The geopolitical risks in the Middle East have decreased, oil price premiums have fallen, and the increase in US crude oil inventories has affected investor confidence. On February 21st, international crude oil futures plummeted, with the settlement price of the main contract of WTI crude oil futures in the United States at $70.40 per barrel, a decrease of $2.08 or 2.9%. The settlement price of the main Brent crude oil futures contract was $74.43 per barrel, a decrease of $2.05 or 2.7%.

Cost support weakened, and the domestic PTA market fell on February 24th. The average market price in East China was 5036 yuan/ton, a decrease of 1.09% from the previous trading day. The closing price of PTA main futures TA2505 was 5058 yuan/ton, a decrease of 90 yuan/ton, a decrease of 1.75%, with a settlement price of 5074 yuan/ton and a daily increase of 4230 lots.

In terms of self supply, two sets of PTA plants with a total capacity of 5 million tons in southern China were shut down for maintenance as planned in mid February. Some PTA plants were restarted this week, and there is sufficient stock supply. And recently, PTA’s main suppliers have delivered more spot goods, resulting in a significant increase in spot circulation.

Downstream polyester factories have low production and sales, and PTA demand has not recovered as expected, so the overall fundamentals are still weak. Currently, most terminal factories have resumed work and production, and the weaving operation rate in Jiangsu and Zhejiang is around 60%. However, due to factors such as limited new orders, funding issues, and manpower shortages, the textile market has started slowly overall. In terms of orders, orders for spring and summer after the holiday did not meet expectations and are mostly in a wait-and-see state. There are no obvious signs of large orders being placed for spring and summer, and weaving manufacturers have fewer new orders.

Business analysts believe that from a cost perspective, the market is concerned about the progress of geopolitical negotiations, and international oil prices may continue to fluctuate, which will dominate the PTA price trend. Under the low processing fee, attention still needs to be paid to unplanned PTA plant maintenance. With the arrival of the “Golden Three Silver Four”, it is expected that the demand for textile and clothing essential orders will gradually increase slowly, and it is expected that PTA prices will maintain a volatile pattern in the short term.

According to the commodity market analysis system of Shengyi Society, the price trend of polyester filament has fluctuated narrowly this week, but the overall trend is relatively stable. On February 21st, the mainstream polyester filament factories in Jiangsu and Zhejiang quoted POY (150D/48F) at 7300-7400 yuan/ton, polyester DTY (150D/48F low elasticity) at 8450-8600 yuan/ton, and polyester FDY (150D/96F) at 7600-7800 yuan/ton.

On the demand side, this week, the downstream stretch and weaving start-up rate of polyester filament continued to rise, but the recovery of textile market demand is slow, and downstream factories need to consume raw materials in the early stage. Most downstream factories are waiting for the release of month end promotional prices before considering whether to stock up, resulting in a sustained sluggish market production and sales. Polyester filament continues to be weakly consolidated, with a generally weak trading atmosphere and stable prices. In actual transactions, discounts are offered, and some factories experience mixed ups and downs.

In terms of supply, some polyester filament production enterprises have adjusted their production strategies based on market demand and raw material prices, and the discount space for some specifications of products has been moderately reduced. The overall market supply is relatively stable, but the production and sales situation is not optimistic due to downstream demand.

In terms of inventory, the POY/FDY/DTY inventory of polyester filament reached 14.5/13/20 days respectively, and downstream users urgently needed replenishment. The overall production and sales of polyester filament were average, with good transactions in some areas. The average production and sales of polyester filament were 40%.

Overall, currently, the prices of polyester filament in most polyester factories remain largely unchanged, and there is a high probability of short-term weak adjustment. Although the operating rate of downstream elastic and weaving enterprises is gradually recovering, their intention to purchase polyester filament spot goods is insufficient, and the raw material inventory in the early stage needs to be consumed. The production and sales rate of most polyester filament manufacturers cannot be effectively increased. The main raw material PTA market is experiencing a decline, with average cost support. Business Society believes that the polyester filament market is operating at a standstill with limited fluctuations.

The market price of epichlorohydrin has continued to rise this week. According to the monitoring and analysis system of Shengyi Society, as of February 20th, the benchmark price of Shengyi Society’s epichlorohydrin was 9325 yuan/ton, an increase of 3.61% compared to the beginning of this month.

Price influencing factors:

On the raw material side, the prices of propylene and glycerol have fluctuated, and the support of high costs is still evident. Among them, the cost of glycerol based epichlorohydrin enterprises has significantly increased, leading to a loss in industry profits. According to the market analysis system of Shengyi Society, as of February 20th, the benchmark price of propylene in Shengyi Society was 6835.75 yuan/ton, an increase of 0.18% compared to the beginning of this month (6823.25 yuan/ton).

Supply side: The supply of epichlorohydrin in the market has decreased. This week, the 30000 ton/year glycerol plant of Dongying Hebang and the 100000 ton/year glycerol plant of Zibo Feiyuan both maintained low load operation; The 80000 ton/year plant in Hebei Jinbang restarted on February 10th, and in addition, some plants are in a long-term shutdown state. In addition, a recent accident occurred at an epichlorohydrin plant in Shandong, and it will take at least a month for the plant to recover. Overall, the operating rate of the epichlorohydrin industry is only about 57.39%.

