Metallurgy / Chemicals / Rubber & Plastics

According to the Coatings Purchasing Network, the recent "OPEC+" ministerial meeting has caused great fluctuations in the crude oil industry. In the midst of fierce debate, no agreement was reached on the increase in crude oil production in August. At the meeting that continued the next day, the negotiations fell into a deadlock, and no consensus was reached on the negotiations of major oil-producing countries to increase production.

Under the stubbornness of the UAE, OPEC+ had to stage the "dragging tactics" once again, which made the already nervous market tense again.

Crude oil prices hit a three-year high and production increases are almost certain

Muller, head of the Asia region of the Victor Group, said: No matter how the 0PEC+ production increase agreement is ultimately, it will certainly only meet a small part of the growing consumer demand. Saudi Energy Minister Abdul Aziz: Oil production should increase to meet the expected summer oil production decline.

In the past six months, the surge in oil prices is obvious to all. Coupled with the global recovery progressing slightly further, inventories are decreasing, and both ends of supply and demand are becoming increasingly balanced.

July 1: The terminal shows that the price of the main NYMEX crude oil contract has risen sharply, closing close to US$75 barrels;

July 2: Fall into shock, closing at $75.19/barrel;

July 5th: WTI crude oil futures fell by about $0.3 in a short-term at the beginning of the trading day, and are now reported to be $75.04/barrel, down 0.17%.

In the past six months or so, international oil prices have continued to rise. After Brent crude oil recovered to 35.74 USD on November 2, 2020, it fluctuated all the way. On March 8, 2021, it exceeded 70 USD/barrel in one fell swoop. On June 22, Brent crude oil hit a maximum of $75.77 per barrel, the highest level since October 2018.

The changes in the relationship between supply and demand of crude oil are very directly reflected in prices. At present, both Brent and WTI oil prices have stabilized above US$70/barrel. WTI oil prices have increased by nearly 80% in the past year, and the increase since the beginning of this year has also exceeded 50%.

Goldman Sachs Group Petroleum Analyst Damien Coulvarin: We believe that crude oil prices will continue to rise, rising to $80 in the short term, but I think it may continue to rise in the future.

Not only Goldman Sachs Group, including Trafigura, Vital and other world-renowned commodity traders have similar views. According to data from Bank of America, with the rebound in travel demand, the global benchmark crude oil price may rise to $100 per barrel next year.

Francisco Blanche, Global Head of Commodities and Derivatives at Bank of America Merrill Lynch: International oil prices are expected to rise sharply next year. Our expectation of US$100 per barrel is largely based on a comprehensive forecast of both supply and demand.

Rising crude oil prices result in a large number of chemical products

In addition to crude oil fluctuations, multiple factors such as rising raw materials and chip shortages will have certain impacts on enterprises and the market.

From the beginning of 2021 to the present, the raw material market has continued its upward trend. Driven by the continued high upward trend in the external market, the price of butadiene in China has risen to a new high during the year. In the same month, the butadiene market price rose from 7,458 yuan to 8,852 yuan/ton, an increase of 18.68%, and the price increased by 156.09% year-on-year, with the largest amplitude of 46.16% in the first half of the year.

The closing price of CFR China methanol was US$308.00-309.00/ton; the closing price of CFR Southeast Asia methanol market was US$363.50-364.50/ton, an increase of US$4/ton.

The US Gulf methanol market closing price was 111.00-112.00 cents/gallon; the FOB Rotterdam methanol market closing price was 320.00-321.00 Euro/ton, up 5 Euro/ton.

Shandong Hualu Hengsheng Group's isooctanol plant is operating normally. The ex-factory quotation is 16,000 yuan/ton, and the quotation has increased by 300 yuan/ton. The actual transaction price is mainly negotiated.

...

Fluctuations in supply and cost transmission of raw material price increases are suppressing downstream demand

There is a shortage of chips in various countries in the world. As the main raw material polysilicon, it can be regarded as a good market era. The price of silicon materials has experienced a 12-week upward trend. The price of single crystal double-feed materials has increased by 77.6%, and the price of single crystal dense materials has increased by 79.2%. The record high in the first half of the year was in April, when domestic polysilicon production was approximately 39,400 tons, an increase of 5.1% from the previous month. Given the shortage of silicon materials throughout the year, it is expected that the second half of the peak season is expected to hit higher prices.

All kinds of data show that the demand side is "recovering blood." In terms of price, this is an economic defense war. Only by considering the cost lock-in of crude oil and raw materials, can the dilemma be solved.