Global oil prices in 2016 remained at around $50, the price of raw materials and coatings showed a different trend. Wang Zhishun from the international crude oil to paint various raw materials prices and the market demand, a profound analysis of the 2016 China coating raw material market.

Wang Zhishun said that the 2016 monitoring products, 91% of paint raw materials, product prices, only 9% of the raw materials prices.

The emulsion of overcapacity in the industry increasingly fierce competition

In 2016 the domestic acrylic emulsion capacity of 3 million 400 thousand tons, an increase of 14.9% in 2015. But the operating rate has decreased significantly, is expected in 2016 the annual average operating rate of less than 7, in 2016 the total output of about 2 million 240 thousand tons in the vicinity.

From the recent years of acrylic emulsion production capacity, yield, operating rate statistics, although the acrylic emulsion production capacity continues to grow, but the rate slowed, the operating rate declined year by year, indicating the emulsion facing excess capacity, industry increasingly fierce competition.

As the main downstream acrylic emulsion for waterborne architectural coatings, acrylic emulsion for downstream of the total consumption of about 74%, followed by the textile and paper adhesive, respectively accounted for 8% and 7%.

2016 acrylic emulsion is expected to total production of 2 million 240 thousand tons, of which building coating consumption is expected in the vicinity of 1 million 657 thousand and 600 tons. Acrylic emulsion capacity in China is mainly concentrated in the eastern region, followed by Southern China and North China, the factory production mainly concentrated in the surrounding coastal provinces. East China production capacity, the largest proportion of Jiangsu and Shanghai.

The price of 2015-2017 emulsion chart

The rapid rise in coal prices led to coal enterprises urea costs increased sharply, and the other is the main cause of the recent urea fertilizer prices by category. In addition, price control, automotive environmental protection also has certain effect. “This year the supply side reforms a huge impact on the coal industry, development and Reform Commission proposed to the coal production capacity of 2.5 tons of annual objectives and tasks. According to the national development and Reform Commission data show that 1-9 months, the national coal production of 24.6 tons, down 10.5%.” In November 3rd, the Bohai thermal coal price index closed at 607 yuan / ton, the highest on record since the beginning of this year, compared with the beginning of 371 yuan / ton rose 236 yuan / ton, rose 63.6%. According to the consumption of coal per ton of coal based urea for 1.55 tons, which means that from the beginning of the year so far, only one coal, urea enterprises rising costs 365.8 yuan / ton.

According to the National Bureau of statistics data show that in early January this year, China’s circulation small particles urea price is 1452.5 yuan / ton in early November, the price of 1458.8 yuan / ton, not much difference between the price. “Coal prices fall in the near future, but the entire north to the heating season, the demand for coal will continue until the spring of next year, the price decline in space does not exist. Especially coal inventory fertilizer use is not normal operation of fire delivery, transportation capacity decreased, so prices may not fall.” One is the high cost, the other is the low price, the follow-up of urea and other kinds of chemical fertilizer prices still rising larger space.

Because the cost of raw materials and the strong support of railway transport price increases, the recent production companies around the very price hike plan and strong will, in the short term the market price is strong. While the downstream demand is still weak, short-term wait-and-see strong willingness to accept price increases. The industry believes that the fertilizer market change dilemma.

The current market supply and demand structure analysis, manufacturers only sporadic sign, high turnover is unlikely. Wait until the end of November after the winter order of compound fertilizer enterprises launched, the market trend is clear, fertilizer prices can be out of the doldrums.

A ammonium sulfur raw material prices continue to rise, but the downstream production of compound fertilizer Co., a demand for ammonium ammonium, a smooth operation of the market, enterprises orders with limited space, single transaction based. Sulfur, sulfuric acid, ammonia and other raw materials prices and freight cost of ammonium strong support, enterprises in order to delivery, most orders can be sent to the new year, short-term sales pressure. In the case of price instability, some companies began to see the market, do not rush to put goods again. Expected short-term ammonium prices continue to slow slightly to consolidation, the local behavior of the lord. Last week (November 14 ~ 20 days) 55% powdery ammonium average ex factory price of 1620 yuan (ton price, the same below), up 2.86%; the average wholesale price of 1750 yuan, up 2.22%.

Diammonium Tuesday ammonium market remained stable. After the production of phosphate and compound fertilizer enterprises, very price will increase day by day. During the manufacturers tentative rises in price, but the downstream acceptance is not high, no significant fluctuations in price. Last week, the domestic 64% phosphate factory price of 1975 yuan, the wholesale price of 2250 yuan, and the previous week. The international market prices were mixed, in Pakistan phosphate demand, driven in part area prices, but this is only temporary, Pakistan DAP demand soon end. In addition, the market speculation that Chinese may cancel the export tariffs diammonium 100 yuan.

Prices continue to rise in space

at the end of November, OPEC meeting resolution will be members of the specific implementation plans to limit production. When agreement is reached at the beginning of next year, crude oil supply and demand will be balanced.

Approaching winter, the market will enter the traditional consumption season, the international crude oil price is expected to exceed $55 per barrel, which will cost from the end of polyolefin price formation support. In addition, petrochemical manufacturers inventory is still a low level, last week was increased slightly, but the overall delivery pressure, PP prices may be up there.

* on the international crude oil prices is expected to rise to speculate:

Last week, the international crude oil prices rose slightly, the expected production is the main influencing factors. However, OPEC and Russian crude oil output high, decline in U.S. crude oil production trend has stalled, difficult to alleviate the problem of excess supply.

The external surface of the macro, the current oil market is not clear, the United States WTI12 month crude oil futures set prices on Friday (November 18th) rose $0.14, or 0.31%, at $45.56 / barrel, oil prices rose sharply higher Friday, last week, for the first four weeks; recipients in the market increasingly expected OPEC (OPEC) way to limit production will be found in the end of this month. At the same time, ICE January Brent crude oil futures electronic trading prices rose $0.86, or 1.87%, at $46.86 / barrel. Brent crude oil rose last week, for five weeks for the first time. According to Iran’s Shana news agency, Iran’s oil minister on Saturday (November 19th) in Tehran and OPEC Secretary General Barkindo (Mohammed Barkindo) said the negotiations will meet in November 30th, held in Vienna, OPEC is likely to stop oil production agreement signed on, once the agreement is signed, the price of oil will be may be increased to $55 a barrel. Some analysts said oil prices rise or fall, has been meeting in November 30th before the OPEC statement based on state. The price depends on the performance of OPEC long oil production agreement optimistic or pessimistic. Whether crude oil production is still uncertain, but recently the dollar is strong go all the way, and in the follow-up to the Fed rate hike expectations, the dollar is still strong may. And the RMB exchange rate has hit a new low of nearly eight years, put pressure on the dollar, in unstable conditions, the latter part of the RMB may still go down, the remaining impact on liquidity.

In summary, although the glycol fundamentals support foundation, but the market shocks still require external news guidance, short-term crude oil market trend is unknown, the dollar continued to strengthen, the RMB is easy or hard up, still impact on liquidity. Expected short-term ethylene glycol is still room to rise, but the increase or limited, the market will narrow the main shock.