According to the Commodity Market Analysis System of Business Society, the domestic PTA market in 2023 showed an upward trend of “M” – shaped fluctuations. As of December 31, the average market price in East China was 5930 yuan/ton, an increase of 5.58% from the beginning of the year. It can be roughly divided into four stages:

From January to mid April, PTA continued its upward trend from December of the previous year, with prices gradually rising to the highest point of 6520 yuan/ton for the year. In terms of segmentation, from January to February, the expectation of demand recovery is positive, and all links in the PTA industry chain are steadily rising. Entering March April, the upstream PX domestic and foreign equipment underwent centralized maintenance, and the PX import volume in April reached the lowest level of the year. At the same time, the PTA’s own circulation of goods has gradually tightened, leading to a rapid increase in prices.

From mid April to mid May, it only took a month for PTA to decline by more than 15%. On the one hand, the crude oil center of gravity has fallen, and the speculation in the PX market has cooled down. On the other hand, the fundamentals of PTA have also weakened overall, especially with the recovery of demand for gold, silver, and four falling short of market expectations. Faced with high priced raw materials, terminal weaving and downstream polyester have seen a decrease in production and demand, leading to a decrease in willingness to purchase PTA and a clear bearish market sentiment.

From June to mid September, there was another upward trend, and as the center of gravity of crude oil prices shifted upwards, PX also rebounded to high levels and fluctuated. In addition, the downstream polyester industry has maintained a high operating rate after profit recovery, leading to an increase in demand for PTA.

From mid September to December, crude oil prices plummeted significantly and PX prices fell from high levels, causing the cost side to lose positive support and driving downstream polyester industry chain prices down. During this period, although the PTA market experienced a temporary recovery due to factors such as the strengthening of crude oil and the reduction of PTA main suppliers, the overall adjustment was still mainly weak.

Looking ahead to 2024:

PTA production capacity is still in an overcapacity cycle, increasing pressure on accumulated inventory

By the end of 2023, the total production capacity of PTA reached 80.615 million tons, with a growth rate of 16.4%. In terms of production, the domestic PTA production in 2023 was about 64 million tons, an increase of 9.9 million tons compared to 2022, with a growth rate of 18.3%.

The annual average operating rate is 76.68%, a significant increase from 73.93% in 2022. This is mainly due to the release of downstream polyester production capacity and the high polyester operating rate throughout the year, resulting in a significant increase in domestic demand for PTA. There are still many production capacity investment plans in the PTA industry in 2024, totaling 9.5 million tons. If the production progress is smooth, the total production capacity will reach about 90 million tons, with a growth rate of about 11.8%, and it is still in an excess cycle. In addition, the growth rate of downstream polyester production in 2024 will be slightly lower than that of PTA, so the accumulation pressure of PTA throughout the year will also increase.

PTA exports are expected to become an important channel for digesting domestic overcapacity

In terms of import and export, PTA has a relatively low import dependence, almost zero. In 2023, PTA exports reached a new historical high, with a total annual export volume of 3.5094 million tons, an increase of 1.82% year-on-year. The main reason for the record high export volume of PTA is that there are too many old PTA devices abroad, and the operation of the devices is unstable. However, the continuous production of large PTA devices in China has enhanced the comprehensive competitiveness of PTA enterprises with integrated production capacity support. However, India used to be China’s largest exporter, but due to the restrictions of BIS certification, the growth rate of PTA exports in China has slowed down. But we believe that the PTA export market is expected to become an important channel for digesting domestic overcapacity in the future.

The industry concentration is constantly increasing, and the trend will continue

In recent years, the concentration of PTA industry has been continuously increasing, with the top six enterprises accounting for over 75%. The PTA industry is showing an oligopoly pattern, with production enterprises having increasingly strong pricing power, and the trend will continue in 2024.

