After a decline of about 10 days on April 12, urea rose again after a decline of about 70-100 yuan/ton, which exceeded the expectations of most industry insiders. Especially, a factory in northern Jiangsu increased by 80 yuan/ton in just four days from 12 to 15. Is there any feeling similar to the last ten days in late March? Do you feel that all factors in the market are not enough to pull up?

How will the urea market end when it lags behind and rises again?

First of all, the plan can’t catch up with the change, and the market has a little variable again. The price reduction started on April 2. The urea manufacturers’surface quotation did not drop much. The actual turnover fell very fast. Some large agricultural companies were a little panicked. They still had some high-priced goods not in place. What’s more, let’s talk about selling them? Therefore, the symbolic receipt of some new orders while lowering prices has brought new support to urea manufacturers’prices. However, when the high-priced goods in the hands of large agricultural companies are digested, they may no longer take new orders and delay for a month and a half, which should bring new low prices to urea manufacturers.

Secondly, there is still support for industrial demand. The starting rate of compound fertilizer enterprises has risen rapidly. On the one hand, through the increase of urea price in more than a month, especially in Nabor in late March, the compound fertilizer enterprises have increased their sales promotion or continued to sell at a low price. The stock of finished products in their hands has been digested a little faster. In the last wave of spring market, the more production points are a little bit, the more sales points are a little bit, win-win with urea manufacturers, and give urea manufacturers this. The second price increase brought necessary conditions. However, fertilizer production in spring is the end after all. Fertilizer production in summer is a little early. Industrial compound fertilizer enterprises, power plants and plywood factories temporarily digest the previous products and raw materials. Compound fertilizer enterprises should not blindly accept high-price urea. Moreover, some compound fertilizer enterprises will soon convert to high-phosphorus and high-potassium fertilizer, and will not blindly support urea price increase.

Thirdly, there are slightly optimistic expectations in terms of exports and imports. International urea prices have risen for two weeks in succession, although the increase is not significant, but it gives some confidence to Chinese urea manufacturers. Industry insiders also realize that the impact of imported urea is not significant. The imported Iranian urea that arrived at Zhenjiang Port on April 9 is still not much news. The panic of small and medium-sized distributors, or the psychology of early selling, is not so strong. The next importers of urea arrived in Hong Kong in May or even June, so there is no need to pay attention to it for the time being. India won only 372,000 tons of urea in the tender on April 3. New tender may be held at the end of April and May. At that time, the international urea price or another step may bring some opportunities for China’s urea export. Even if it cannot be exported, it can avoid the excessive amount of imported urea flowing into China’s market.

Finally, the psychological tug-of-war between buyers and sellers is temporarily dominated by sellers, or the one with sufficient funds. Although the urea start-up rate is high, it does not affect the market quickly. Although the urea manufacturers’price is 200-300 yuan/ton higher than the cost line, it also fails to prevent speculation among some professionals. This price increase is nothing more than once again confusing everyone’s vision, building up everyone’s psychological bottom price, so that a small number of people in need once again bear high prices.

In short, the positive factors are too difficult to find, the price increase is very delicate!

To sum up, we should continue to adhere to the original point of view. Without the intervention of policy or unexpected factors, the ex-factory price of urea is still reasonable at the price of 1800-1900 yuan/ton, and it will climb another 100-200 yuan/ton during the peak period of summer market. Ten thousand steps back, if prices continue to rise for a period of time, it will be too late to take urea for the end fertilizer demand in June, let alone for the more concentrated demand for urea in topdressing is still early. Recently, we need to observe the trend of urea prices more before making purchasing decisions. A good result can be achieved only when the purchase is made in good time.

On April 14, the phthalic anhydride commodity index was 64.72, unchanged from yesterday, down 46.13% from the peak of 120.13 points in the cycle (2012-02-28), and up 33.66% from the low of 48.42 points on January 21, 2016. (Note: Period refers to 2011-09-01 to date).

