1、 Price trend

According to the Commodity Market Analysis System of Shengyi Society, as of December 24th, the reference average price of domestic urea market was 1828 yuan/ton, which is 1.26% lower than the reference average price of 1851 yuan/ton on December 17th.

2、 Market analysis

market conditions

This week, the domestic urea market prices have weakened and fallen. As of December 24th, the factory price of urea in Shandong region is around 1680-1720 yuan/ton, in Hebei region it is around 1730 yuan/ton, in Henan region it is around 1710 yuan/ton, in Hubei region it is around 1720-1740 yuan/ton, and in Liaoning region it is around 1810 yuan/ton.

Supply and demand situation

This week, the urea market has strong supply and weak demand. On the supply side, urea supply has been relatively loose this week, and market inventory has increased. In terms of demand, downstream procurement is relatively cautious, with a focus on low-priced purchases. At present, the market trading volume is still acceptable, but the trading atmosphere needs to be improved.

3、 Future forecast

The urea analyst from Shengyi Society believes that the domestic urea market has been weak and consolidating recently. At present, there is no significant improvement in the supply and demand side, and there is no positive support in the market. It is expected that in the short term, the domestic urea market prices will remain stable with a weak trend.

Analysis: Last week (12.16-20), the liquid ammonia market in Shandong remained sluggish, with prices fluctuating and falling. According to the Commodity Market Analysis System of Shengyi Society, the main production area of Shandong experienced a weekly decline of 1.57%. The main reason for the increasing supply pressure is that the operating rate of the equipment is generally high, and the operating rate of manufacturers has increased. Coupled with the sluggish urea market, some manufacturers have switched to ammonia, which has further exacerbated the contradiction of oversupply in the ammonia market. From the beginning of the week to the weekend, some mainstream large factories in Shandong generally lowered their prices by around 100 yuan/ton. Distributors mainly underreport shipments. And downstream procurement enthusiasm is not high, agricultural demand is still in the off-season, industrial demand remains rigid, and the overall demand side is bearish. At present, the mainstream quotation in Shandong region is 2570-2700 yuan/ton.

Prediction: The market has entered the off-season for fertilizer procurement, with a significant decrease in downstream operating rates, industrial demand following suit, sufficient supply, and the problem of oversupply in the later stage may continue. However, there may be regional differentiation in the later stage of the market. On the one hand, the operating rate will decline with the decrease of prices, and it is not ruled out that there may be pricing issues for enterprises. In addition, rainy and snowy weather in Northeast China, Inner Mongolia and other places may put pressure on transportation, and there may be a shortage of local supply. Considering all factors, liquid ammonia will remain at a low level and fluctuate mainly next week, and it is difficult to have good performance in the short term.

According to the Commodity Market Analysis System of Shengyi Society, on December 20th, the mainstream polyester filament factories in Jiangsu and Zhejiang Province quoted POY (150D/48F) at 6850-7200 yuan/ton, polyester DTY (150D/48F low elasticity) at 8100-8500 yuan/ton, and polyester FDY (150D/96F) at 7300-7500 yuan/ton, with local price increases.

In terms of cost: Recently, the domestic PTA spot market has seen a slight upward trend. According to the Commodity Market Analysis System of Shengyi Society, as of December 19th, the average price of PTA in the East China region was 4809 yuan/ton, an increase of 2.85% compared to December 9th. The escalation of geopolitical tensions between Russia and Ukraine has prompted the United States to announce a new round of sanctions against Russia. In addition, OPEC+may extend its production reduction plan again at its December meeting and may postpone it until the second quarter of next year, which is positive news for international oil prices. However, the weak demand in the international crude oil market and investors’ concerns about the prospect of oversupply in the crude oil market still exist, which is bearish for the oil market. As of December 20th, the settlement price of the main contract for WTI crude oil futures in the United States was $69.91 per barrel, and the settlement price of the main contract for Brent crude oil futures was $72.88 per barrel.

In terms of supply and demand, the market price of polyester filament has shown a fluctuating downward trend since the third quarter, with a slight increase in the second week of December. Due to the approaching Spring Festival, manufacturers have started to offer discounts on shipments this month, resulting in an increase in the production and sales rate of polyester filament and a significant decrease in inventory. After a wave of promotions in mid December, the price of polyester filament has risen narrowly this week. On the other hand, low inventory has boosted the confidence of manufacturers and increased the enthusiasm of enterprises to raise prices. In addition, the improvement of the raw material supply environment and the narrow rise in prices have given a certain boost to the polyester filament market.

According to analysts from Shengyi Society, with the recent seasonal increase in foreign trade orders and increased purchasing efforts by end-users, the production and sales of polyester factories have significantly increased, greatly alleviating inventory pressure. Overall, it is expected that the polyester filament market will show a fluctuating trend, and may maintain a strong trend before the Spring Festival, with price fluctuations possibly between 50-100 yuan/ton.

