(Jiangxi New Materials Co., Ltd.)

Recently, bulk items Prices have risen, and the market has made many interpretations from a financial perspective. But thinking back to 2008-2009, let’s revisit that timeThe experience of the sudden rise and fall of chemical products may provide some inspiration for the current price judgment of chemical products.



Basic knowledge of economics, Product Price is determined by supply and demand. When prices rise, demand is suppressed and supply increases; when prices fall, demand rebounds and supply decreases. However, among the many cases I have personally experienced, chemicals are undoubtedly the most complicated due to their long industrial chains and interlocking prices.



Going back to 2008, if there was no financial crisis and prices were allowed to rise wantonly, it is still impossible to verify what the outcome would have been. At that time, I was responsible for the sales of butadiene products. The price of butadiene started to rise crazily in early 2008, reaching a price of more than 30,000 yuan/ton in July and August. This is unimaginable because butadiene is a by-product. Corresponding raw material naphtha, produced The cost is very low and the profit is outrageous. At the same time, the downstream synthesisrubber, ABS and other products are experiencing comprehensive losses, and prices will collapse sooner or later. Since we realized very early on that butadiene would have major price fluctuations in 2008, when we were negotiating for the second year’s contract goods at the end of 2007, we tried our best to sell all the planned production volume in the form of contracts. , only keeping a small amount of spot stock to cope with changes in output. In August 2008, it was already felt that some customers were unable to bear the contract goods, mainly from ABS users; at the same time, spot goods could still be sold at a relatively high price. At this time, we decisively sell more spot goods to the market. We would rather have the ship wait at the factory and bear the demurrage costs, but we should sell future goods in advance to prevent the price from collapsing. Time has finally proven that the star product butadiene has gone from a price of more than 30,000 yuan per ton in just a few months to a price of more than 3,000 yuan per ton by the end of the year.

(Jiangxi New Materials Co., Ltd.)

Of course, there were many similar products in 2008. The price of ethylene glycol reached 15,000 yuan/ton at the end of 2007, and by the middle of 2008, the price was less than 3,500 yuan/ton, which was not as good as the price of mineral water. The craziest thing is sulfur. The price of liquid sulfur was as high as 5,850 yuan/ton in June 2008. At the end of 2008, the price was only 500 yuan/ton, which was less than one-tenth of the previous price. <span class="t_tag" href="tag.php?name=%D0%D0%D2%B5" style="padding: 0px; margin: 0px; word-wrap: break-word; line-height: normal; cursor:pointeThe corresponding downstream supporting equipment often requires an investment of more than 4 billion U.S. dollars; if the global new ethylene demand is 5 million tons a year, it will require a capital expenditure of 20 billion U.S. dollars to meet the demand.



4. Conclusion and understanding



If we take a seven-year cycle as a cycle, we have to say that there are too many similarities between 2016 and 2009. In 2008 and 2015, the common experiences of the chemical industry were: the drop in oil prices caused chemical products to fall to a low point, downstream companies were eager to destock, intermediaries broke contracts or had reduced performance capabilities, and downstream companies tended to increase the proportion of spot purchases and contract volume decreased, etc.



The trend of many petrochemical products has exceeded the rebound in oil prices, and is more due to their own destocking and downstream demand, such as ethylene, polyethylene, styrene, polypropylene, etc.



In the downstream demand structure, the trend of products related to real estate and infrastructure is relatively slow, such as acrylic acid.



When funds are abundant, for products with poor liquidity, once the downstream replenishes inventory, the upstream price is likely to rise sharply, such as butadiene.



There is currently no specific data on bulk commodity pledges and letter of credit financing. From intuition and understanding from some traders, it is not common under the premise of the current downward interest rate.



Most current oilChemical products‘s profits and prices are still at historical average levels.



Overall, the current supply and demand of the petrochemical industry chain represented by ethylene is very healthy; although propylene is in surplus, it is not overvalued compared to historical prices; aromatics prices are still at historical levels.



On the demand side, we are more optimistic about the long-term demand growth of polyethylene and polypropylene. Demand for polyethylene is growing at a good rate due to the increase in online shopping for packaging materials, agricultural film planting, etc. Polypropylene, driven by food packaging boxes, non-woven fabrics, etc., has extremely strong consumption attributes.



At the supply level, industry leaders need to integrate. In particular, industries with fragmented suppliers are in urgent need of consolidation by leading companies, which often depends on companies with healthy balance sheets and prudent capital expenditures.