The impact of the Russia-Ukraine conflict continues to ferment, the energy crisis intensifies, oil prices take the lead, and market volatility intensifies.
The market is worried that the United States and the European Union may impose restrictions on Russian crude oil exports, and the global crude oil market is facing a sharp increase in the risk of supply disruptions. During yesterday’s session, both Brent and WTI crude oil prices hit their highest levels since July 2008, rising to US$139.13/barrel and US$130.50/barrel respectively. Affected by this, the average price of gasoline in the United States rose by 11% in a week, exceeding $4/gallon. As of early morning closing this morning, Brent crude oil closed up 4.3%, closing at US$123.21/barrel; WTI crude oil closed up 3.2%, closing at US$119.40/barrel;
Analysts believe that Russia is the world’s second largest crude oil producer, with an output of about 11 million barrels per day and an export volume of about 5 million barrels per day. It will be difficult to make up for such a large amount of exports in the short term after being restricted.
The market is worried about the escalation of sanctions against Russia. On the morning of March 7, it was reported that Speaker of the U.S. House of Representatives Nancy Pelosi sent a letter to members of the House of Representatives stating that the House of Representatives is currently considering formulating a “strong bill” to further isolate Russia from the global economy. The bill would ban the import of Russian oil and energy products to the United States and revoke normal trade relations with Russia and Belarus. The bill would also take the first step toward denying Russia access to the World Trade Organization and would also authorize the U.S. government to increase tariffs on Russian imports. The market panic caused by sanctions on Russia will also further intensify.
“Currently, sanctions have had an actual impact on the supply side of crude oil. Some buyers are afraid of the sanctions and are afraid to buy, while some want to buy but cannot. According to market feedback, some buyers have had problems with payment and ship supply. Encountering difficulties, some banks have stopped issuing letters of credit for refineries purchasing Russian crude oil. Correspondingly, we have seen the discount of Russian Urals crude oil to Brent spot reaching 20-30 US dollars per barrel.” Zhang Zhengze, a researcher at Guohai Liangshi Futures, said .
Market panic drives oil prices to continue to soar, which strongly drives crude oil varieties to “dance together” from the cost side.
On Monday, intraday crude oil followed the surge in international oil prices. SC crude oil, high-sulfur fuel oil, asphalt main contracts, low-sulfur fuel oil, and PTA main contracts all hit the daily limit, and the daily limit was closed in late trading. LPG and methanol main contracts rose more than 100%. 6%.
“The current oil price trend is a mirror reflection of the oil price trend during the epidemic in 2020. How pessimistic the price was at that time, how crazy the mood is now, but the destruction of substantive demand by high prices will not be absent, but will only be late.” Everbright Futures can Chemical director Zhong Meiyan said that for the industry, high costs have brought great damage to the resilience of the industrial chain. Product profits have turned from positive to negative. Once the fragility of the industrial chain breaks out, it will lead to a larger area of shutdown and production suspension. At present, the cost of chemical industry transactions is rising, and the price center has moved upward. However, due to different varieties, there are also large differences in the increase in this round.
According to Pang Chunyan, an analyst at SDIC Essence Futures, the current market rhythm is mainly in the energy sector. The absolute price of downstream products still mainly follows the oil price, but profits may continue to be squeezed. “Oil prices are rising rapidly due to geopolitical factors, and it is difficult to grasp the rhythm of the market outlook from fundamental analysis. Once oil prices turn around, chemical products may experience a significant round of negative effects due to weakening costs and declining demand. adjustments.”
The price focus of petrochemical products has shifted upward
The price of crude oil in the external market dominates the changes in the petrochemical system in the internal market. Yesterday, crude oil surged, and prices of asphalt, LPG and fuel oil were strong.
In Zhang Zhengze’s view, crude oil affects the prices of downstream petrochemical products more by raising the production costs of downstream petrochemical products and then reducing their supply.