Recent domestic market price trend of phthalic anhydride has declined slightly, the market of phthalic anhydride and phthalic anhydride in eastern China has weakened, downstream factories have just needed to purchase, factory inventory pressure has continued, high-end transactions have been blocked, the mainstream of on-site neighbouring source negotiations is 6500-6600 yuan/ton, and the mainstream of naphthalene source negotiations is 6300 yuan/ton; the mainstream quotation of phthalic anhydride market in North China is 6400-6600 yuan/ton, with the main market weakness The quotation trend of enterprises has slightly declined, downstream construction is not high, purchase on demand is the main, wait-and-see mentality is strong, domestic phthalic anhydride plant operation is stable, phthalic anhydride spot supply is normal, the market is not good, phthalic anhydride prices continue to decline.

Recently, the executive price of the upstream product of phthalic anhydride, Sinopec o-phthalic anhydride, is 6700 yuan/ton. The actual transaction price in the market is 6700 yuan/ton. The quotation is stable and the port market is general. The upstream raw material mixed xylene price is stable, the turnover of phthalic anhydride is general, the stock of phthalic anhydride in port is low, the price of phthalic anhydride is temporarily stable, the cost of imported phthalic anhydride is rising, the actual transaction price is discussed in detail, the upstream price trend is stable, and the market price of phthalic anhydride remains weak. DOP prices in the downstream are lower. Recently, in the DOP market in Zhejiang, merchants’quotations have maintained 8200-8300 yuan/ton, while downstream prices have slightly declined. Demand for upstream phthalic anhydride is limited, and the market price of phthalic anhydride is slightly lower. It is expected that the market price of phthalic anhydride in the later period will be around 6550 yuan/ton.

On April 14, the PX Commodity Index was 67.20, unchanged from yesterday, down 34.38% from its peak of 102.40 points in the cycle (2013-02-28), and up 47.53% from its low of 45.55 points on February 15, 2016. (Note: Period refers to 2013-02-01 to date).

Recently, the domestic market price trend of p-xylene has been temporarily stable. Pengzhou Petrochemical Plant has been running steadily in the field. Urumqi Petrochemical Plant has started 50% of its operation. Fuhai Aromatic Hydrocarbon Plant has started a line. CNOOC Huizhou Refinery and Chemical Plant has been overhauled. Hengli Petrochemical PX Plant has been put into operation. Other units have been running steadily for the time being. Due to the increase of domestic market supply of p-xylene, the market for p-xylene has increased. Price trend is stable for the time being. The opening rate of PX plant in Asia is about 80%. On April 12, the closing price of p-xylene in Asia increased by 3 US dollars/ton. The closing price is 1049-1051 US dollars/ton FOB in Korea and 106 8-1070 US dollars/ton CFR in China. More than 50% of the domestic units need to be imported. The rise of foreign prices has a positive impact on the domestic market price of p-xylene. The price trend of p-xylene in the market is temporarily stable.

On April 12, the price of WTI crude oil in May rose to $63.89 per barrel, an increase of $0.31. Brent crude oil in June rose to $71.55 per barrel, an increase of $0.72. The trend of crude oil price rose slightly, which provided some cost support for the price of downstream petrochemical products. The price trend of paraxylene market was temporarily stable. Recent textile industry market shocks, PTA price trend shocks on the 15th day, the average price of East China bid in the vicinity of 6700-6800 yuan/ton, as of 12 days domestic PTA start-up rate is about 80%, polyester industry start-up rate is about 90%, downstream production and sales rate maintained high, but PTA market price changes little, it is expected that PX market prices will remain stable in the later period.

After entering April, urea prices in the Central Plains have been adjusted appropriately with the decrease of demand and the increase of supply. Recently, urea factory prices in Lianghe and other places have dropped below 2000 yuan (ton price, the same below). It is rumored that Shanxi’s low price transaction has dropped to a little higher than 1900 yuan, but the overall receiving prices in the Northwest, Southwest and Northeast regions are slightly higher than those in the earlier period. There has been an increase, such as the quotation of some factories in Xinjiang has been screamed to more than 1800 yuan, the export price of high-end brands in Yunnan has also been more than 2200 yuan, and the arrival price of Heilongjiang market has also risen to more than 2200 yuan. At present, the urea market demand around the Central Plains has come to an end, but the domestic demand in some regions still exists, and prices are staggered. The downstream traders also have some difficulties in purchasing urea: are they picking up or temporarily on the sidelines? The author discusses this issue with the industry and draws the following conclusions: urea still has a certain risk of slipping in the near future, and procurement still needs to be cautious, mainly in the following aspects:

