The price of domestic mainstream urea market rose slightly this month: the price of urea rose from 2698.00 yuan/ton at the beginning of the month to 2780.00 yuan/ton at the end of the month, up 3.04%. Compared with the same period last year, it increased by 5.14% year-on-year.

The urea commodity index on January 29 was 128.37, which was the same as yesterday, down 15.73% from the cycle’s highest point of 152.33 (2022-05-15), and up 130.88% from the lowest point of 55.60 on August 17, 2016. (Note: the period refers to September 1, 2011 to now)

In January, the price of urea rose slightly, with a weekly maximum increase of 1.26%. From the manufacturer’s quotation, the domestic mainstream market price of urea rose and fell each other this month.

The upstream support is good, and the downstream demand is general

From the data of the upstream and downstream industry chain, the urea upstream products in this month appeared to be up and down: the price of liquefied natural gas rose first and then fell, and the price fell from 6176.00 yuan/ton at the beginning of the month to 5814.00 yuan/ton at the end of the month, a decrease of 5.86%, a year-on-year increase of 50.36% compared with the same period last year. The price of Yangquan anthracite (washing medium fast) rose first and then fell, rising from 1870 yuan/ton at the beginning of the month to 1880 yuan/ton at the end of the month, up 10 yuan/ton. The price of liquid ammonia dropped slightly, from 4673.33 yuan/ton at the beginning of the month to 4250.00 yuan/ton at the end of the month, down 9.06%, down 4.35% year on year. This month, the price of melamine in the downstream of urea was low, and the price was 8233.33 yuan/ton.

From the perspective of demand: agricultural demand increased slightly and industrial demand was normal. The operating rate of compound fertilizer plant is average, and the enthusiasm for urea procurement is average. The plate and melamine enterprises are generally started, and mainly need to purchase. From the perspective of supply: some units in Shanxi have started to resume production, and some gas head enterprises have stopped for maintenance. The daily output of urea is about 150000 tons. Urea rose slightly in the future.

Urea fell slightly in the future

In the first half of February, the urea market may fall mainly due to small fluctuations. Upstream anthracite and natural gas prices fell slightly, and cost support weakened. The downstream agricultural demand is general, and the industrial demand is normal. The daily output of urea is about 150000 tons, and the supply is tight. Urea may fall slightly in the future.

According to the data monitored by the Business News Agency, the PP market has been weak recently, the drawing brand has fallen in shock, and the fiber products have also declined. As of January 16, the mainstream price of T30S (wire drawing) offered by domestic producers and traders was around 7750 yuan/ton, up and down by – 1.38% compared with the average price at the beginning of the month.

Cause analysis

Industrial chain: in the upstream, the domestic propylene market of propylene has been rising steadily recently, and the refinery has been tentatively pushing up. Downstream stock preparation before the festival, there was a wave of purchase peak, the transaction atmosphere improved, the upstream stock flow was smooth, the inventory was effectively removed, and the price was tentatively pushed up. At the same time, cost support increased, further boosting market prices. It is expected that the propylene market in Shandong will run steadily in the short term.

The price of propylene rose steadily and was slightly stronger. Last week, PP cost side support was acceptable. In terms of industrial load, the maintenance downtime of PP polymerization enterprises increased recently, and the industrial load fell back to 81%. The supply of goods on the site is relatively sufficient, the inventory position has decreased, and the supply pressure has decreased. In terms of demand, the operating rate of the main downstream plastic knitting enterprises has decreased. The stock situation of terminal enterprises is not as expected, the market momentum is low, and the spot price is weak.

In terms of fiber materials, according to the data monitored by the Business Agency, as of January 16, the spot price of domestic fiber PP was generally flat. The mainstream quoted price of domestic producers and traders Z30S (fiber) is about 7866.67 yuan/ton, which is – 3.28% higher than the average price at the beginning of the month and – 4.65% lower than the same period last year. In the early stage, the load of downstream non-woven enterprises, the main force of PP fiber material, rose, and the demand of terminal enterprises tended to fall before the festival in the near future. The digestion speed of non-woven end products decreased, and the enterprise’s replenishment operation of fiber PP weakened due to the approaching holiday. It is expected to maintain weak consolidation operation in the short term.

