This week (December 2-6, 2024), downstream demand is limited, and the trend of the adhesive short fiber market remains stable. The market price of the main raw material dissolved slurry in the upstream remains stable and firm, with low inventory levels in the market. There is resistance from the downstream market, and demand for purchasing is limited. Under the game of positive and negative factors, the market price of adhesive short fibers has temporarily stabilized and consolidated.

According to the Commodity Market Analysis System of Shengyi Society, as of December 6th, the domestic factory price of 1.2D * 38mm adhesive short fiber is 13820 yuan/ton, and the price continues to remain stable.

In terms of cost: This week (December 2-6, 2024), the market price of adhesive short fiber raw material dissolution slurry remained stable, while the market price of auxiliary liquid alkali continued to decline. The market price of sulfuric acid continued to rise, and the market price of raw materials fluctuated. The average production cost of adhesive short fiber decreased.

On the supply side, the operating rate of the adhesive short fiber industry remained at around 84.9% this week, with a slight decrease in production compared to last week. During the week, some adhesive short fibers in Shandong region were parked for maintenance, resulting in a decrease in on-site supply.

In terms of inventory, the supply of adhesive short fibers in the market has decreased, but due to the end of previous orders, downstream replenishment enthusiasm is not high, and the speed of on-site shipment has slowed down, resulting in a narrow increase in inventory levels.

On the demand side: The downstream cotton yarn market has poor delivery speed and price stagnation is the main issue. Downstream yarn factories are facing a shortage of new orders, resulting in a continuous accumulation of finished product inventory and a low enthusiasm for replenishing raw materials. They are holding onto essential orders from multiple sources.

Future forecast

The main material dissolution slurry market is expected to continue its strong trend, while the auxiliary material liquid alkali and sulfuric acid markets are expected to consolidate within a certain range, resulting in average cost support. Due to equipment maintenance by some manufacturers, the supply of adhesive short fiber industry may still decrease, and market inventory may continue to be low, resulting in less pressure on on-site inventory; The demand in the terminal market has not improved significantly, and there is an increasing trend in the inventory level of yarn enterprises. Business analysts predict that in the short term, the domestic adhesive short fiber market will experience a slight weak consolidation, with prices expected to be between 13700-13900 yuan/ton.

In late November, the domestic liquid ammonia market mainly fluctuated and fell, breaking out of a trend of first rising and then falling. According to the Commodity Market Analysis System of Shengyi Society, liquid ammonia recorded a decline of 0.48% in the second half of the year.

Since the end of the month, liquid ammonia has reversed the downward trend in the middle of the month. The prices of manufacturers have been steadily rising, and the overall operating rate of domestic manufacturers has significantly declined, especially in the northern main production areas where ammonia emissions are generally low. The urea plant in Shandong is operating normally, with some parts transitioning to urea production and a significant reduction in ammonia release. In addition, some facilities in Anhui, Shanxi, and Northeast China have not yet started production, resulting in tight market demand for ammonia. In addition, some facilities in Shandong have also undergone short-term maintenance due to malfunctions. The supply has not been followed up yet. The ex factory price of liquid ammonia has naturally increased several times. Shandong manufacturers have generally raised prices 2-3 times within the week, with a cumulative increase of over 100 yuan/ton. The market performance is in short supply.

Towards the end of the month, in the last week of November, the market experienced a general decline, with prices in Shandong dropping from 2800 yuan to around 2600 yuan in the latter half of the month. In addition, the northwest and Inner Mongolia have also experienced declines along with the downturns in Shanxi, Shaanxi, and other regions. Due to increased supply pressure, there is a significant increase in the conversion of liquid ammonia in regions such as Shandong and Hebei, leading to an increase in the potential for ammonia production. In addition, most of the facilities in Central China, Northwest China, and other regions have been operating steadily, while new production capacity in Ningxia has been gradually released. The increase in supply has led to manufacturers accumulating inventory, forcing them to lower prices for shipments.

Future forecast

Business analysts believe that from the supply side, under the expectation of equipment maintenance, the supply pressure in the main production areas of the north will gradually ease, and there is a high possibility of a later decline. In addition, as winter enters, the increase in rain and snow weather in the north may limit short-term supply, and local supply-demand imbalances may lead to an increase in price differences.