Cost support still exists, and the PX market is relatively easy to rise but difficult to fall

In terms of cost, WTI crude oil prices fell by 8.46% and Brent crude oil prices fell by 7.56% in 2023. The changing international situation and expected decrease in demand in 2023 have constrained the market, resulting in ups and downs. The global crude oil supply will continue to shrink in 2024, mainly due to the OPEC+policy of reducing crude oil production continuing until the end of 2024. In terms of demand, boosted by the gradual stabilization of the global economic situation, there is room for sustained amplification of global crude oil demand in 2024. This is mainly due to the stable recovery of the economic situation in the Asian region, but the inflation rate in Europe and America is still high, so the economic situation is still not optimistic. Therefore, it is expected that the average oil price in 2024 may still be slightly higher than in 2023, but the increase will not be too significant.

With the joint assistance of centralized maintenance of domestic and foreign equipment, unexpected demand, and fluctuations in crude oil prices, the domestic PX market price has increased significantly in 2023. The average price at the beginning of the year was 7450 yuan/ton, and the average price at the end of the year was 8600 yuan/ton, with a year-on-year increase of 15.44%. From the perspective of PX’s own supply and demand, it is in a production window period in 2024. Only one set of Yulong Petrochemical’s 3 million ton unit is planned to be put into operation in the second half of the year, but there is still some uncertainty about whether the project can be smoothly put into operation and released. The peak of PX production in 2023 has passed, and the future increase in production capacity is limited. However, the downstream PTA production capacity is still in a continuous expansion pattern, so the temporary gap in PX is still present. The overall pattern preference and supply shortage are the biggest upward drivers for PX in 2024, and prices are also prone to rise but difficult to fall.

The growth rate of downstream polyester will decrease, and it is expected that it will not be able to provide a significant increase in consumption for PTA

The polyester market in 2023 has shown characteristics of high production, high output, high exports, and improved capacity utilization. In 2023, a total of 10.35 million tons of polyester production capacity was added, excluding 1.37 million tons of eliminated production capacity. By the end of the year, the total production capacity reached 79.32 million tons, with a growth rate of 12.3%, which is the highest level in recent years.

In terms of production, the annual operating rate in 2023 was 83.89%, an increase of 4.19% year-on-year. The cumulative production of polyester is expected to be 66.58 million tons, an increase of 8.87 million tons compared to 2022, with a year-on-year growth rate of 15.4%. The growth rate of polyester production is already high, coupled with a significant increase in capacity utilization. This year’s polyester production growth rate is the highest in recent years.

In 2023, there will be a significant amount of actual polyester production capacity, some of which will be delayed in 2022. The record breaking expansion of polyester production in 2023 has had a direct impact on a decrease in polyester product production profits or an increase in production losses. The planned polyester production capacity for 2024 is over 7 million tons. Due to concerns about the profits of some polyester products, it is estimated that the actual production will significantly decrease compared to 2023. Therefore, the growth rate of PTA consumption will significantly decline.

The increase in polyester exports in 2023 is still significant, with an estimated export volume of 10.92 million tons and a net export volume of 10.09 million tons, an increase of 12.1% year-on-year. But compared to last year, there is still a slight decline. Affected by India’s BIS trade certification and other factors, the future import and export situation of polyester in 2024 is still worth paying attention to. The main tone for the recovery of domestic and international demand for terminal textile clothing in 2024

From the perspective of weaving, the operating rate of weaving machines has significantly increased in 2023, at around 64%, a year-on-year increase of 16%. From a seasonal perspective, apart from the periodic negative reduction in April, the overall operating rate of weaving machines this year is around 70%.

From the perspective of terminal consumption of textile and clothing, the overall trend is showing a mild recovery. The annual retail sales of clothing, shoes and hats, and knitted textiles reached 1.4 trillion yuan, a year-on-year increase of 12.9%. The growth rate of domestic clothing and textiles is relatively high. On the one hand, the base was relatively low in the previous year, and on the other hand, there has been significant improvement in the production and operation of domestic enterprises, leading to a gradual recovery of domestic demand.