In terms of melt-blown materials, the melt-blown PP market continued to fall last week. As of January 16, the average quotation of domestic melt-blown material sample enterprises monitored by the Business Society was about 10100 yuan/ton, which was – 9.28% higher than the average price at the beginning of the month and+6.05% higher than the same period last year. In terms of international health events, the disposal of health events in China was optimized last month, resulting in a large demand for masks. However, at present, the social consumption of medical melt-blown cloth materials is too much, and the recent demand tends to be flat. Domestic and overseas demand has not been significantly boosted. At present, the supply of melt-blown materials in the market is abundant for a long time, and the saturation of domestic melt-blown materials and cloth enterprises is high. Therefore, the price of melt-blown materials may fall back when the demand momentum slows down.

Aftermarket forecast

PP analyst of Business Agency believes that the polypropylene market fell last week. The market of raw material propylene is stable and rising, and the cost support is acceptable. As soon as the terminal enterprises gradually entered the pre-holiday mode, the intra-field trading began to weaken, and the buyers were cautious to wait and see. It is expected that in the short term, the PP market will continue to consolidate and operate due to the continuous delisting of the industry.

1、 Price trend

According to the monitoring data of the Business News Agency, the price of baking soda this week consolidated and operated. The average market price at the beginning of the week was 2527.5 yuan/ton, and the average market price at the weekend was 2525 yuan/ton. The price fell 0.1%, up 1.68% year on year. The baking soda commodity index on January 12 was 167.59, down 0.16 points from yesterday, down 28.94% from the cycle’s highest point of 235.84 points (2021-11-10), and up 89.86% from the lowest point of 88.27 points on December 22, 2020. (Note: the period refers to the period from September 1, 2020 to now)

2、 Market analysis

According to the business agency, the price of baking soda is temporarily stable, and the downstream market is in general demand recently. At present, the price of baking soda in Henan is about 2500-2700 yuan/ton. The current price of light soda ash in the upstream of baking soda in East China is about 2650-2750 yuan/ton in the mainstream market. The price of soda ash in North China is temporarily stable, and the current market price of light soda ash is about 2700-2800 yuan/ton. At present, the inventory of soda ash enterprises is low.

Demand: downstream medicine, textile and food have a general demand for baking soda. According to the monitoring data of the Business Agency, the price of soda ash was temporarily stable this week. The average market price of light soda ash at the beginning of the week and the weekend was 2664 yuan/ton, up 19.06% from the same period last year. In the downstream, medicine, textiles, and food are mostly purchased as needed. The supply and demand of the buyers and sellers play a game. From a comprehensive perspective, the price of baking soda can be maintained in a short term or in a consolidated operation, depending on the downstream market demand.

1、 Market review in 2022

Futures:

Figure 1: Trend chart of main contracts of natural rubber futures in 2022

goods in stock:

Figure 2: Trend of natural rubber spot commodity index in 2022

Figure 3: Monthly K histogram of natural rubber market in 2022

According to the data monitoring of the Business News Agency, the natural rubber and natural rubber market in 2022 is worse than that in previous years, and the downward trend is obvious. As shown in Figure 1-2, the mainstream market trend of domestic standard 1 in East China is in the reverse “√” shape, and the annual overall downward trend is 10.9%. The natural rubber starts to fluctuate from 13748 yuan/ton at the beginning of the year, first breaks through the 14000 yuan/ton mark in a small upward direction, and reaches the annual peak price of 14020 yuan/ton on the 12th; Then it continued the downward trend of repeated shocks for 10 months, until the end of October fell to the annual low of 11170 yuan/ton, which was close to 11000 yuan/ton, and then the shocks rebounded up 4.94% from the beginning of November, reaching the stage rebound high of 12420 yuan/ton on December 9, and then retreated until 12250 yuan/ton on December 31. Overall, the maximum amplitude of domestic standard price of natural rubber in 2022 is 20.33%.

Factor analysis:

Macro:

Figure 4: Trend of international crude oil mainstream market from January to December 2022

As shown in the figure, in 2022, the oil price showed an inverted “V” trend, and the annual amplitude of WTI and Brent crude oil exceeded 80%. The oil market showed a strong trend at the beginning of the year, and the Brent oil price rose to the highest point of 139 US dollars/barrel in the whole year under the influence of geopolitical risk premium and consumer resilience. The strong trend continued until the end of the second quarter. In the second half of the year, due to the negative macro outlook, the economic recession depressed demand expectations, and the “peak season” of oil product consumption, the risk premium accelerated to fall. Near the end of the year, the oil price basically returned to the level before the war between Ukraine and Russia. The oil market seeks to rebalance between low supply and weak demand. As of December 27, the price of WTI crude oil was 79.53 US dollars per barrel, up 5.74% for the whole year; Brent crude oil price was 84.68 US dollars per barrel, up 8.87% for the whole year.