From the demand side perspective, the early replenishment is gradually coming to an end, agricultural demand is gradually falling, and industrial demand is maintaining rigid demand. This may pose a constraint on ammonia prices in the future. However, considering that imports are still at a low level, a reasonable balance between supply and demand should be maintained in the short term.

Taking all factors into consideration, the price of liquid ammonia is expected to stabilize and stop falling in the near future. In the short term, due to the easing of supply pressure, there may still be room for price surges. However, under the expectation of weak demand during the winter off-season, the supply-demand game will intensify, and the ammonia market may experience fluctuations.

Price trend

According to the bulk ranking data from Shengyi Society, the domestic PC market fluctuated and fell in November, with most spot prices of various brands decreasing. As of November 30th, the mixed benchmark price of Business Society PC is around 15900 yuan/ton, with a price fluctuation of -0.62% compared to early November.

Cause analysis

In terms of supply, the overall operating rate of PC in China has shown a downward trend in November, with enterprises such as Cangzhou Dahua and Jiaxing Teijin entering maintenance successively. The industry average operating rate has narrowly fallen from 81% at the beginning of the month to around 75%. The average weekly production of PC has also fallen from the ultra-high level of over 60000 tons in the medium and long term to below 60000 tons. But the on-site supply of goods is still abundant, and the supply-demand mismatch pattern remains unchanged. Good news on the supply side is difficult to achieve, with high inventory causing manufacturers to be unable to raise prices, and low ex factory pricing resulting in a stalemate. At the same time, there is an expectation of resumption of work in the future, and the market supply side has poor support for PC prices.

In terms of raw materials: From the above chart, it can be seen that in November, domestic bisphenol A continued the rapid downward trend in October, and the spot price at the beginning of the month was already at a low point. During the month, some companies underwent maintenance and the upstream phenol cargo was delayed in arrival at the port, bringing some positive news in terms of supply and cost. The supply and demand forces are balanced, and prices have stopped falling and stabilized. But the main downstream PC and epoxy resin stocks are average. In addition, the acetone market has stabilized, and overall, there is a standoff between long and short positions in bisphenol A, with the market operating in a stalemate. Bisphenol A has a low horizontal support for PC cost.

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, with the logic of weak rigid demand procurement in the market. Industry players tend to have a wait-and-see attitude, while downstream factories purchase goods to maintain production. Buyers have strong resistance to high priced goods, and the circulation of goods on site is slow. The overall inventory in China is high, and merchants have increased their price reduction and order placement operations, making it difficult for the demand side to form strong support for PC spot prices.

Future forecast

The PC market in November was generally weak in consolidation. The upstream bisphenol A market remains flat, with limited support for PC cost changes. The load of domestic aggregation plants has continued to decrease slightly throughout the month, with more restarts than maintenance in the short term, leading to relaxed supply expectations. At the same time, the industry’s inventory is high, and there has been no substantial improvement in supply pressure. The downstream weak rigid demand stocking pattern has not changed, making it difficult to drive market trends. The price of PC has fallen below the low point of the year, but the profound mismatch between supply and demand cannot be alleviated in the short term. Therefore, Shengyi Society predicts that the PC market may still show signs of fatigue in the future.

Aluminum prices in November will experience a “V” decline

Aluminum prices will experience a “v” trend in November. According to the Commodity Market Analysis System of Shengyi Society, as of November 30, 2024, the average price of aluminum ingots in the East China market in China was 20373.33 yuan/ton, a decrease of 2.05% compared to the market average price of 20800 yuan/ton on November 1, with a monthly fluctuation of 6.45%. The high point of the month appeared on November 8, with a daily average price of 21720 yuan/ton.

Aluminum prices weaken and decline in mid to late November

The weak downward trend in aluminum prices in mid to late November is mainly due to three factors. Firstly, after the aluminum prices rose in the first half of the year, they reached a new high for the year. However, the actual demand from downstream terminals was lower than expected, which led to resistance to high priced raw materials and intensified competition in the upstream and downstream of the industrial chain; Secondly, due to the cancellation of export tax rebates for downstream aluminum products, there is an expectation of weakened export demand in the short term. At the same time, there is a strong expectation of tax increases in the United States, which suppresses prices; The third is the main driving force behind the upward trend of aluminum ingots, and the expectation of sustained cost increases is weakening.