Recently, the domestic PTA spot market has seen a slight upward trend. According to the Commodity Market Analysis System of Shengyi Society, as of December 18th, the average price of PTA in the East China region was 4814 yuan/ton, an increase of 2.85% from December 9th.

In the second half of November, the PTA pre maintenance equipment will resume operation, but with the current processing fees, there will be less maintenance of the PTA equipment. Yisheng Ningbo’s 2.2 million ton PTA plant will shut down on December 9th; Jiaxing Petrochemical’s 1.5 million tons will undergo maintenance on December 12th. Dushan Energy’s 2.7 million ton PTA new plant began trial operation on December 18th. The current industry production is around 86%, and the overall supply in December is relatively loose.

The escalation of geopolitical tensions between Russia and Ukraine has prompted the United States to announce a new round of sanctions against Russia. In addition, OPEC+may extend its production reduction plan again at its December meeting and may postpone it until the second quarter of next year, which is positive news for international oil prices. However, the weak demand in the international crude oil market and investors’ concerns about the prospect of oversupply in the crude oil market still exist, which is bearish for the oil market. As of December 17th, the settlement price of the main contract for WTI crude oil futures in the United States was $69.65 per barrel, and the settlement price of the main contract for Brent crude oil futures was $73.19 per barrel.

The centralized replenishment of downstream factories, previously due to the sluggish performance of the entire polyester sector prices, is now showing signs of a rebound in various products driven by raw materials. The inventory level of raw materials for terminal textile enterprises is not high, and there is still some time before the Spring Festival. This round of replenishment is expected to be mostly for pre year orders, and there is still room for replenishment in the later period. In addition, domestic macro policies have released a series of positive signals, including promoting domestic demand, and it has been heard that export orders have performed well.

Business Society analysis believes that under the current macro positive policies and short-term favorable crude oil conditions, PTA may be boosted in the short term, but the sustainability of demand side replenishment needs attention.

Price trend

According to the bulk ranking data from Shengyi Society, the domestic PC market has recently seen an increase, with some spot prices of certain brands rising narrowly. As of December 17th, the mixed benchmark price of Business Society PC is around 16300 yuan/ton, with a price increase or decrease of 2.62% compared to early December.

Cause analysis

On the supply side: Previously, companies such as Jiaxing Emperor gradually returned, and the industry average operating rate rose to over 80%. Recently, the overall operating rate of PC in China has narrowly declined to around 78%. The average weekly production of PC remains at a super high level of over 60000 tons. The on-site supply of goods is still abundant, and the mismatch between supply and demand remains unchanged. The high inventory has led to cautious pricing by manufacturers, and the auction market has slightly improved. The market supply side is generally supportive of PC prices.

In terms of raw materials: As can be seen from the above chart, after the rapid downward trend of bisphenol A, the spot price at the end of last month has reached a low point. At the same time, there is a delay in the production of new devices on the news side, which has boosted the supply side significantly, coupled with the maintenance of some enterprises in the early stage. Although the price of raw material phenol has fallen from a high level due to the cooling of gas purchases, the arrival of cargo at the port has been delayed, and the inventory level at the port is only about 6000 tons. Spot goods are still in a tight supply situation, and there is a stable supply and price sentiment. At the same time, the main downstream PC and epoxy resin stocks are stable, and influenced by various favorable factors, the price of bisphenol A continues to rise, and the mentality of industry players is strengthening. Overall, bisphenol A remains stable and strong, providing further support for PC costs.

In terms of demand, the PC consumption pattern has not improved for a long time, and the overall trend continues to be weak in the previous period. The logic of weak rigid demand purchasing in the market continues, and the wait-and-see sentiment of industry players is biased. As the end of the year approaches, downstream factories are taking over goods to maintain production, and buyers are resistant to high priced goods. Purchasing and price chasing operations are cautious, and only some companies have seen an increase in operating rates. The slow circulation of goods in the market has limited changes, and the demand side has poor support for PC spot prices.

Future forecast

The PC market has been on the rise recently. The upstream bisphenol A market continues to rise, further strengthening the support for PC cost side. The load of domestic polymerization plants has dropped by 2%, while the supply remains loose and unchanged. The high level of inventory in the industry has limited changes, and there has been no substantial improvement in supply pressure. The downstream stocking pattern has not changed, making it difficult to drive market trends. Business Society believes that the rise in raw materials has brought strong cost side benefits, but at the same time, it has also brought cost pressure. The profound mismatch between supply and demand is not something that can be alleviated in the short term, and there may be some companies returning for maintenance in the future. Therefore, the PC market may be hindered from rising in the future, and it is recommended to closely monitor the trend on the cost side.