According to the data from the previous stock exchange, Shanghai Rubber continued to fluctuate slightly during the week of March 27th, fluctuating around 11850-11990 yuan/ton, with a relatively empty atmosphere. According to data from the Business News Agency, the spot market of natural rubber in China fluctuated slightly following the trend of futures. As of March 31, the domestic full latex market in East China was 11526 yuan/ton, a slight increase of 0.4% compared to 11480 yuan/ton on Monday, 27th.

Supply side

Arrival volume continues to increase: As of March 26, 2023, the total inventory of Tianjiao Bonded and General Trade in Qingdao was 628000 tons, an increase of 15000 tons compared to the previous period, with a month-on-month increase of 3.23%. China’s bonded port areas and social areas continue to accumulate stock of spot glue, and the market impact continues to be short.

New rubber production starts: Southeast Asia and Thailand are in the production reduction season. According to information from domestic production areas, at present, the phenological conditions in Hainan production area are normal, and the production of new rubber starts, but the amount is not large; Affected by powdery mildew in Yunnan, the cutting is delayed, which is initially expected to be delayed until mid next month to around May. Overall, at present, domestic new rubber has just begun to produce a small amount, which has no significant impact on the supply side. However, from the perspective of trading in the investment market, natural rubber continued to decline in February and March, coupled with long-term imbalances in supply and demand, and unfavorable market transactions. In addition, with the gradual increase in new rubber production, in the current economic environment and industry demand situation, the market trend of natural rubber may become more difficult in the future, with strong bearish sentiment.

Demand side

Year-on-year increase in operating rate: As of March 23, the operating rate of the all-steel tire production line was 73.29%, an increase of about 11 percentage points year-on-year; The operating rate of the semi steel tire production line was 79.21%, a year-on-year increase of 14 percentage points. Currently, under the premise of weak trends in natural rubber and carbon black procurement, downstream enterprises have downward expectations for future prices, and terminal orders are mostly placed in the form of on-demand procurement.

Tire Product Price Increase: It is reported that since March, due to the short-term increase in the prices of raw materials such as natural rubber and carbon black after the year, tire companies have generally chosen to increase the prices of tire products by specification and pace in order to absorb the phased cost pressure. Enterprises in Qingdao, Shandong Province said that their orders have improved since the first quarter; Some companies are also expected to start raising prices for certain tire products in the second quarter. The point recovery of demand, which extends to the entire industry, will have a more significant impact on the market.

Aftermarket Forecast

Regarding the future market, with the gradual increase in the production of natural rubber and new rubber next month, the pressure on the supply side will continue to increase. The pressure on the spot inventory of finished tire products at the downstream end continues to digest, and there are signs of a “point wise” improvement in demand expectations. It will take time for orders to fully improve. In summary, the natural rubber market in the second quarter is expected to be dominated by small fluctuations in the range, with the possibility of large fluctuations in the short term.

DOP prices fluctuated and consolidated in March

According to data monitoring by Business News Agency, as of March 30, the price of DOP was 10050 yuan/ton, an increase of 1.01% compared to the price of DOP of 9950 yuan/ton on March 1. Cost support remains, with the DOP market surging in March.

The price of raw material isooctanol fluctuates and rises

According to the price monitoring by the Business Society, as of March 30, the price of isooctanol was 9642.86 yuan/ton, up 4.49% from the shock of 9228.57 yuan/ton on March 1. In March, the price of isooctanol fluctuated and increased, while DOP raw material cost support remained. DOP had a strong upward momentum. In April, there was an overhaul plan for isooctanol enterprises, and it is expected that the supply of isooctanol will decrease. In the future, isooctanol will have a strong upward momentum.

The market of raw material phthalic anhydride fluctuated and rose

According to the price monitoring by the Business Agency, as of March 30, the quotation for ortho phthalic anhydride was 8625 yuan/ton, an increase of 2.07% compared to the price of 8450 yuan/ton on March 1. The price of o-xylene rose, but the willingness to stand up for phthalic anhydride remained. In March, the market for phthalic anhydride remained stagnant, and the upward momentum for DOP in the future remained.

Import and export data statistics

According to the import and export data released by the customs, the cumulative export volume in January and February 2023 was 11471.71 tons, a year-on-year increase of 55.18%. Due to the Spring Festival holiday, the export volume in January decreased year-on-year, but the volume remained at 5179.38 tons. In February, exports returned to normal, and the export volume rebounded to 6292.34 tons. In January and February, the export volume increased to varying degrees compared to the same month. From January to February 2023, the cumulative import volume of DOP was 305.9 tons, a year-on-year decrease of 47.26%. Among them, the quantity in January was relatively small, only 99.44 tons. The import volume in January and February decreased significantly. DOP export data increased, import data decreased, and domestic plasticizer market supply decreased. Support for DOP growth remains.

Aftermarket expectations

According to DOP data analysts from the Business News Agency, in March, the price of isooctanol, a raw material for DOP, fluctuated and rose, while the market for phthalic anhydride remained stagnant after rising. After rising, the cost of DOP stabilized, and the price of DOP rose slightly. In the future, the maintenance of isooctanol enterprises will support the price increase, and the expectation of weak DOP demand remains. The positive import and export data will provide some support for domestic DOP prices. It is expected that the DOP prices will consolidate strongly in the future.

The price of ethylene oxide was strong in March

According to data from Business News Agency, on March 29, 2023, the average spot market price of ethylene oxide in China was 7200 yuan/ton, up 2.86% from the beginning of the month; Compared to the beginning of the year, the price was 6800 yuan/ton, up 5.88%.

