Chemical sector products are still sluggish

As of early December 2012, the chemical sector witnessed a significant downturn in the market, with product prices continuing to show a relatively weak performance. Rumors suggest that the export tariff for urea may decrease to 5% next year, and the benchmark price could rise to 2,260 yuan/ton, potentially boosting market confidence. Additionally, the gradual resumption of Dongcun's operations and the stabilization of natural gas prices remain key concerns for the market moving forward. Key Points:

Chemical Product Prices: Persistent Decline. Out of the 122 chemical products we monitor, 23 saw increases this week, rising from 16.39% last week to 18.85%. The number of declines was 34, dropping from 34.43% last week to 27.87%. Chemical product prices continued to decline. Products that saw more than a 5% increase this week include natural gas (New York spot), diesel, and others. No product experienced a decline exceeding 5%.

Crude Oil: International oil prices fluctuated at high levels. WTI: $88.91/barrel, +0.71%; Brent: $111.23/barrel, -0.31%. Factors influencing oil prices include the better-than-expected economic sentiment index in Europe, Germany approving new aid measures for Greece, and unexpected drops in U.S. crude oil inventories, coupled with rising inventories in the Cushing region. Long-term trends should focus on global economic growth, OPEC supply, and European debt issues.

Eastern China: +RMB 200/ton, up 33.33%. Prices in eastern China continued to rise this week, though the trading atmosphere remained subdued. Chlor-alkali enterprises have lower startup loads, easing the oversupply situation, but downstream demand hasn't significantly improved. Demand for certain products remains sluggish. Price increases are primarily driven by business activity. Currently, the Shandong region has seen price decreases, and we anticipate price consolidation dominating next week.

Dichloromethane (Eastern China): 3,000 yuan/ton, +3.45%. The increase in methylene chloride prices this week was supported by low operating rates and raw material costs. Downstream demand remains weak. On the equipment front, Jiangsu Liwen’s 160,000-ton/year facility will resume operations in early December, and the Jinling 200,000-ton/year plant is set to restart around the same time. Given these developments, we anticipate potential downward pressure on prices in the near future. Overall, we believe methylene chloride prices may decline next week.

Acrylonitrile: 12,600 yuan/ton, +3.28%. Domestic acrylonitrile markets were stimulated this week by production cuts announced by manufacturers. Reports indicate that Jilin Petrochemical plans to shut down a production line around the 3rd, while an East China-based acrylonitrile plant with 260,000 tons/year capacity will reduce output next month. Additionally, Taiwan Formosa Plastic's 140,000-ton/year capacity is scheduled for closure in January. On the demand side, there is no significant interest yet. Moving forward, acrylonitrile prices are likely to stabilize, with a focus on production decisions by manufacturers.