In terms of exports, the global economy has recovered slowly in 2023 due to the impact of the epidemic, and weak demand in major markets has led to a decrease in orders, resulting in a lack of momentum for the growth of China’s textile and clothing exports. In addition, changes in the geopolitical landscape and fluctuations in the RMB exchange rate have brought heavy pressure to the development of textile and clothing foreign trade. In 2023, China’s cumulative exports of textile and clothing reached 293.64 billion US dollars, a decrease of 8% 1%, including textile exports of $134.50 billion, a decrease of 8.3%, and clothing exports of $159.14 billion, a decrease of 7.8%. In 2024, domestic clothing consumption will remain resilient, and domestic demand may continue to recover. The “the Belt and Road” countries will become a new growth point to drive exports, and textile exports are also expected to bottom out.

Therefore, in summary, there is a positive expectation of domestic and international demand for textile and clothing in China from the perspective of terminal demand. In the first half of the year, the supply and demand of PX on the cost side were tight, and there was strong support. In the second half of the year, we will focus on the production process of new production capacity. Under the pattern of slowdown in polyester production capacity growth and continued pressure on PTA’s own supply side accumulation, it is expected that PTA prices will be better in the first half of 2024 than in the second half, with an overall narrow range of downward fluctuations.

Overview of ethylene oxide prices in 2023

In 2023, the price of ethylene oxide remained relatively low, with an operating range of 6000-7200 yuan/ton. According to data from Business Society, as of December 31, the average price of ethylene oxide in the domestic market was 6400 yuan/ton; The decline within the year was 5.88%.

In 2023, the annual price of ethylene oxide remained at a low level in the past three years, and the market average for the year remained at a weak level throughout the historical cycle.

Overview of the ethylene oxide industry chain

The price trend of ethylene oxide is relatively close to that of the main downstream polycarboxylate water reducing agents, and the impact factor of the demand side on the price is more obvious in 2023. Single enterprise inventory is not high, production is relatively stable, demand for ethylene oxide is relatively stable, and downstream production is mainly stable; From the recent upstream and downstream product prices, it can be seen that downstream prices have started to rise, increasing profit margins and strengthening support for the price of raw material ethylene oxide in the short term.

Since mid to late December 2023, the price of ethylene glycol has remained strong, and some factories have begun to operate the appropriate conversion of ethylene glycol. There is a certain negative feedback on the output of ethylene oxide production.

Low starting point of ethylene oxide production may improve in 2024

Due to price and profit factors, the operating rate (capacity utilization) of ethylene oxide in 2023 has been running at 50-60%.

In terms of production capacity changes, in December 2023, 15 sets of maintenance equipment were installed, involving a total production capacity of 2.126 million tons per year, with a total production capacity of 8.6 million tons per year. The production of new production capacity in 2024 is mainly concentrated in the second half of the year.

The incomplete statistics of ongoing projects in the ethylene oxide industry chain are as follows:

The price of ethylene oxide is expected to rise in 2024, but there is not much room for upward movement

Due to the influence of overseas ethylene glycol equipment factors, the fundamentals of ethylene glycol have improved, prices have moved up, and the demand for production conversion may have negative feedback on the supply of ethylene oxide. On the other hand, the uncertainty of terminal demand in real estate is strong, leading to strong uncertainty in the demand for polycarboxylate water reducing agents in the main downstream, which to some extent suppresses the price of ethylene oxide. It is expected that the price of ethylene oxide will rise in 2024, but there is not much room for upward movement.

1、 Price trend

In 2023, the market for lithium iron phosphate continued to decline, showing a downward trend throughout the year. The price peaked at the beginning of 2023, with a price of 166000 yuan/ton and a low point at the end of December at 46000 yuan/ton, with a decline of 72.29% throughout the year. There was only a slight rebound in May, and the trend of lithium iron phosphate declined significantly in 2023. In the past two years, lithium iron phosphate seems to have experienced a roller coaster ride, and the entire industry has undergone earth shaking changes. Since the shortage of supply in 2021, With rapid development and oversupply by 2023, crowded enterprises, and intensified competition, what will happen to the lithium iron phosphate market in 2024?

