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Downstream demand is average, and baking soda market is weak

1、 Price trend

 

According to the Commodity Market Analysis System of Shengyi Society, the average market price of baking soda on August 12th was 2060 yuan/ton. On August 11th, the baking soda commodity index was 139.91, unchanged from yesterday, a decrease of 40.68% from the highest point of 235.84 points during the cycle (2021-11-10), and an increase of 58.50% from the lowest point of 88.27 points on December 22, 2020. (Note: Cycle refers to September 1, 2020 to present)

 

2、 Market analysis

 

According to the commodity analysis system of Shengyi Society, the price of baking soda is running weakly, and the company’s shipments are still acceptable. The price of baking soda in Henan region is declining, with a factory price of around 1500-1600 yuan/ton. Due to poor downstream demand, it is expected to operate weakly in the later stage. Upstream: According to the commodity analysis system of Shengyi Society, the price of soda ash has been running weakly this week. The current average market price is 1874 yuan/ton.

 

Business analysts believe that the price of baking soda has been weak recently, and the upstream raw material soda ash has been weak recently. Downstream industries such as pharmaceuticals, textiles, and food have been purchasing on demand recently, with average demand enthusiasm and a supply-demand game. It is expected that the price of baking soda will be weak in the later stage, depending on downstream market demand.

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Macro impact: Nickel prices fluctuated downward in early August

1、 Trend analysis

 

According to the monitoring of nickel prices by Shengyi Society, the upward trend of nickel prices this week (8.1-8.9) was not maintained and fluctuated downward again. As of the weekend, the spot nickel price was 131666 yuan/ton, a decrease of 1.14% from the first day and a year-on-year decrease of 24.54%.

 

According to the weekly rise and fall chart of Shengyi Society, in the past 12 weeks, nickel prices have fallen 9 times and risen 3 times, with overall nickel prices weakening and showing signs of rebound.

 

Nickel industry chain

 

Macroscopically, the US manufacturing PMI value for July was 46.4, lower than market expectations and has been shrinking for 9 consecutive months. China’s manufacturing PMI value for July was 49.4%, slightly down 0.1 percentage points from the previous month. The US non farm payroll report for July was weak, coupled with a series of weak financial reports released by US technology giants. Concerns about global economic growth anxiety and weak demand affected the market trend. However, the number of initial jobless claims in the US only decreased narrowly than expected, and various institutions predicted that the Federal Reserve would cut interest rates in September, stabilizing market sentiment. The US stock market also rose sharply on Thursday, causing a wide range of fluctuations in the impact on nickel.

 

On the supply side, Indonesia’s nickel exports significantly increased in the first half of the year, with a total volume of 805000 tons and an annual growth rate of 20.7%. Under long-term supply pressure, several nickel mining projects in Australia have gradually reduced or stopped production. LME nickel inventory continues to rise. As of August 9th, LME nickel inventory reached 112404 tons, the highest level since December 2021. Shanghai nickel inventory is 16499 tons, showing a continuous downward trend. In July 2024, the national refined nickel production reached 28900 tons, a month on month increase of 8.2% and a year-on-year increase of 33.87%. In July, the national production of nickel sulfate was 27800 metal tons, and the national physical ton production was 126200 physical tons, a decrease of 9% month on month and 29.7% year-on-year. In July, the national production of nickel pig iron was 29900 tons of nickel, with 737000 physical tons. The physical tons increased by 10.69% month on month, and the metal tons increased by 6.43% month on month.

 

In terms of demand:

 

Stainless steel needs to be neither too hot nor too hot. It is reported that the national stainless steel crude steel production in July 2024 was about 3.1838 million tons, a decrease of 1.44% month on month and 2.13% year-on-year. Affected by high temperatures, overall demand is weak, and stainless steel plants are beginning to reduce their load. With the expected peak season of “Golden September and Silver October” approaching, stainless steel production will improve in August.

 

The demand for ternary batteries has slowed down. The installation of lithium batteries in June 2024 reached 43GWh, a year-on-year increase of 30%. 11 GWh of ternary batteries were loaded onto the vehicle, accounting for 26%; The installed capacity of lithium iron phosphate batteries is 32GWh, accounting for 74%, while the growth of ternary batteries has slowed down compared to the previous period. From January to June, 203G of lithium batteries were installed, a year-on-year increase of 34%.

