Basic Chemical Weekly Report: International oil prices rise sharply, potash fertilizer prices rebound from the bottom

Introduction: In the first half of the year, the prices of chemical products dropped significantly. According to statistics from Zhuochuang Information, 64% of the 53 chemical products had monthly average prices at their lowest levels in the past year. 28% had monthly average prices below the 15th percentile of the past five years. In June, only 2 products saw a price increase, while 50 products experienced a decline, with 9 of them dropping by more than 10%. The proportion of loss-making chemical products exceeded 60%.

Key Points:

• In the first half of the year, the prices of chemical products dropped significantly. According to statistics from Zhuochuang Information, 64% of the 53 chemical products had monthly average prices at their lowest levels in the past year. 28% had monthly average prices below the 15th percentile of the past five years. In June, only 2 products saw a price increase, while 50 products experienced a decline, with 9 of them dropping by more than 10%. The proportion of loss-making chemical products exceeded 60%.
• Since July, after experiencing a continuous decline for 1-2 quarters, the industry has gone through a phase of active de-stocking to passive de-stocking. Product prices began to warm up and rise, with products like MDI, TDI, methanol, refrigerants, glyphosate, and fertilizers seeing significant price increases. The CCPI price index has rebounded sharply from its one-year low. Most chemical product inventories have decreased significantly, such as potash, urea, and TDI, which have dropped to near-historical lows. Demand in downstream industries has rebounded, and the industry has entered an active restocking cycle. Considering the expected improvement in exchange rates, PPI, and other macroeconomic data, as well as the recent rise in international crude oil and coal prices, we believe that the overall prosperity of the chemical industry is expected to rebound in the second half of the year. Especially as overseas fertilizer inventories continue to decline and recent climate and overseas events push up food prices, this is expected to drive up the prices of potash and phosphate fertilizers.
• Major oil-producing countries such as Saudi Arabia and Russia will continue to voluntarily reduce production in September. The unexpected decline in US crude oil inventories also supports international oil prices. Therefore, Brent crude oil prices continue to rise above 85 US dollars per barrel. We are optimistic about the upward space of international oil prices in the second half of the year. Recently, domestic end-user natural gas prices have begun to adjust intensively, and the linkage between upstream and downstream natural gas prices has started. We highly recommend [China Petroleum] and [China Petrochemical].
• The overseas potash restocking cycle has started, coupled with the price demands of international potash oligarchs, global potash prices have rebounded from the bottom. We particularly recommend [Asia Potash International], which will significantly expand its production capacity in the future. As the concept of health is promoted, the penetration rate of dietary fiber in the industry is steadily increasing. [Bailong Chuangyuan] is expanding its production capacity while actively laying out other high-end sweeteners and prebiotic products. With the deepening of supply-side structural reforms, quota management will be implemented at the legislative level, and the industry competition pattern tends to be centralized. With the steady recovery of downstream demand, we are optimistic that the third-generation fluorinated refrigerants are expected to welcome a recovery. At the same time, the domestication process of fluoropolymer and fluorinated liquids is accelerating. We highly recommend [Juhua Shares], [Sanmei Shares], and [Yonghe Shares]. International shipping fees continue to decline, while domestic automobile production and sales continue to rise, and overseas tire demand is rebounding. In the future, the comparative competitive advantage of Chinese tires will continue to expand its global market share. We highly recommend [Sen Qilin]. The semiconductor, panel, and photovoltaic industries are driving the demand for the electronic gas industry. At the same time, the speed of domestic substitution is expected to increase significantly. We especially recommend the electronic bulk industry track, focusing on [Jinhong Gas].

Key Data Tracking:
Price fluctuations: The top five chemical products with price increases this week are liquid chlorine (37.20%), ortho-nitrochlorobenzene (24.44%), sulfuric acid (18.90%), propylene glycol (9.01%), and pure MDI (9.00%). The top five chemical products with price declines this week are PVDF pellets (-20.00%), PVDF battery grade (-16.67%), acetonitrile (-11.70%), disperse dyes (-8.70%), and photovoltaic grade trichlorosilane (-6.21%).

Risk Warning:
Fluctuations in international crude oil prices; domestic and foreign demand is less than expected, etc.