2、 Review of the 2023 lithium iron phosphate market

Lithium iron phosphate prices first fell and then rose in the first half of the year

From the bar chart, it can be seen that in 2023, lithium iron phosphate experienced more decline than increase throughout the year, with only May and June showing an upward trend in the second quarter. The overall price in the first quarter fell by 39.76%, from 166000 yuan/ton at the beginning of January to 100000 yuan/ton by the end of March. The low decline in the second quarter slowed down, mainly due to the influence of upstream lithium carbonate. At the end of April, the supply of upstream raw material lithium mica was very tight, and the price of imported spodumene concentrate from overseas remained high, Lithium carbonate rebounded from its decline at the end of April, while lithium carbonate was in an upward trend. Lithium iron phosphate passively followed suit, although there was a slight rebound in April and May, driving up prices. However, the overall trend in the second quarter still showed a downward trend, with a decrease of 5%. The price dropped from 100000 yuan/ton in early April to 95000 yuan/ton at the end of June. The overall price of lithium iron phosphate fell by 42.77% in the first half of the year.

Lithium iron phosphate prices continue to decline in the second half of the year

In the second half of the year, lithium iron phosphate has shown a continuous downward trend, mainly due to the influence of upstream lithium carbonate. From the comparison chart between upstream and downstream, it can be seen that the price of lithium iron phosphate is closely related to upstream lithium carbonate. Lithium carbonate has plummeted sharply, and the cost side of lithium iron phosphate lacks strong support. In the third quarter, the price of lithium iron phosphate dropped from 95000 yuan/ton in early July to 70800 yuan/ton at the end of September, with an overall decline of 25.47%, The price of lithium iron phosphate in the fourth quarter dropped from 70800 yuan/ton in early October to 46000 yuan/ton at the end of December, with an overall decline of 51.58% in the second half of the year.

3、 Development Trends of Lithium Iron Phosphate in 2024

In terms of production capacity: by the end of 2022, the production capacity of lithium iron phosphate was 2.12 million tons, and by the end of 2023, the production capacity of lithium iron phosphate was 4.27 million tons. Sichuan region has a relatively high concentration of lithium iron phosphate production capacity, with Yuneng, Wanrun, Youshan, Germany, and Rongtong accounting for 60%. Currently, there is an overcapacity of lithium iron phosphate in various regions, with a clear trend and low operating rates. The main operating rates are concentrated in top enterprises. In 2023, lithium iron phosphate experienced overcapacity and low prices, Compressing costs and seizing market share, the investment heat is gradually entering a cooling off period, and there will be a significant cooling down in investment in lithium iron phosphate in 2024.

In terms of production growth rate: In 2023, the annual growth rate of production capacity was lower than expected, with growth rates of -40%, 61%, 19%, and -15% in the four quarters, respectively. The peak season of demand was in the 2.3 quarter, with a relatively fast growth rate, while the first and fourth quarters were relatively slow. In the first quarter, the domestic environment was mainly relaxed by clearing inventory, with upstream operating at a high level and downstream demand insufficient. In the second quarter, it entered the traditional peak season, and demand recovered. At the same time, the upstream price recovery drove the upward trend of lithium iron phosphate, In the third and fourth quarters, there was insufficient terminal demand, and the overall lithium iron phosphate market was sluggish. Weak inventories remained high, and consumption was slow. The industry’s pessimistic attitude was obvious.

In terms of imports: In the first half of 2023, the total import volume of lithium iron phosphate was 21.186 tons, and in the second half of the year, the import volume was 19.3 tons, with an annual import volume of about 40.4 tons. Due to the impact of upstream raw material prices and weak overall demand, the overall import volume significantly declined in 2023, and the import volume significantly decreased in the third quarter, mainly due to relatively saturated domestic supply, weak downstream demand, and less import demand.