 

Market forecast: Business analysts believe that the trend of the metal market is easily affected by macro factors, and the negative sentiment on the macro level may gradually weaken. There is an oversupply of international nickel, but domestic nickel inventory in Shanghai has weakened, and domestic demand expectations are slowly improving. It is expected that nickel prices will fluctuate and rebound.

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BDO market continues to decline

According to the Commodity Market Analysis System of Shengyi Society, from July 29th to August 2nd, the average price of BDO in China fell from 8942 yuan/ton to 8842 yuan/ton, with a price drop of 1.12% during the period and a year-on-year decline of 20.13%. Recently, some devices have been shut down for maintenance and replacement, resulting in a decline in the overall operating rate of the industry. But the downstream industry load has also decreased, resulting in a reduction in the digestion of raw materials. Manufacturers holding goods are under pressure to ship, and negotiations for discounts on actual orders are underway to promote sales. The market center of gravity is fluctuating downward.

 

On the supply side and in terms of equipment, the industry’s capacity utilization rate has decreased, and suppliers are mainly inclined to maintain prices. The supply of BDO is affected by favorable factors.

 

In terms of cost, raw material calcium carbide: there has been a significant increase in the supply of calcium carbide, and there has been a noticeable recovery and improvement in the operation of supporting calcium carbide equipment. At the same time, the early maintenance of the calcium carbide furnace has been completed, resulting in an overall increase in supply. The calcium carbide market is running abnormally low. Raw material methanol: The methanol market is experiencing a narrow consolidation. As of 10:00 am on August 2nd, the domestic methanol Taicang price is 2510 yuan/ton. The cost impact of BDO is mixed.

 

On the demand side, although the downstream PTMEG industry has slightly increased with the increase of maintenance equipment load, and the TPU and PU slurry load in the polyurethane field has also increased, the second largest downstream PBT industry has experienced a significant decline in load due to the impact of some equipment load reduction production. The demand side has reduced the amount of raw material digestion, and the supply-demand contradiction still exists. At the same time, downstream industries such as THF, PBT, GBL, PBAT are experiencing a decline in market conditions, leading to poor transmission of industrial chain costs and severe pressure on raw material prices. The demand side of BDO is affected by bearish factors.

 

Market forecast shows that some maintenance equipment will operate at a reduced load after restarting, leading to an increase in market supply. Downstream industries are experiencing both negative and negative impacts, and overall demand has also increased. However, the supply-demand imbalance continues, putting pressure on manufacturers’ shipments. Business analyst BDO predicts that the domestic BDO market will mainly operate weakly.

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Aluminum prices remain weak in July and may stabilize in August, showing signs of stabilization

Aluminum prices fell by 5.68% in July

 

Aluminum prices continued to decline in July. According to the Commodity Market Analysis System of Shengyi Society, the average price of domestic aluminum ingots in the East China market on July 31, 2024 was 18986.67 yuan/ton, a decrease of 5.68% from the market average price of 20130 yuan/ton at the beginning of the month (July 1).

 

Reasons for the decline in July

 

1. Overseas economic data has hit hard on expectations of interest rate cuts, and the market no longer fully expects the Federal Reserve to cut interest rates in November. At the macro level, international commodity prices have been suppressed, and non-ferrous metal prices have retreated.

 

2. Weakening overseas data triggers recession expectations, while CPI data gradually raises market expectations of a weakening US economy. The Federal Reserve’s Beige Book shows that businesses expect future growth to slow down and the labor market to remain weak. The production of primary processed aluminum products in the United States has decreased, and the demand for aluminum ingots has maintained a low season performance.

 

On the domestic front, the economic data for the second quarter was released, with a GDP of 4.7%, which was lower than expected. Domestic downstream inventory replenishment and falsification, and inventory removal is not smooth. As of July 29th, the inventory of electrolytic aluminum in major domestic markets was 795000 tons, unchanged from the inventory of 795000 tons on June 3rd; Compared to July 1st, the inventory was 762000 tons, with a cumulative inventory of 33000 tons.

 

Summary of favorable factors in August

 

1. Domestic macro factors: Recently, the central bank has taken frequent easing measures, such as lowering the quoted interest rates for one-year and five-year loan markets. Subsequently, several banks announced the reduction of deposit interest rates, and some banks in Shanghai and Beijing began to lower mortgage interest rates. The National Development and Reform Commission and the Ministry of Finance issued the “Several Measures on Strengthening Support for Large scale Equipment Renewal and Consumer Goods Trade in”, and arranged about 300 billion yuan of ultra long-term special treasury bond funds for support.

