Recently, the price of chemical products has risen: There are many varieties and large ranges. In August, the prices of chemical products have begun to rise. Among the 248 chemical product prices we tracked, 165 products increased in price with an average increase of 29.0%, and only 51 products fell in price with an average decrease of 9.2%. Among them, the prices of pure MDI, butadiene, PC, DMF, styrene and other products have risen sharply.

The demand for chemical products usually has two peak seasons, namely March-April after the Spring Festival and September-October in the second half of the year. The historical data of the China Chemical Product Price Index (CCPI) from 2012 to 2020 also verifies the law of operation of this industry. And like this year, product prices have continued to rise since August, and entered a year of unabated enthusiasm in November, only 2016 and 2017 driven by supply-side reforms.

Crude oil prices play a pivotal role in the pricing of chemical products. Generally, the prices of chemical products generally rise and fall in line with the fluctuations in crude oil prices. However, in the process of the price increase of chemical products, crude oil prices have basically remained volatile, and the current crude oil prices are still lower than the prices in early August. Looking back in the past 9 years, the price of chemical products and crude oil have deviated significantly only 5 times, most often in the peak or bottom shock period, and the prices of crude oil have risen while the prices of chemical products have remained flat or down. Only this year is the price of chemical products rising sharply, while the price of crude oil fluctuates. Under such circumstances, the rise in chemical product prices has mostly increased the profits of related companies.

Chemical companies are usually one of the links in the industrial chain, and most of their upstream or customers are also chemical companies. Therefore, when the product price of enterprise A rises, the cost of enterprise B, which is a downstream enterprise, will also increase. Faced with this situation, company B either cuts production or suspends production to reduce purchases, or raises the price of its own products to shift the pressure of rising costs. Therefore, whether the price of downstream products can rise is an important basis for judging the sustainability of the price rise of chemical products. At present, in multiple industrial chains, the price of chemical products has begun to spread smoothly.

For example, the price of bisphenol A drives up the price of PC, silicon metal drives the price of organic silicon, which drives the price of rubber compounds and other products, the price of adipic acid drives the price of slurry and PA66, and the price of pure MDI and PTMEG drives the price of spandex.

Among the 248 chemical product prices we tracked, 116 product prices were still lower than the price before the epidemic; compared with the same period last year, 125 product prices were lower than the same period last year. We use the average price of products in 2016-2019 as the central price, and 140 product prices are still lower than the central price. At the same time, among the 54 chemical product spreads we tracked, 21 spreads are still lower than the spreads before the epidemic; if compared with the same period last year, 22 product spreads are lower than the same period last year. We use the 2016-2019 average product spread as the central spread, and 27 product spreads are still lower than the central spread. This is consistent with PPI’s year-on-year and ring-on-quarter data results.