Firstly, the overall operation of the enterprise is relatively high. Recently, with the gradual resumption of production of gas head urea enterprises, although some enterprises have also entered the state of overhaul, according to the statistics of China Chemical Fertilizer Network, the actual daily output of urea in China is still more than 150,000 tons, and some overhaul enterprises are about to resume production, while most large plants have no plan for overhaul, the overall supply pressure is gradually increasing, and some industries are expected to be around the end of April, urea Overall supply may exceed 160,000 tons, and historical data over the years show that when the overall production of urea exceeds 155,000 tons, the overall price is relatively likely to decline.

Secondly, the market demand is not urgent. Recent spring market orders are almost at the end. Although the summer fertilizer market mainly uses high nitrogen fertilizer, most downstream compound fertilizer plants are not in a hurry to purchase at present. On the one hand, there are still low-price orders to be issued in the early stage. Compound fertilizer enterprises are not short of stock in the short term. On the other hand, the current urea price is still on the high side. In order to avoid risks, some enterprises are still offering high prices. The urea industry only takes a stand-by attitude, waiting for the urea market to stabilize; and the export side is because the domestic price is relatively high, at least at this stage, the domestic urea export is temporarily hopeless, under the background of high start-up rate, urea price or there is a certain risk of decline.

In addition, the demand of plywood factories and recent markets in northeast, northwest and southwest can not last long. The agricultural market will end before May, and the demand of plywood factories is out of gear. Some industries are expected to be the most prosperous when the enterprises have completed the execution of the orders in arrears, the price will decline further.

In summary, recent urea demand reflects slightly. Although some factories have done enough to meet the tense demand atmosphere, the downstream market is still relatively small. It is expected that the overall price of urea in the near future is stable and weak, and there is still a certain downside risk.

Although the spot supply of PTA will turn loose after this round of equipment overhaul, the production cost will gradually rise under the influence of rising crude oil prices. Inventories of ethylene glycol in East China continue to rise, and the forward price of ethylene glycol is weaker than PTA when the spot price can cover the production cost. The spread between PTA and Ethylene Glycol 1909 is expected to continue to widen.

The explosion of Xiangshui Industrial Park in Suzhou has a great impact on the dye market. Under the influence of cost pressure, printing and dyeing enterprises began to reduce the purchase of upstream grey cloth. According to the data of grey cloth inventory of sample enterprises in Shengze area, the progress of grey cloth inventory of degraded grey cloth began to slow down at the beginning of March. The stock of grey cloth has risen from the recent low of 34 days to 35.5 days, and has not entered the rapid degrading stage as in the same period over the years. With the passage of time, the impact of the incident on the textile and chemical fibre industry has been conducting upward and downstream, and the production peak in September this year is expected to be significantly affected. The demand for PTA and ethylene glycol will continue to weaken in the second and third quarters.

Late March to mid-April is the first round of PTA equipment centralized maintenance time of this year. At the same time, under the condition of low inventory, PTA manufacturer’s intention to exert influence on market price by adjusting equipment maintenance gradually appears.

Recently, PTA social inventory began to flatten. According to the latest data, PTA social inventory is 2.5 days, at a normal level. With the end of the centralized overhaul period, the stock boost to PTA prices will gradually weaken. Relatively speaking, the inventory scale of ethylene glycol has been rising since it entered the storage phase in September, 2018. The latest inventory in East China has reached 1.16 million tons. Assuming that the output of polyester is 50 million tons in 2019, the corresponding consumption of ethylene glycol is 16.75 million tons. According to the degrading rate in 2014, it takes nearly three months for inventory to be degraded. Taking into account the current apparent consumption of 15 million tons per year, the process of ethylene glycol inventory degrading will be very long, and inventory pressure is much higher than PTA. Recently, crude oil prices have risen sharply, WTI has stabilized at $64 and Brent has broken through $70, which has significantly boosted the cost of chemical products. The price difference between crude oil and PX has continued to fall from the high level since the beginning of March, but with the weakening of PX price in March, the price difference between PX and PTA oscillates upwards, which is higher than the same period. Recent PTA processing fees have fallen. In the long run, it is expected that PTA profits will continue to transfer to PX, and the cost support for PTA prices will gradually increase. Although the loose spot supply will put pressure on PTA price after the maintenance period is over, the reduction of processing fee will gradually increase the support of cost to PTA price.