 

Currently, the price of aluminum ingots has fallen to near the marginal cost, and the upstream raw material market is tight, which provides some support for the price.

 

Supply and demand dynamics in August

 

The Yunnan and Inner Mongolia projects have completed their resumption of production, and a factory in Sichuan plans to resume production of 12.5W by the end of July, with a planned duration of two months. The import window is currently closed.

 

Aluminum prices may stabilize and stop falling in August

 

At present, aluminum prices have fallen below the level of 19000 yuan, and downstream acceptance has increased. It is expected that aluminum prices may stabilize and stop falling in August.

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Strong supply, weak demand. Copper prices slightly decline in July

1、 Trend analysis

 

According to monitoring data from Business Society, there was a high volatility followed by a decline. As of the end of the month, the copper price at the beginning of the month was 77831.67 yuan/ton. At the end of the month, the copper price fell to 73223.33 yuan/ton, with an overall decline of 5.92% and a year-on-year increase of 6.11%.

 

According to the current chart of Shengyi Society, copper futures prices in July were mostly higher than spot prices, and the main contract is the expected price two months later. The overall copper price is bearish in the future.

 

According to LME inventory, LME copper inventory increased significantly in July. As of the end of the month, LME copper inventory was 239400 tons, up 32.96% from the beginning of the month, hitting a new low in recent years.

 

Macroscopically, the US S&P Global Manufacturing PMI fell to 49.5 in July. The European and American regions have released the Purchasing Managers’ Index (PMI) for the manufacturing industry, which shows that the index is lower than expected and previous values, triggering market concerns about the possibility of overseas economies falling into recession. The pessimistic sentiment in the global financial market continues to ferment, and China’s important conference has not released the stimulus policies expected by the market, which has dampened investor confidence. But the actual GDP of the United States in the second quarter was 2.8%, higher than expected and previous values, easing pessimistic sentiment towards demand.

 

On the supply side, domestic copper production steadily increased in June, reaching 1.005 million tons, a year-on-year increase of 9.5%. The estimated production for July is 1.00166 million tons. Domestic electrolytic copper smelting enterprises have not been affected by the shortage of copper mines, and their production has increased instead of decreased. The maintenance period of domestic smelters has come to an end. After the early maintenance enterprises resumed production, they began to ramp up production, while other smelters were producing normally, resulting in a month on month increase in production.

 

Downstream: The flat demand for cables has limited consumer demand, and the sustained high copper prices have put significant pressure on terminal consumption. Even if the copper price drops in July and stimulates a rebound in cable consumption, it will be difficult to effectively generate consumer demand in August. The domestic air conditioning industry has shown positive production and sales performance in the first half of this year. July has clearly entered the off-season for air conditioning industry production, and August remains the off-season for air conditioning industry production and sales. The characteristics of the off-season will continue. The overall production and sales performance of the domestic automotive industry is better than previous years, and the production of new energy vehicles has continued to rebound since March, driving the overall performance of the automotive industry.

 

Imports: The import volume of unprocessed copper and copper materials in China in June was 436000 tons, and the import volume of unprocessed copper and copper materials from January to June was 2.763 million tons, a year-on-year increase of 6.8%.

 

According to the annual price comparison chart of Shengyi Society, in the past five years, copper prices have fallen more than risen in July.

 

The largest copper mine strike

 

The mining giant BHP’s Escondida copper mine in Chile is the world’s largest copper mine, and its union is calling on its nearly 2400 members to reject the company’s final contract offer and prepare for a strike.

Based on the above situation, the expectation of the Federal Reserve cutting interest rates is expected to strike again, and the volatility of the US dollar may increase in August. Fundamentally, refineries will once again face pressure on raw material supply. In terms of demand, the off-season characteristics of consumption are obvious. Except for the stable demand in the automotive industry, other terminal copper ports are difficult to have substantial demand pull. The insufficient increment and frequent disturbances on the supply side, as well as the growth in demand for new energy and overseas infrastructure, have limited the potential for a deep decline in copper prices. Short term copper mine disturbance, copper prices may rebound at a low level, but overall demand is limited, and it is expected that copper prices will mainly fluctuate within the range in August.

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