Downstream demand side: The downstream epoxy resin industry is experiencing slow growth in production. At present, the operating load of the epoxy resin industry is 50.24%, an increase of 11.2% compared to the operating load of 39.04% in the first week after the holiday. Due to the recent increase in raw material prices, the cost side has been under pressure, and some epoxy resin manufacturers have raised prices, which has also brought greater difficulties to manufacturers who urgently need to purchase. It is expected that the prices of epoxy resin manufacturers may rise in the short term, and more attention should be paid to changes in market trends.

Market forecast: Analysts from Shengyi Society believe that high raw material prices will support downstream demand. It is expected that the market price of epichlorohydrin may increase in the near future, and more attention still needs to be paid to changes in market supply and demand.

1、 Price trend

According to the Commodity Market Analysis System of Shengyi Society, the average market price of baking soda on February 18th was 1550.4 yuan/ton. On February 18th, the Business Society Baking Soda Index was 102.90, a decrease of 0.14 points from yesterday, a decrease of 56.37% from the highest point of 235.84 points during the cycle (November 10, 2021), and an increase of 16.57% from the lowest point of 88.27 points on December 22, 2020. (Note: Cycle refers to September 1, 2020 to present)

2、 Market analysis

According to the commodity analysis system of Shengyi Society, the price of baking soda is running steadily, and the company’s shipments are still acceptable. The price of baking soda in Henan region is operating steadily, with a factory price of 1450-1550 yuan/ton in Henan region and 1500-1750 yuan/ton in Shandong region. Due to downstream demand based procurement, it is expected that consolidation and operation will be the main focus in the later stage. Upstream: According to the commodity analysis system of Shengyi Society, the price of soda ash has been consolidating this week. The current market average price is 1420 yuan/ton, and downstream customers tend to purchase according to their needs.

According to analysts from Business Society, the price of baking soda has been weak and consolidating in recent times. The upstream raw material soda ash has generally been in operation recently, while downstream industries such as pharmaceuticals, textiles, and food will mostly purchase according to demand after the year. The demand enthusiasm is average, and there is a supply-demand game. Overall, it is expected that baking soda prices will mainly fluctuate in the later period, depending on downstream market demand.

In mid February, the domestic ABS market consolidation was weak, and the spot prices of some grades were narrowly lowered. According to the Commodity Market Analysis System of Shengyi Society, as of February 18th, the average price of ABS sample products was 11862.50 yuan/ton, with a price level increase or decrease of -0.11% compared to the beginning of the month.

Fundamental analysis

Supply level: In mid February, there was limited change in the operating rate of the domestic ABS industry, and the load decreased by about 1% to 72% compared to the first ten days. The average weekly production within ten days is close to 130000 tons, and the inventory level of aggregation enterprises has risen to over 180000 tons. The overall pattern of abundant supply of goods remains unchanged. The post holiday orders of petrochemical plants are poor, and traders are lagging behind in terms of goods delivery, resulting in a rebound in the early month’s price increase. Under the pressure of balancing costs, some production enterprises have plans to reduce their burden. Overall, the recent supply side has provided poor support for ABS spot prices.

Cost factor: Since mid February, the trend of ABS upstream materials has been stable with some weakness, and overall support for ABS costs has been average. The domestic acrylonitrile market is stagnant and declining. Although the low load situation in the industry continued in the early stage, with the spread of expected news of expanding supply in the future and the impact of new production capacity, the positive news on the supply side is gradually being digested. Fortunately, the inventory level in the industry is still low, and the price drop is relatively narrow. But downstream buying sentiment has weakened, and the overall market outlook may turn bearish in the future.

The butadiene market has loosened at a high level. Although the spot market continues the previous tight pattern, with the expected increase in industry load, supply will inevitably move towards abundance. In addition, due to the high spot prices in the early stage, downstream buyers have become increasingly resistant to receiving goods at high levels, resulting in a slight lack of market momentum and a stalemate between supply and demand sides. It is expected that butadiene may continue its weak consolidation trend.

In mid February, the styrene market was mainly characterized by sideways consolidation. The load of the styrene plant stabilized within ten days, while the market supply and demand remained basically stable. Upstream pure benzene is difficult to utilize in remote oil due to the easing of geopolitical relations, with prices stagnating at high levels and narrowly declining. The fundamental guidance of styrene is ambiguous, and it may continue to be organized and operated.

In terms of demand, the export demand for some front-end household appliances in the terminal sector has been fully released before the holiday, and downstream purchasing power has significantly weakened compared to the end of the lunar calendar after the holiday. The current resumption process of terminal factories is lagging behind, and the overall load position is slowly recovering. In addition, terminal enterprises still have inventory to digest, and the atmosphere of on-site purchasing is sluggish. Overall, the demand side has a slower pace in providing market support.

Future forecast

In mid February, the domestic ABS market remained stable with slight weakness. The weak and stable consolidation of the upstream three materials provides average comprehensive support for the cost side of ABS. The load variation of ABS polymerization plant is relatively small, and the inventory accumulation level remains unchanged. In the future, aggregation enterprises have plans to reduce their burden, and the pressure on the supply side may gradually decrease. The demand side expansion is still insufficient, and some downstream enterprises are slow to return to production. Business analysts believe that the ABS market has weak supply and demand, and in the short term, the market will continue to be dominated by weak and stable consolidation.