Expected production reduction after cost increase

Overseas, Rusal announced that it will reduce production by more than 6% (about 250000 tons) to cope with high alumina prices and rising macroeconomic risks.

Domestically, as the spot price of alumina continues to rise at a high level, the average cost of aluminum ingots in the country has risen to around 21100 yuan/ton, and over 60% of the country’s aluminum ingot production capacity has suffered losses. It cannot be ruled out that production capacity reduction and operation may occur due to the low degree of industrial chain integration.

List of Domestic Inventory Data for Aluminum Ingots

In November, the total inventory of domestic aluminum ingots decreased slightly. As of November 28th, the inventory of mainstream electrolytic aluminum plants in China was 64000 tons, a slight increase of 8000 tons from the inventory of 56000 tons in mainstream electrolytic aluminum plants on October 31st; The social inventory of electrolytic aluminum in the mainstream domestic market is 553000 tons, which is 57000 tons lower than the 610000 tons in the mainstream domestic market on October 31st.

The continuous depletion of aluminum ingot spot inventory is mainly due to two factors. Firstly, after the supply side reform of domestic electrolytic aluminum, the production capacity is gradually approaching the ceiling, and the supply side increment is limited; The second reason is that the integration level of electrolytic aluminum enterprises has been improved. In order to reduce energy consumption and save ingot costs, the on-site conversion rate of aluminum water is increasing, resulting in a decreasing amount of ingots year by year. The aluminum to water ratio will operate within the range of 63.6-73.8% in 2024, with an average of 71.1%, an increase of 5.3% compared to the same period last year, which is 67.5%.

Based on the recent inventory circulation and supply situation, railway shipping in Xinjiang has continued to improve, with a significant increase in arrivals from mainstream consumer destinations.

Aluminum prices are expected to remain weak in December

Due to the implementation of the aluminum export tax rebate policy on December 1st, the frequency of overseas buyers’ inquiries and the pace of rushing for exports have continued to accelerate recently. In late November, the downstream demand for aluminum ingots was still strong, and the off-season was not weak. In December, with the slowdown of downstream export pace, there may be negative feedback on the aluminum ingot market, and the expectation of a off-season may come. It is expected that aluminum prices will mainly operate weakly in December. The main risk variables are the sustainability of cost support (whether alumina prices continue to remain high) and changes in aluminum ingot production capacity.

According to the Commodity Market Analysis System of Shengyi Society, the domestic polyester staple fiber market has experienced a slight decline since mid November. As of November 28th, the average price of 1.4D * 38mm in mainstream factories in Jiangsu and Zhejiang was 7176 yuan/ton, a decrease of 0.92% from November 12th. Cost fluctuations have weakened, providing insufficient support for the cost of polyester staple fibers. The company has sufficient supply of circulating goods, resulting in relatively weak downstream demand and weakened supply and demand, leading to a fluctuating decline in staple fiber prices.

In the international crude oil market, with the easing of geopolitical issues in the Middle East and a slight decline in crude oil prices, the support for PTA costs has slowed down. As of November 26th, the settlement price of the main contract for WTI crude oil futures in the United States was $68.77 per barrel, and the settlement price of the main contract for Brent crude oil futures was $72.81 per barrel.

Since November, there has been an increase in domestic PTA supply, with over 10 million tons of PTA plants being restarted one after another, and the current industry operating rate is close to 90%. The new PTA production capacity of 2.7 million tons in the East China region is also about to be put into operation, and the PTA supply is still abundant, which is bearish on spot prices. According to the Commodity Market Analysis System of Shengyi Society, as of November 28th, the average market price in East China was 4741 yuan/ton, a decrease of 3.24% from the beginning of the month.

The overall performance of the terminal textile industry is poor, and the industry demand is still in the traditional off-season. Downstream yarn mills maintain their demand for essential purchases. In terms of orders, domestic autumn and winter orders are coming to an end, and the enthusiasm for raw material stocking is insufficient. The demand for foreign trade orders still exists, but it has narrowed compared to the same period last year.

Business analysts believe that the cost side is weakening and adjusting, downstream purchases continue to be cautious, and market fundamentals lack upward drivers. Therefore, the price of polyester staple fibers may continue to adjust downward.