In the aspect of ethylene glycol, the price difference is not the same under each process. But overall, the profits of oil and gas ethylene glycol manufacturers are very thin. The price difference of naphtha route has approached zero axis, the price difference of ethylene route has remained near – 1100 yuan / ton, and the price difference of MTO route has weakened to – 1000 yuan / ton. In contrast, the full cost of coal-to-ethylene glycol is still lower than the spot price. According to the annual report data of listed companies producing ethylene glycol in 2017, the total cost of coal-based ethylene glycol is estimated to be around 4300 yuan/ton considering depreciation. If depreciation is not considered, the unit cost of coal-based ethylene glycol is even as low as 3500 yuan/ton. Relatively speaking, lower market prices are more conducive to these coal chemical enterprises to occupy the market. Considering the production cost of each route, the price support of ethylene glycol will remain weak in the second and third quarters.

In 2019, downstream polyester industry demand for raw materials is expected to weaken. Considering the trend of PTA and ethylene glycol inventory differentiation and the difference in cost-side support between them, the price gap between PTA and ethylene glycol will continue to widen until September. Technically, the spot price difference between the two is near the average value of nearly ten years, and there is a large space for the spread to expand. The opening of continuous trading makes the trading time of the two varieties coincide highly, which is more conducive to the operation of arbitrage trading. Overall, the profit margin of long PTA and ethylene glycol in 1909 contract is larger.

The price of potassium sulphate water salt is relatively low, Mannheim is stable and high; the current 50% water salt powder market trade transaction mainstream 2600-2650 yuan/ton, Mannheim 50% Fanjilu mainstream factory price 2750-2800 yuan/ton, the actual transaction is a single agreement. Resource-based national investment in potassium 52% of the regional trade out of the warehouse about 2850 yuan/ton, the overall supply is sufficient, the mindset of the business is stable.

The overall trend of domestic potassium sulphate market is relatively stable, the production of Luo Potassium plant is normal, and there is no specific time schedule for summer overhaul plan. At present, the official quotation is stable. The market price is more than 2800 yuan/ton, and there is no new adjustment.

Mannheim potassium sulphate plant is still operating at more than 50% and shipments in the northern region are slightly better than those in the south. Therefore, some northern manufacturers have raised their quotations slightly, ranging from 50 yuan/ton to 2 750-2 850 yuan/ton for 50% of the milled powder and from 2 900 to 3 000 yuan/ton for 52% of the milled powder. Actual transactions are mainly based on orders and orders.

International Energy (IEA) released its monthly crude oil market report on Thursday (April 11). The report shows that global oil markets are tightening as oil supplies in the Organization of Petroleum Exporting Countries (OPEC) countries decline, but warns that oil demand may be reduced because economic growth is threatened.

As Saudi Arabia and its partners cut production and Venezuela and Iran’s exports were squeezed by economic and political crises, global oil supply fell by 340,000 barrels a day in March and crude oil stocks are expected to fall for the rest of the year, according to the monthly report. But it warned that the threat of a global economic downturn from Europe to emerging markets could have a negative impact on fuel demand.

“As we enter the second quarter of 2019, there are signs of tightening in the oil market, but we see mixed signals about demand prospects,” said the IEA, which provides energy advice to most major economies. Demand risk is “in the downward trend at present”.

Brent’s crude oil price has risen by more than 30% this year and is trading at more than $71 a barrel as Saudi Arabia leads OPEC and its allies in production cuts. However, the International Monetary Fund (IMF) predicts that this year will be the weakest year for global economic growth since the financial crisis a decade ago, and concerns about global economic growth have limited the rise in oil prices.