Industry:

Phase I: January to March

Figure 5: Market trend of natural rubber spot market from January to March 2022

In January-March, the domestic natural rubber (standard 1) in China’s East China market fell sharply: on January 1, the main price was about 13748 yuan/ton (on January 12, 14020 yuan/ton was the highest point of the year), and on March 31, the main price was about 13190 yuan/ton, a decline of 4.06% in three months.

In January-March, for foreign production areas, the annual production reduction period will be entered first, and all domestic production areas in China have been cut off before the year; In addition, China’s social inventory has slowed down and accumulated, so from the supply side, the advantages of rubber supply in January are all obvious, and the stock preparation before the year pushed the demand price up, which led to the highest annual price of natural rubber; The holiday was opened before the Spring Festival, the demand was weak, and the price of rubber was suppressed. After the Spring Festival in February, the operating rate of downstream enterprises rose after the year, and the recovery rate slowed down near the end of the month. The enthusiasm for rubber procurement decreased, the market price acceptance was low, and the transaction was weak. In March, the production suspension period in Southeast Asia is about to pass, and a new round of rubber cutting period is coming. The opening of Yunnan production areas in China has gradually increased, the overall rubber production has increased significantly, and the overall supply pressure is expected to increase. In March 2022, many provinces and cities in China have experienced public health events, and the downstream product manufacturers’ commencement, procurement and logistics transportation have been affected. The demand is weak, and the natural rubber market is volatile and weak.

Phase II: April to June

Figure 5: Market trend of natural rubber spot market from April to June 2022

From April to June, the domestic natural rubber (standard 1) market in the East China market fluctuated first, then up and down: on April 1, the mainstream domestic market reported about 13110 yuan/ton, and on June 30, the market reported 12854 yuan/ton, a decline of 1.95% in three months; The highest price in this stage is about 13150 yuan/ton on April 6, and the lowest price is about 12100 yuan/ton on May 9. The maximum amplitude in this stage is 7.98%.

From April to June, the global economic growth rate is expected to be lowered, the domestic public health events continue to have a wide impact, it is difficult for rubber to leave the warehouse in Shanghai and other places, the circulation of raw materials and finished products in many places in China is blocked, the export demand decreases and it is difficult to recover in the short term; Heavy truck distribution and sales data show that all three major demands have weakened significantly; The slowdown in internal and external demand has led to the heavy inventory of finished products of tire enterprises, and the pressure of de-stocking is great, which has affected the commencement of enterprises. The import volume is low, and the domestic inventory is reduced by a small margin. The output of new rubber from Hainan is in serious shortage, so that the output of trans-regional transfer of goods to domestic and foreign production areas is gradually increasing, and the operation of processing plants is gradually recovering. This quarter is generally in the off-season of consumption in the middle of the year, and the market demand is relatively weak, and the speed of Tianjiao’s stock elimination is slow. The domestic and foreign supply side continued to increase. The domestic auto promotion policy boosted the natural rubber futures, and the production and sales chain rose. The natural rubber market continued to fluctuate. Among them, from the middle of May to the first ten days of June, the sharp rise of international crude oil led to the trend of the commodity market, and the natural rubber market rose by nearly 9% at this stage, followed by the first decline of crude oil in the middle and last ten days of June, and the natural rubber market adjusted with the market.

Phase III: July to October

Figure 6: Market trend of natural rubber spot market from July to October 2022

From July to October, the mainstream market of natural rubber (standard 1) showed a continuous downward trend of shock. Although there was a rebound during the period, it was difficult to stop the decline, so that it fell to the annual lowest point of 11170 yuan/ton at the end of October, and this price level was not only the lowest since the same period in October 2021, but also the lowest since the same period in 2020. On July 1, China’s East China market’s domestic standard 1 was about 12954 yuan/ton, and on October 31, the market’s main price was about 11170 yuan/ton, with a decline of 13.77%. The natural rubber market experienced the worst “golden nine silver ten”.