Taking styrene as an example, driven by the cost of crude oil, the production cost of styrene integrated units continues to rise. The oil price is priced at US$120/barrel, and the production cost of styrene integrated units will reach 11,000 yuan/ton. There is a lag in the transmission of styrene prices to the downstream, resulting in compression of production profits and a decline in operating rates. Eventually, the impact on the cost side becomes a direct impact on the supply and demand side, driving up prices.
The reporter learned that at present, the core factor that dominates petrochemicals is the sharp rise in the cost of crude oil. However, the supply and demand conditions of each variety are different, resulting in differences in the intensity of the rise.
“In this round of rising prices in the oil and chemical industry, the overall increase in asphalt is relatively small. From a more intuitive inventory perspective, due to the current poor demand situation and supply schedule exceeding expectations, the asphalt factory inventory plus the total inventory in the company’s warehouse It is at a historical high for the same period of the year and has super-seasonal accumulation of inventory. Against this background of poor supply and demand, prices are rising more along with the rise in the cost side of the entire sector, and the driving force of its own supply and demand is limited.” Zhang Zhengze said.
“Relatively speaking, the increase in LPG is also smaller. The reason is that LPG is expected to enter the off-season for civil demand. At the same time, PDH equipment losses are increasing, the operating rate is expected to decline, chemical demand is marginally weakened, and LPG civil and chemical demand are weakening. Therefore. , LPG, as a product with weaker fundamentals in the oil and chemical sector, has a relatively small increase.” Liu Shunchang, an energy and chemical analyst at Nanhua Futures, said.
“The current market transactions are no longer a factor in the fundamentals of crude oil itself, but whether the war situation is expanding and whether sanctions areWhether it expands, therefore, oil price fluctuations will be dramatically amplified. “Zhong Meiyan said that what is more worrying about the future of oil and chemical products is the carrying capacity of the demand side. “From the current domestic macro policy, there are stable expectations, and the policy focus is also to stabilize demand. However, due to sharp fluctuations in raw material prices, profits in the industrial chain have been concentrated towards the upstream end, and the crowding-out effect of high prices on demand will gradually become clear. From the demand side, price increases lack sustainability. ”
In fact, the demand side of various oil chemical products is also differentiated. “So far, the demand side of asphalt has not improved significantly, the demand for styrene has maintained a seasonal increase, and the downstream operating loads of EPS, ABS, PS, etc. are all at seasonal highs; the traditional civil demand downstream of LPG has gradually entered the seasonal off-season, but Industrial demand, such as C4 downstream alkylation and MTBE demand, has seen a significant increase in operating rates due to the recovery of profits from early stage equipment.” Zhang Zhengze said that after prices have reached a relatively high level, attention needs to be paid to the basis spread of each variety, downstream profits and downstream Will there be any negative feedback?
Respondents generally believe that the future trend of the petrochemical industry still depends on the cost side – the “face” of crude oil.
“Taking into account the uncertainty of the political game, if the final outcome of the Iran nuclear negotiations does not go smoothly and Saudi Arabia fails to significantly increase production, oil prices will continue to rise sharply. At this time, the crude oil market rebalancing will have a negative impact on economic growth through oil prices continuing to rise sharply. This is achieved by negative feedback and squeezing of consumption.” Liu Shunchang said that the current volatility of Brent May at-the-money options has risen to around 120%, a new high since the epidemic in 2020. The volatility of crude oil continues to increase, and attention must be paid to risk control. .
Similarly, Zhang Zhengze also believes that as oil prices continue to rise and the cost of petrochemicals rises, it is also necessary to pay attention to some possible reverse signals to prevent huge fluctuations after the rise.
The “three brothers” of polyester are dancing wildly, and the cost pressure is worrying
Driven by the surge in costs, the entire oil and chemical sector has risen sharply, and the polyester sector is no exception. Looking at the breakdown, yesterday, pure oil-based PTA performed the strongest, hitting the daily limit in the afternoon; ethylene glycol followed, with an increase of more than 5%, and the increase in downstream staple fiber lagged behind that of raw materials.
On Monday, PTA hit the daily limit many times and performed the strongest among the polyester sectors, mainly due to its strong fundamentals.
