shock sanctions imposed by the United States on Iran will intensify the contradiction between the two countries, and that the geopolitical risk in the Middle East will rise further in the future, which does not exclude the possibility of a hot war. Globally, Saudi Arabia is the main supplier of Iran’s crude oil shortfall in a short time, but we believe that after the sharp fall in oil prices in the fourth quarter of last year, Saudi Arabia will be more cautious in adjusting its production policy, which means that Saudi Arabia is less likely to release its supply substantially to the market in the short term. In the context of the dramatic decline in the scale of global refinery overhaul, global crude oil The supply gap is widening. Therefore, we believe that oil prices will continue to go up as a whole in the future. Brent is expected to hit the top of $85 per barrel.

4. Risk cues

OPEC will release production substantially in the short term, or global demand will shrink sharply.

Geographical risk is heating up again

U.S. oil distribution soared nearly 3% to a new year high

U.S. WTI June crude oil futures electronic disk closed Monday (April 22) up $1.61, or 2.51%, to $65.68 a barrel. Oil prices jumped nearly 3% on Monday to a six-month high as concerns about global supply constraints intensified after the United States announced further pressure on Iranian oil exports.

Meanwhile, ICE Brent crude oil futures closed up $2.16, or 3.0%, at $74.13 a barrel in June.

Increased U.S. sanctions on Iran are worrying about crude oil supply

The United States said it would lift its exemption from May 2 for eight economies to buy Iranian oil without sanctions from the United States.

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Oil prices hit a new high in 2019 for the first time after the Washington Post reported on the Trump Administration’s new policies.

Michael Bradley, strategist at Tudor Pickering Holt, an investment bank, points out that this unexpected move is driving up oil prices. He said in a research report that crude oil investors were surprised today because the Trump administration said it would not extend the exemption clause allowing any country to buy Iranian oil without facing U.S. sanctions. Many expect the United States to take stronger action on exemptions, but most did not expect to announce zero exemptions.

Last November, after President Trump unilaterally withdrew from Iran’s nuclear agreement with world powers in 2015, the United States imposed sanctions again on Iranian oil exports. However, the U.S. government granted Iran’s eight largest oil buyers immunity, allowing them to make limited purchases within six months.

The eight buyers are China and India, Iran’s largest customers, and Japan, South Korea, Turkey, Italy, Greece and Taiwan, China. The exemption allowed Iran to continue exporting about 1 million barrels of oil a day, down from about 2.5 million barrels a day last year.

Does OPEC continue to reduce production will affect oil prices?

After months of saudi-dominated production cuts, supply in the oil market is declining rapidly. OPEC and other oil producers, including Russia, are taking the lead in reducing production by 1.2 million barrels a day.

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John Kilduff, founding partner of Again Capital, an energy hedge fund, said Monday that geopolitical risk premiums have largely returned to the oil market. If not all, most legitimate businesses will avoid buying Iranian oil. Iran’s oil supply will be reduced to a trickle.

After crude oil prices plunged in the last few months of 2018, Brent’s crude oil price rose 38% this year, and U.S. crude oil prices rose nearly 45%.

The White House said in a statement that the United States will work with OPEC member Saudi Arabia and the United Arab Emirates to take timely action to ensure that global demand is met as Iranian oil withdraws from the market.

Saudi energy minister Falh said Saudi Arabia would coordinate with other oil producers to ensure that consumers had adequate supplies and that the global oil market was not imbalanced.

In the coming weeks, Saudi Arabia will consult closely with other oil-producing countries and major oil-consuming countries to ensure a balanced and stable oil market, which is conducive to both oil-producing and consumer countries and to the stability of the world economy.

OPEC and its allies are scheduled to meet at the end of June to decide whether to raise the production ceiling or continue to curb production.

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Daryl Liew, head of portfolio management at Reyl Singapore, a financial services company, said India could be hit hardest by U.S. policy among Iranian oil buyers. Daryl believes that India may be one of the major potential countries to be affected by rising oil prices in terms of its current account deficit. This will also essentially put pressure on inflationary pressures.

The unrest in Libya will continue to affect oil prices

Meanwhile, Tripoli, the capital of Libya, OPEC’s main oil producer, suffered a series of air strikes and explosions last weekend, escalating violence that could further threaten oil supplies. Libya is in the midst of a full-scale civil war.

Wu Kang, head of Asia analysis at Prussian Energy, said the situation in Libya could lead to a rapid decline in oil production. Libya produces 1.1 million barrels of oil a day. If problems arise, 300,000 to 400,000 barrels of oil a day may be immediately affected.

Wu adds that much depends on how Saudi Arabia will cope with this situation – they have excess capacity – but supply concerns will put pressure on oil prices in the short term.

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