In its monthly report, the IEA said Venezuela’s oil production fell to a long-standing low of 870,000 barrels a day as a result of U.S. sanctions and power outages. “The collapse of the economy, corruption and poor management, together with the recent sanctions imposed by the United States, have severely damaged Venezuela’s oil industry, and the blackout has worsened the situation.” Production fell by 270,000 barrels a day from the previous month, creating the second largest decline in the country’s history, a decrease of 600,000 barrels a day from the same period last year.

Venezuela’s exports fell sharply as Saudi Arabia’s output cut more than expected. OPEC output fell sharply again last month, falling by 550,000 barrels a day to 30.1 million barrels a day in March, and global oil supply declined. The IEA said supply growth outside OPEC would also slow sharply as Canada cut production and North Sea production suffered a decline.

Owing to OPEC’s production restrictions, inventories in developed countries were below their five-year average, falling for the first time in four months in February. Nevertheless, the IEA warned that the demand outlook was shadowing.

Demand risk

The IEA said global crude oil demand growth in 2019 was expected to remain unchanged at 1.4 million barrels per day, supported by robust growth in demand in China and India, but it raised some potential risks.

Consumption in developed countries fell for the first time in the fourth quarter since 2014. In addition, the IEA said it was concerned about the ongoing trade dispute between China and the United States, that demand recovery in the Middle East remained “moderate” and that the economic situation of European countries could deteriorate, and that the situation would be even worse if Britain left the EU in disorder.

The downside may also come from rising oil prices, which are now at $70 a barrel, which are more uncomfortable for consumers than they were at the beginning of the year.

In April, the propylene market was abnormal and prices began to rise. Taking April 2 as an example, enterprises in Shandong, Liaoning and Heilongjiang provinces have raised propylene prices by about 100 yuan per ton. At present, the mainstream transaction price in Shandong market is 6900-7000 yuan/ton. Industry insiders believe that propylene supply is expected to decline, and the short-term market is expected to still have room for growth, but under the constraints of limited demand growth, market growth is limited and the rebound is difficult to sustain.

Expected decrease in supply

Lee, general manager of Lubon Industry Co., Ltd., said that in March, the domestic propylene market price declined due to factors such as increased supply and reduced downstream demand. The average price of Shandong mainstream dropped 522 yuan/ton, or 6.89% compared with February. In April, driven by downstream demand, on-site trading and buying gas significantly warmed up, and the propylene market stopped falling and stabilized. For the future market, industry insiders believe that with the centralized arrival of local refining and overhaul period, supply expectations are reduced, which forms a support for the propylene market.

It is understood that Qiwangda, Changyi Petrochemical, Qingdao Anbang, Huifeng Petrochemical, China Overseas Energy, Ningbo Haiyue, Dongchen Petrochemical and other propylene plants continue to stop for maintenance, Huaxing Petrochemical, Yongxin Petrochemical, Lijin Petrochemical inventory and maintenance plan. Yantai Wanhua 750,000 tons/year PDH plant has been stopped for overhaul on April 1. It is expected that the downstream production facilities will be in normal operation for about 20 days. In addition, in April, the overhaul of cracking units in Korea, Japan and other countries will increase. Overall, the expected reduction in propylene supply, the internal and external disk is expected to form a benign interaction.

However, restarting the plant or suppressing the propylene market. It is understood that the 600,000-ton/year PDH plant in Haiyue of Ningbo was restarted on March 31, and propylene plants such as Qiwanda, Haiyue of Ningbo and Dongfang Hualong are scheduled to resume production in early April, while propylene plants such as Dongming PetroChina, China Overseas Energy and Huifeng Petrochemical Company are scheduled to resume production in mid-April.

“Overall, the supply side of propylene market is still shrinking. In the short term, the market will be more dynamic or will dominate the market. Wang Chunming said.

Cost may be stronger

The upstream crude oil market of propylene is likely to rise, which will support the propylene market.

Meng Ying, an analyst at Jin Lianchuang, said that the threat of output expansion in the United States has weakened and oil drilling will continue to be inactive, which means that crude oil production will be relatively stable, the rapid digestion of refined oil stocks will continue to reduce crude oil stocks, and the price gap between light crude oil and Brent crude oil will further narrow.

Industry insiders believe that OPEC’s repeated attitudes towards production reduction will cause fluctuations in crude oil prices, but low oil prices will seriously harm the interests of oil-producing countries, so OPEC in the actual implementation of production reduction process, will frequently launch good oil price news.