Overview of ethylene oxide industry chain

The terminal demand has improved, and the price of the main downstream polycarboxylic acid water reducing agent monomer has rebounded. On the one hand, after the holiday, the resumption of production and construction of terminal real estate has started, and the production enthusiasm of polycarboxylic acid water reducing agent monomer enterprises has increased, increasing the demand for ethylene oxide.

Aftermarket Forecast

The price of raw material ethylene is relatively strong, with strong cost support for ethylene oxide currently; The main downstream polycarboxylic acid water reducing agent monomer market is improving, and the demand for ethylene oxide is expected to improve. It is expected that the price of ethylene oxide will continue the current trend in the short term, with strong fluctuations operating mainly.

According to the monitoring of Business News Agency, as of March 28, the average market price of local refining petroleum coke was 2039.00 yuan/ton, down 5.23% compared to the previous trading day and 58.60% year-on-year. Since February, the local refining petroleum coke market has continued to fluctuate and decline, with a decline of over 40%.

The petroleum coke commodity index on March 28 was 158.59, down 8.75 points from yesterday, down 61.20% from the cycle’s highest point of 408.70 points (2022-05-11), and up 137.09% from the lowest point of 66.89 points on March 28, 2016. (Note: The cycle refers to September 30, 2012 to now)

Supply side: high inventory of petroleum coke in port, oversupply in domestic market

The storage of petroleum coke in domestic ports is at a high level, and port traders are actively selling imported petroleum coke to recover funds. However, recently, imported petroleum coke has gradually arrived and warehoused in ports, making it difficult to change the high storage trend of petroleum coke in ports. The operating rate of delayed coking units in China is basically stable, and the market supply is sufficient. Local refining enterprises actively arrange inventory, with poor delivery and investment. Currently, the petroleum coke market is in a situation of oversupply.

Demand side: terminal market is light and demand is limited

In 2023, the downstream metal silicon spot market continued to decline, resulting in light market transactions, a comprehensive loss for Southwest Silicon Factory, and an increase in shutdown and maintenance. Recently, Yunnan issued a notice on the special rectification work plan for safety production, and silicon enterprises in Yunnan have been involved. The calcined coke market continued to decline; Carbon enterprises mainly purchase on demand, while the petroleum coke market continues to decline. Downstream enterprises have a strong wait-and-see mood, mainly consuming early inventory, and limited support for the local refining petroleum coke market.

According to petroleum coke analysts from Business News, the inventory of petroleum coke in domestic ports is currently at a high level for a long time, with a stable operation rate of delayed coking units in China, sufficient market supply, serious shortage of procurement at the downstream demand end, and oversupply in the market. In the near future, the situation of oversupply in the domestic market will continue; Local refining enterprises are facing difficulties in shipping, actively reducing prices to remove inventory, while downstream enterprises are cautious in purchasing, and lack enthusiasm for entering the market. It is expected that petroleum coke refining in the near future may decline slightly.

Aluminum price stops falling and stabilizes

According to data from Business News Agency, on March 27, 2023, the average price of domestic aluminum ingots in the East China market was 18416.67 yuan/ton, with a daily increase of 0.44%. Compared to the beginning of the month (March 1), the aluminum price was 18416.67 yuan/ton, which was flat. After recovering in January, aluminum prices fell in mid February. After the Federal Reserve raised interest rates in March, aluminum prices stopped falling and stabilized.

In the long term, the current price has retreated significantly, increasing by 5.54% compared to the recent recovery starting point (July 14, 2022), where the average market price of aluminum ingots was 17450 yuan/ton. The recent high aluminum price occurred on December 5th, with the average aluminum ingot market price of 19536.67 yuan/ton, a decrease of 5.73%.

Overview of fundamentals

1. High inventory levels showed month-on-month inventory removal performance

As of March 23, the domestic mainstream social inventory was 1.218 million tons, compared to 1.076 million tons of social inventory at the beginning of February (February 2), with a cumulative inventory of 142000 tons; Compared to the social inventory of 1427000 tons at the beginning of March (March 2), 209000 tons were removed from the warehouse.

2. Gradual digestion of macro pressure

With the relative decline of macro panic sentiment and the implementation of the Federal Reserve’s interest rate hike in March, macro negative factors in the early stage gradually digested.

3. List of import and export data

According to customs data, in January-February, China imported about 150000 tons of aluminum ingots, an increase of 92800 tons year-on-year. The total export of aluminum ingots was about 3700 tons, a year-on-year decrease of 27000.

4. Domestic supply side

Guangxi and Sichuan regions have a small amount of electrolytic aluminum production capacity, while Gansu, Guizhou, and Inner Mongolia have a small amount of new production capacity.

After three rounds of production restriction, the production capacity in Guizhou has decreased by 760000 tons compared to the end of November. A new round of production reduction in Yunnan has been in place, with a total reduction of about 780000 tons of production capacity until the end of the dry season in May.

Aftermarket forecast

From the perspective of supply side, recent production reductions in Yunnan-Guizhou region and inventory data show that the social inventory of electrolytic aluminum is still relatively high, but there is a trend of destocking. In the short term, electrolytic aluminum will be suppressed and alleviated by macro factors. It is expected that the aluminum price will stop falling and stabilize, and the future market will be dominated by strong shocks. In the near future, it is expected to wait and see the strength of downstream consumption.