According to Zheshang Futures analyst Zhu Lihang, the PTA supply side has a large number of equipment maintenance in March and April, and the downstream polyester maintains high operation. PTA overall is in the rhythm of destocking, and the supply and demand pattern is good. Compared with ethylene glycol and staple fiber, PTA has no pressure to add new production capacity in the short term. As downstream operations continue to be put into production, the production capacity pattern is also constantly optimized. “Now that PTA processing fees are at a low level, the overall valuation level is low, and there are good supply and demand expectations, it is reasonable for the strong performance.”
“Ethylene glycol is a deeply loss-making product, and overseas units have reduced production a lot, so it may have a greater impact on imports; however, some domestic oil-processing units have been converted to production, and large-scale production reductions are still on the way. The coal-based route is currently well underway. Some units have annual maintenance arrangements.” Pang Chunyan said that overall, ethylene glycol has reversed the pattern of continued weakness due to the dual benefits of production cuts and soaring raw materials, but the profit recovery driver has not yet appeared, and port inventories are still rising. As a downstream product of PTA and MEG, short fiber is closer to end consumption. Under the current background of weak consumption, the price of short fiber has been weak. Therefore, with the surge in raw materials, the profits of short fiber have been passively squeezed.
In Pang Chunyan’s view, the entire industry chain shows that the closer to the upstream crude oil raw materials are, the stronger their performance will be, and the further down to the consumer end, the weaker their performance will be. Profits are concentrated in the upstream crude oil and naphtha sectors. PX, ethylene and downstream chemicals are in a comprehensive loss situation. The losses are intensifying with the strong rise in raw materials, and the profits of polyester products are also being squeezed.
With the sharp increase in the price of raw materials and the increase in polyester varieties, the profits of various polyester varieties have been significantly compressed. Except for DTY, filament yarns all showed a loss of 200-400 yuan/ton, short fiber cash flow also fell into losses, and bottle flake cash flow was still able to maintain relatively high profits.
During the interview, the reporter learned that high costs and weak demand have become important contradictions in the current polyester market. According to Dadi Futures analyst Jiang Shuopeng, after entering March, the performance of the downstream demand side of polyester is still relatively weak, weaker than expected. At present, terminal orders are still weak. There are only a small number of new domestic summer orders, large-volume orders have not been transmitted, and there is no obvious improvement in foreign orders.
“In March, during the rise in oil prices, polyester factories carried out periodic promotions, and there were some days when production and sales increased. However, overall, the willingness of downstream companies to chase the increase was not strong, and industrial chain inventories are still backlogged in the polyester segment. Although Now the operating rates of polyester and downstream have basically returned to high levels, but terminal orders are weak, which has hindered the cost transmission of the industrial chain.” Pang Chunyan said that the upstream and downstream of the industrial chain are in a state of severe torn. Although products are driven by costs, Prices are rising, but the difficulty of terminals accepting high prices may in turn restrict upstream production. For example, polyester factories whose inventories continue to rise and are forced to cut production will have a negative impact on raw materials.
In Jiang Shuopeng’s view, the current terminal performance remains weak, the polyester link maintains high inventory and low profits, and the inventory transfer in the industrial chain is still slow. If the factors of rising costs are excluded, the support for the continued upward trend in the price of the polyester industry chain may be relatively limited. .
“At this stage, polyester prices still mainly follow the fluctuations of oil prices, and the impact on supply and demand is relatively limited. If oil prices stabilize in the future, on the one hand, we must pay attention to whether downstream polyester can maintain a high operating rate, and on the other hand, we must pay attention to the supply-side maintenance news The landing situation.” Zhu Lihang said.
�The factor of rising costs may provide relatively limited support for prices in the polyester industry chain to continue to rise.
“At this stage, polyester prices still mainly follow the fluctuations of oil prices, and the impact on supply and demand is relatively limited. If oil prices stabilize in the future, on the one hand, we must pay attention to whether downstream polyester can maintain a high operating rate, and on the other hand, we must pay attention to the supply-side maintenance news The landing situation.” Zhu Lihang said.
</p