In addition, U.S. sanctions against Iran and Venezuela are still under way, and tightening the sanctions will stimulate a rebound in oil prices. Therefore, the international crude oil market is expected to remain volatile in April, but it does not rule out the possibility of further upsurge or provide good support for the propylene market.

Demand is still constrained

Although the supply side and cost side are strongly supported by the propylene market, the downstream demand is difficult to recover, which dooms the propylene market rebound to be unsustainable.

PP powder market, affected by the “3.21″ accident in Xiangshui, Jiangsu Province, started a large-scale safety production inspection nationwide or again, the downstream powder industry of propylene has increased maintenance efforts, the market supply has decreased expectations, raw material procurement or subsequently declined.

“The downstream propylene oxide industry is currently operating at 78.45%, and the demand for propylene is stable. In the future, the domestic propylene oxide market will continue to maintain an interval fluctuation trend. Value-added tax reform will be implemented on April 1. The overall demand side is weaker than expected in March, which is difficult to drive the propylene market. Zhang Xu, General Manager of Jilin Ruiyang Chemical Trade Co., Ltd.

At present, the overall start-up load of downstream butyl octanol is 88%. Among them, although Tianjin Bohua butyl octanol plant resumed production at the end of March, in early April, Blue Sail Chemical butyl octanol plant and Qilu Petrochemical PP granular plant inventory maintenance plan, and there will be enterprise maintenance after the Qingming Dynasty, resulting in butyl octanol consumption of propylene will be reduced, the lifting role of raw materials will be further weakened, restricting the continuous improvement of propylene market.

Driven by multiple positive factors, international oil prices hit a new high on the 8th. Brent crude oil futures prices in the North Sea and West Texas light crude oil futures prices in the United States both hit their highs in the past five months.

West Texas Intermediate Oil, delivered on the New York Mercantile Exchange in May, rose 50 cents to $62.09 a barrel, the highest level since November 8, 2018. Brent crude for June delivery rose 37 cents to $69.38 a barrel.

It is pointed out that the main factors driving up international oil prices include: market expectations that global supply will be tightened, the war in Libya continues to expand, the Organization of Petroleum Exporting Countries (OPEC) insists on reducing production, and the United States imposes sanctions on Iran and Venezuela.

Investors in the crude oil market are focusing on supply, Reuters reported. The current war in oil-rich Libya could disrupt exports; the eastern army pushed forward to the capital in defiance of global calls for a cease-fire.

In addition, Iran’s current oil exports have fallen by more than half, as the United States is considering tougher sanctions against Iran. Affected by the domestic political situation, Venezuela’s oil production has stagnated. Analysts believe that the reduction of oil supply in Iran and Venezuela will make OPEC’s production reduction plan, which came into effect in January this year, more remarkable. In March, OPEC’s oil supply reached its lowest level in four years, with Saudi Arabia, OPEC’s largest oil exporter, cutting production beyond the amount stipulated in the agreement. Saudi energy minister Falh said it was too early to talk about whether OPEC and its allies agreed to extend the cut, but the May meeting was crucial because the effect of the cut would be clearer by then.

Russia, a big oil producer, has also convinced the market that OPEC and major oil producers want oil prices to keep rising. According to Singapore’s Lianhe Zaobao newspaper, Russian oil officials hinted on the 8th that Russia hopes to discuss oil production at a meeting with OPEC in June due to improved market conditions and declining oil inventories. Russia’s Special Envoy for the Middle East and Saudi Arabia, Dmitriyev, had previously said it was still too early to end production cuts, but he said on the 8th that there might be no need to reduce oil supply after June, indicating a significant shift in his position.

Some analysts point out that recent reports on US crude oil supply show that global crude oil stocks are declining, falling by about 1.2 million barrels in the last week of March. Besides the role of supply and demand, the reason also includes the good economic data of the two major economies of China and the United States. Traders also said that Genscape, a market intelligence firm, showed that crude stocks in Cushing, Oklahoma, where U.S. crude oil was delivered, fell by about 419,000 barrels last week. These factors have strengthened confidence in the oil market.