Last week, the domestic chemical products market in China continued to decline, with the overall downward trend expanding further compared to the previous week. Among the 20 monitored varieties by Guanghua Trading, 3 products experienced an increase in price, 11 products saw a decrease, and 6 remained unchanged.

Looking at the international market, last week, the international crude oil market experienced volatile rebounds. This was primarily influenced by the decrease in US commercial crude oil inventories, the upcoming peak summer travel season in the US, the positive expectations for fuel demand during the summer, and the continued production cuts by OPEC+. These factors contributed to a rapid rebound in the international crude oil market. As of May 26th, the settlement price for the main contract of US WTI crude oil futures was reported at $72.67 per barrel, an increase of $1.12 per barrel compared to May 19th. The average weekly price was $72.77 per barrel, a week-on-week increase of $1.13 per barrel. The settlement price for the main contract of Brent crude oil futures was reported at $76.95 per barrel, an increase of $1.37 per barrel compared to May 19th. The average weekly price was $76.86 per barrel, a week-on-week increase of $1.15 per barrel.

In the domestic market, although the international crude oil market showed strength due to support from the fundamental factors last week, concerns over the US debt crisis and pessimistic economic prospects, as well as the sluggish trend in the coal market and limited cost support, weighed on the domestic chemical product market, leading to insufficient rebound momentum. Additionally, the overall demand for domestic chemical products remained sluggish, especially with no significant improvement in the export market, which also hindered the market trends in the domestic chemical product market.

According to the monitoring data from Guanghua Trading, the price index of chemical products in South China continued to decline last week. As of last Friday, the price index for chemical products in South China was 1061.36 points, a decrease of 2.19% compared to the previous period. Among the 20 classification indexes, three indexes (mixed aromatics, toluene, and xylene) increased, while 11 indexes (PX, caustic soda, pure benzene, propylene, caustic soda flakes, polypropylene, BOPP, formaldehyde, styrene, ethylene glycol, and TDI) decreased. The remaining indexes remained stable.

Partial Category Index Trends

1. Methanol

Last week, the methanol market experienced an accelerated decline. The continuous downturn in the coal market since last week, coupled with collapsing cost support, put pressure on the methanol market and intensified the downward trend. Additionally, the restart of maintenance units and increased supply further strengthened the bearish sentiment in the market, contributing to the decline. Despite some restocking demand after days of decline, overall market demand remained weak, especially as the downstream entered the seasonal off-peak period, resulting in a persistent sluggishness in the methanol market.

As of the afternoon of May 26th, the price index for the methanol market in South China stood at 933.66 points, a decrease of 7.61% compared to the previous Friday (May 19th).

2. Caustic Soda

Last week, the domestic liquid caustic soda market experienced initial increases followed by declines. At the beginning of the week, the market sentiment improved due to maintenance of chlor-alkali units in North China and East China, increased demand for stockpiling at the end of the month, and low liquid chlorine prices, leading to a rebound in the mainstream market. However, the improvement was short-lived, as downstream demand did not substantially improve, limiting the overall market's upward momentum.

For solid caustic soda, the market trend was mainly upward. The continuous decline in market prices stimulated some downstream players to replenish their inventories at low prices, resulting in improved shipments from manufacturers and boosting the market for solid caustic soda. However, as prices continued to rise, market demand was once again restrained, and the mainstream market struggled to sustain higher prices.

As of May 26th, the price index for caustic soda in South China stood at 1175.02 points, a decrease of 0.09% compared to the previous Friday (May 19th).

3. Ethylene Glycol

Last week, the domestic ethylene glycol market experienced an accelerated decline. With the increase in operating rates in the ethylene glycol market and growing port inventories, overall supply significantly increased, intensifying the bearish sentiment in the market. Additionally, the lackluster performance of the commodity market last week further contributed to the increased downward pressure on the ethylene glycol market.

As of May 26th, the price index for ethylene glycol in South China stood at 685.71 points, a decrease of 3.45% compared to the previous Friday (May 19th).

4. Styrene

Last week, the domestic styrene market continued to decline. Despite a slight rebound in the international crude oil market at the beginning of the week, prevailing market pessimism and a bearish outlook for the domestic chemical market exerted pressure on the styrene market, leading to a continued decline. In particular, the bearish sentiment in the market regarding the domestic chemical market increased selling pressure on the styrene market, and the mainstream market trend continued to decline.

As of May 26th, the price index for styrene in South China stood at 893.67 points, a decrease of 2.08% compared to the previous Friday (May 19th).

Market Outlook

Although US inventories saw a significant decline this week due to strong summer demand and the positive impact of OPEC+ production cuts, the unresolved US debt crisis and persistent expectations of an economic recession in Europe and the US may have a negative impact on the international crude oil market. It is expected that there will still be downward pressure on the international crude oil market. In the domestic market, the international crude oil market lacks upward momentum, and limited cost support may result in a weak and volatile trend in the domestic chemical market. Additionally

, as some downstream sectors enter the seasonal off-peak period, overall demand for chemical products remains weak. Therefore, the rebound potential of the domestic chemical market is expected to be limited.

1. Methanol

Recent planned maintenance by manufacturers such as Xinjiang Xinye, coupled with the restart of several units from Zhonghai Chemical, Shaanxi, Inner Mongolia, and other regions, has led to sufficient supply in the domestic market, which is not favorable for the methanol market. In terms of demand, the enthusiasm for the start-up of major olefin units is not high but remains stable. Demand for MTBE, formaldehyde, and other products has increased slightly, but overall demand growth is slow. Considering the ample supply and the difficulty of demand catching up, the methanol market is expected to remain weak and volatile.

2. Caustic Soda

For liquid caustic soda, there is upward momentum in the domestic market. The positive impact of maintenance by some manufacturers in Jiangsu Province has provided upward momentum for the liquid caustic soda market. However, the limited enthusiasm of downstream players to receive goods may weaken the support for the liquid caustic soda market, limiting the upward trend in the mainstream market.

For solid caustic soda, the upward trend in the market is limited. Although some manufacturers' shipment prices have shown signs of pushing higher, the actual transaction situation may restrain the upward trend in the mainstream market, thus limiting the market trend.

3. Ethylene Glycol

The ethylene glycol market is expected to continue its weak trend. The limited upward trend in the international crude oil market, coupled with limited cost support, and an increase in supply expectations due to the restart of maintenance units, are all negative factors for the ethylene glycol market. In terms of demand, the polyester start-up situation is positive, but the pace of growth is slow, and the overall market lacks upward momentum.

4. Styrene

The outlook for the styrene market indicates limited upside potential. The weak trend in the international crude oil market, along with a weak market for pure benzene and styrene, and limited cost support, contribute to the limited upward momentum. With little change in overall supply and demand, the styrene market is expected to experience minor fluctuations as the main trend.

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