Crisis! Chemical giant warning! Fear of “cutting supply” risk!

Recently, Covestro announced that its 300,000-ton TDI plant in Germany was force majeure due to chlorine leakage and could not be restarted in the short term. It is tentatively expected to resume supply after November 30.

BASF, also located in Germany, was also exposed to the 300,000-ton TDI plant that was shut down for maintenance at the end of April and has not been restarted yet. In addition, Wanhua’s BC unit is also undergoing routine maintenance. In the short term, European TDI production capacity, which accounts for nearly 25% of the world’s total, is in a vacuum state, and the regional supply and demand imbalance is exacerbated.

The “lifeline” of transportation capacity was cut off, and several chemical giants gave an emergency warning

The Rhine River, which can be called the “lifeline” of the European economy, has dropped water levels due to high temperatures, and some key river sections are expected to be unnavigable from August 12. Meteorologists predict that drought conditions are likely to continue in the coming months, and Germany’s industrial heartland may also repeat the same mistakes, suffering more severe consequences than the historic Rhine failure in 2018, thereby exacerbating Europe’s current energy crisis.

The area of ​​the Rhine River in Germany reaches nearly one-third of Germany’s land area, and it flows through several of Germany’s most important industrial areas such as the Ruhr area. As much as 10% of chemical shipments in Europe use the Rhine, including raw materials, fertilizers, intermediate products and finished chemicals. The Rhine accounted for about 28% of German chemical shipments in 2019 and 2020, and the petrochemical logistics of chemical giants such as BASF, Covestro, LANXESS and Evonik are highly dependent on shipments along the Rhine.

At present, natural gas and coal in Europe are relatively tense, and this month, the EU’s embargo on Russian coal officially came into effect. In addition, there is news that the EU will also crack down on Gazprom. The continuous shocking news has sounded to the global chemical industry. As a wake-up call, many chemical giants such as BASF and Covestro have issued early warnings in the near future.

North American fertilizer giant Mosaic pointed out that global crop production is tight due to unfavorable factors such as the conflict between Russia and Ukraine, continued high temperatures in Europe and the United States, and signs of drought in southern Brazil. For phosphates, Legg Mason expects that export restrictions in some countries will likely be extended through the rest of the year and into 2023.

Specialty chemicals company Lanxess said a gas embargo would have “catastrophic consequences” for the German chemical industry, with the most gas-intensive plants closing production while others would need to reduce output.

The world’s largest chemical distributor, Bruntage, said rising energy prices would put the European chemical industry at a disadvantage. Without access to cheap energy, the mid- to long-term competitiveness of the European chemical industry will suffer.

Azelis, a Belgian specialty chemicals distributor, said there are ongoing challenges in global logistics, especially the movement of goods from China to Europe or the Americas. The U.S. coast has been plagued by labor shortages, slowing cargo clearance and a shortage of truck drivers in the U.S. and Europe affecting shipments.

Covestro warned that rationing of natural gas over the next year could force individual production facilities to operate at low loads or even shut down completely, depending on the extent of gas supply cuts, which could lead to the entire Collapse of production and supply chains and jeopardize thousands of jobs.

BASF has repeatedly issued warnings that if the supply of natural gas falls below 50% of the maximum demand, it will have to reduce or even completely shut down the world’s largest integrated chemical production base, the German Ludwigshafen base.

The Swiss petrochemical giant INEOS said that the cost of raw materials for its European operations is ridiculously high, and the conflict between Russia and Ukraine and the resulting economic sanctions against Russia have brought “great challenges” to energy prices and energy security in the entire European chemical industry.

The problem of “stuck neck” continues, and the transformation of coatings and chemical industry chains is imminent

The chemical giants thousands of miles away have frequently warned, setting off bloody storms. For domestic chemical companies, the most important thing is the impact on their own industrial chain. my country has strong competitiveness in the low-end industrial chain, but is still weak in high-end products. This situation also exists in the current chemical industry. At present, among more than 130 key basic chemical materials in China, 32% of the varieties are still blank, and 52% of the varieties still rely on imports.

In the upstream segment of coatings, there are also many raw materials selected from overseas products. DSM in the epoxy resin industry, Mitsubishi and Mitsui in the solvent industry; Digao and BASF in the defoamer industry; Sika and Valspar in the curing agent industry; Digao and Dow in the wetting agent industry; WACKER and Degussa in the titanium dioxide industry; Chemours and Huntsman in the titanium dioxide industry; Bayer and Lanxess in the pigment industry.

Soaring oil prices, natural gas shortages, Russia’s coal embargo, urgent water and electricity supplies, and now transportation is also blocked, which also directly affects the supply of many high-end chemicals. If imported high-end products are restricted, even if not all chemical companies will be dragged down, they will be affected to varying degrees under the chain reaction.

Although there are domestic manufacturers of the same type, most high-end technical barriers cannot be broken through in the short term. If companies in the industry are still unable to adjust their own cognition and development direction, and do not pay attention to scientific and technological research and development and innovation, this kind of The problem of “stuck neck” will continue to play a role, and then it will be affected in every overseas force majeure. When a chemical giant thousands of miles away has an accident, it is inevitable that the heart will be scratched and the anxiety will be abnormal.

Oil prices return to the level of six months ago, is it good or bad?

Since the beginning of this year, the trend of international oil prices can be described as twists and turns. After the previous two waves of ups and downs, today’s international oil prices have returned to fluctuating around $90/barrel before March this year.

According to analysts, on the one hand, the expectation of weak economic recovery in overseas markets, coupled with the expected growth in crude oil supply, will restrain the rise of oil prices to a certain extent; on the other hand, the current situation of high inflation has formed a positive support for oil prices. In such a complex environment, the current international oil prices are in a dilemma.

Market analysis institutions pointed out that the current situation of shortage of crude oil supply is still continuing, and the bottom support of oil prices is relatively stable. However, with the new progress in the Iran nuclear negotiations, the market also has expectations for the lifting of the ban on Iranian crude oil products into the market, which further leads to pressure on oil prices. Iran is one of the few major oil producers in the current market that can significantly increase production. The progress of the Iran nuclear deal negotiation has become the biggest variable in the crude oil market recently.

Markets focus on Iran nuclear deal talks

Recently, concerns about the prospect of economic growth have put pressure on oil prices, but the structural tension on the oil supply side has become the bottom support for oil prices, and oil prices are facing pressure on both ends of the rise and fall. However, the negotiations on the Iranian nuclear issue will bring potential variables to the market, so it has also become the focus of attention of all parties.

Commodity information agency Longzhong Information pointed out that the negotiations on the Iranian nuclear issue are an important event in the crude oil market in the near future.

Although the EU has stated that it will continue to advance the Iran nuclear negotiations in the next few weeks, and Iran has also stated that it will respond to the “text” proposed by the EU in the next few days, the United States has not made a clear statement on this, so there is still uncertainty about the final negotiation result. Therefore, it is difficult to lift the Iranian oil embargo overnight.

Huatai Futures analysis pointed out that there are still differences between the United States and Iran on key negotiation terms, but the possibility of reaching some kind of interim agreement before the end of the year is not ruled out. The Iran nuclear negotiation is one of the few energy cards that the United States can play. As long as the Iran nuclear negotiation is possible, its impact on the market will always exist.

Huatai Futures pointed out that Iran is one of the few countries in the current market that can significantly increase production, and the floating position of Iranian oil by sea and land is nearly 50 million barrels. Once the sanctions are lifted, it will have a greater impact on the short-term oil market.