The tight spot situation may continue to supply, which is beneficial for the operation of maleic anhydride prices
2023/9/15
The variety of resin industry chain has shown an upward trend, and the increase has significantly expanded compared to the beginning of the third quarter. Among them, the top three varieties with the highest increase are maleic anhydride, crude benzene, and styrene, all of which have increased by over 39%, with the highest increase of 45.85%. And other varieties have also increased to varying degrees.
The main drivers of this upward trend are costs and supply side performance. The continuous strength of crude oil in September provided support for the performance of chemical products, with bulk commodities showing a trend of rising. As we enter the downstream stocking period, there will be incremental demand, which will also drive prices.
Since September, the increase in resin raw material maleic anhydride has further expanded, exceeding market expectations. However, the tight supply pattern of maleic anhydride is still in the preparation period, and it is difficult to change. Apart from supply side support, there is still positive support to be released in other aspects.
Linkage or persistence between crude oil and chemicals
As shown in Table 2, American Oil has increased by 26.84% compared to the beginning of the third quarter. Since around September, news of crude oil production cuts has continued to drive oil prices, while Saudi Arabia has extended additional production cuts and Russia has reduced supply, all of which are positive for oil prices. In addition, OPEC's monthly report is optimistic about the demand outlook for this year and next, or there is still a boost to oil prices. Currently, oil distribution has reached above $90. During the traditional golden nine silver ten peak season, the linkage between domestic chemicals and crude oil has significantly improved, so there is still support for bulk commodities under the strong trend of oil prices, and there may still be positive guidance in the future.
In addition, as the fuel demand season approaches, crude oil and liquefied gas prices are expected to be supported. Pay attention to the subsequent performance of oil prices and the guidance of Saudi CP prices on domestic n-butane prices.
The supply pattern is still difficult to break
The operating rate of the maleic anhydride industry and the operating rate of the butane process in 2023 have not changed significantly compared to the same period in 2022. According to monitoring, the operating capacity of butane based maleic anhydride in September 2023 was around 1.2 million tons, while the operating capacity of maleic anhydride in September 2022 was around 1.1 million tons. Therefore, the actual increase in maleic anhydride production capacity in 2023 did not meet expectations.
At present, as the stock market continues to enter the market during the preparation period, the price of maleic anhydride has been pushed up again, making it difficult to inquire about spot goods on the market, and the low position of holders' positions, the order execution cycle of maleic anhydride factories is still extended. From the current supply pattern of maleic anhydride, it is difficult for new production capacity to enter from September to October. Although new production capacity in Hebei is about to heat up and operate, it still needs to be operated and debugged, and it is difficult to release spot goods to the market in September; Although there is a possibility of increasing the load of the new equipment in Henan or continuing the operation of the third line, Qixiang Tengda started parking 100000 tons in early October, reducing the impact of local supply increments. Therefore, the supply pattern is temporarily difficult to break, and the tight spot supply of maleic anhydride in September is likely to continue.
The key factor that will affect the operation of the industrial chain in the future is still demand
According to monitoring, in September, as the rise in raw materials expanded, UPR also gradually followed the increase in raw material prices, with an increase of 14.61% compared to the beginning of the third quarter, much lower than the increase in raw material prices. In September, the UPR industry started construction and approached 40% load, with a significant increase in load compared to 2022, and an increase in demand for maleic anhydride.
The significant increase in resin raw materials has led to a significant increase in resin production costs, although there have been signs of avoiding high price risks on the market. However, the current tight spot situation of maleic anhydride is likely to continue. With costs and supply still favorable for the operation of maleic anhydride prices, and the performance of chemical products such as crude oil boosting, the market price of maleic anhydride has reached a high point within the year. Against the backdrop of the difficulty in breaking the cost and supply side pattern in the short term, there is still good luck for maleic anhydride to rise. However, the continued increase in magnitude and cycle require attention to the sustainability of resin orders and the operating capacity after the increase in resin costs.
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