In terms of exports: In the first half of 2023, the total export volume of lithium iron phosphate in China was 610.415 tons, and in the second half of the year, the export volume was about 554 tons. The annual export volume was about 1164 tons, with more exports in the first quarter and a slowdown in the second quarter. The reasons are: 1. High upstream raw material prices. 2. Some battery manufacturers have started to expand overseas, which has to some extent driven the export volume of lithium iron phosphate.

In terms of supply and demand: In 2023, the domestic supply of lithium iron phosphate is sufficient, and the tight supply situation has significantly eased. The total supply in 2023 reached 1.2 million tons, a year-on-year increase of 80%. In the past three years, the demand side of lithium iron phosphate has continuously released production capacity, and the industry has gradually shifted from supply shortage to oversupply. Currently, it is difficult for the lithium iron phosphate market to rise, and prices may maintain the current situation or continue to decline.

In summary, the production capacity of lithium iron phosphate in China has been in short supply since 2021, and the price has been rising all the way. By 2022, the demand for lithium iron phosphate was scarce, and the price continued to rise. At the end of 2022, the price of lithium iron phosphate reached a high market level, and the production capacity of lithium iron phosphate continued to increase. Too much new production capacity was invested, resulting in severe overcapacity. The built capacity is sufficient to meet the demand for the next 3-5 years, and the phenomenon of overcapacity is obvious. Secondly, driven by high profits, Numerous enterprises have joined the lithium iron phosphate industry, including not only new energy industry enterprises, but also emerging manufacturers who have entered and laid out lithium iron phosphate production lines, hoping to share a share of the new energy market. This phenomenon has caused congestion in lithium iron phosphate enterprises, increased competitive pressure, and lithium iron phosphate may continue to operate under pressure in 2024.

According to price monitoring data from Business Society, as of January 19, 2024, the reference price for domestic n-propanol market was 7950 yuan/ton, which was basically the same as January 12, 2024. Compared with December 13, 2023 (reference price for n-propanol was 7850 yuan/ton), the price increased by 100 yuan/ton, an increase of 1.27%.

From the monitoring chart of Business Society data, it can be seen that in the recent period (1.12-1.19), the overall market situation of domestic n-propanol has been stable. Recently, the fundamentals of the n-propanol market have been relatively calm, with little adjustment in the supply and demand sides of the market. There have been no significant fluctuations in the n-propanol market, and the supply side of n-propanol has performed normally. The downstream demand side continues to purchase in demand, and the overall supply and demand transmission is normal. As of January 19th, the domestic market price of n-propanol in Shandong region is around 7400-7800 yuan/ton. The normal operation of the n-propanol plant in the Nanjing area, and the overall stable operation of the n-propanol market, with a reference price of around 8500-9000 yuan/ton for the n-propanol market. Dealers in different regions still have reservations about prices, and the difficulty in monitoring prices may lead to differences in specific negotiation situations. Each region also has differences, and actual negotiations are the main focus.

Prediction of future market trends of n-propanol

At present, the overall trading atmosphere in the domestic n-propanol market is mild, with most of the inquiries on the market being for orders that are in high demand. The n-propanol industry has a normal mentality and has a stable outlook on the future market. The n-propanol data analyst from Business Society believes that in the short term, the stability and small fluctuations in the domestic n-propanol market are the main factors, and the specific trend still needs to pay more attention to changes in supply and demand news.

Product name: Sulfur

Latest price: On January 17th, the average sulfur price in East China was 920 yuan/ton, a decrease of 1.08% compared to the previous working day’s 930 yuan/ton.

Analysis: The sulfur market in East China is experiencing a downward trend, with normal operation of on-site sulfur units and sufficient supply of market goods. However, the downstream market is weak, with low utilization of unit capacity and weak enthusiasm for sulfur procurement. The market trading atmosphere is poor, and port prices continue to decline, which has a negative impact on the spot market. The bearish sentiment on the market is obvious, and to stimulate shipments, some refineries have lowered their sulfur prices.

Market forecast: There is sufficient supply of goods on the supply side, weak downstream demand, and a clear trend of oversupply on the market. It is expected that the sulfur market will continue to be weak and consolidate in the future.