In fact, in July, the domestic spot price of natural rubber has gone out of the second lowest price of 11190 yuan/ton. For downstream product enterprises in the same month, the cost of rubber procurement decreased, and the order receiving and operating rates of some enterprises recovered. With the global supply reaching the peak, and the import of natural rubber rings in China rose sharply year on year, the port stock accumulated and the order delay continued, the supply pressure increased significantly, and the price of glue was weak; On the demand side, affected by the high temperature weather in the early stage of the stage, power and production were limited in many places, the operating rate was limited, the inventory of finished goods of spot tires remained high, the export and domestic sales were not objective, affecting the enthusiasm of enterprises to start work, and the overall outlook of the industry was general; With the fall of the high temperature in autumn in the later stage of the stage, the operating rate of downstream enterprises increased all the time, but customs data showed that China’s tire export was under pressure in the third quarter, the economic recession was expected, the overseas demand was weak, the multi-point distribution of public health events continued to have an impact on the industry, the market pessimism spread, and the downstream demand did not improve significantly, and the procurement demand in these four months was lower than that in previous years.

Phase IV: November to December

Figure 7: Market trend of natural rubber spot market from November to December, 2022

After the price of natural latex fell to the lowest point of 11170 yuan/ton in the year at the end of October, the spot price of natural latex fluctuated for one and a half months in November and December, and the last half of the month was dominated by volatility and correction. Among them, on November 1, the main price of domestic standard 1 in China’s East China market was 11530 yuan/ton, and on December 31, the main price was 12250 yuan/ton, up 6.24%; At this stage, the highest price is 12520 yuan/ton, the lowest price is 11530 yuan/ton, and the maximum amplitude is 8.59%.

From the perspective of industry, the cutting of domestic latex has been gradually stopped at the end of the year, and the expected positive effect of production reduction has gradually emerged. In addition, the price of domestic latex is relatively firm driven by the stock preparation before the year; However, the Southeast Asian production areas were still in the peak season of new rubber production before the New Year’s Day. Affected by the cut of domestic areas in China, the price of latex in Thailand and Vietnam increased by more than 1000 yuan compared with the previous month, and the export volume continued to increase. The social inventory accumulated rapidly, and the price shock corrected. From the perspective of demand, the downstream tire enterprises resumed operation after the end of the maintenance cycle. The operating rate of the tire enterprises was about 60%. The inventory pressure of the finished tire products was still high. The domestic and overseas demand was low, and the tire export continued to grow negative year on year for many months. The expectation of economic downturn and the nationwide immunization after the policy of public health events was released at the end of the year, the infection was rapid, and the production of enterprises was affected. In addition, with the arrival of New Year’s Day and Spring Festival holidays, some employees of many enterprises went to work or had holidays in advance, the order quantity of natural rubber dropped sharply, and the market situation gradually stabilized. On the other hand, after the policy liberalization, several provinces have taken the lead in seizing overseas orders. It is preliminarily expected that the cooperation at home and abroad will be promoted rapidly next year, and the overseas demand will be significantly improved.

2、 Market outlook in 2023

From the comparison chart of previous years, the natural rubber market in 2022 is lower than that in previous years. From the perspective of seasonality, the price of latex has been on the upward trend since last month due to the domestic cut off, the foreign normal production, the supply side reduction and the stock preparation before the Spring Festival. After the stock preparation before the holiday was basically completed, the national immunization policy was released, the number of people returning to work was limited due to infection, and the Spring Festival holiday was imminent, and the product manufacturers began to reduce. As for the aftermarket, the market is mainly flat in the short term. After the year, with Vietnam and Thailand reducing production or even cutting, the supply side is at the lowest level of the year. After the Spring Festival, downstream product factories resume production. The demand will start in the new year, and the market will continue to be strong.

The domestic cobalt price fell in December

According to the data monitoring of the Business News Agency, as of January 8, the domestic cobalt price was 319100 yuan/ton, down 1.33% from the cobalt price of 323400 yuan/ton on January 1. Both supply and demand in the cobalt market are weak, the international cobalt price is falling rapidly, the cobalt salt price is weak, and the domestic cobalt price is fluctuating.

Cobalt market supply

Affected by the previous South African port strike, the arrival data of cobalt raw materials in November decreased and the import volume decreased. It is reported that China will implement zero tariff on the import of some cobalt products (unwrought cobalt) in 2023. The import window of cobalt resources will be enlarged in the future, and the import volume of domestic cobalt market will increase in the future. In general, the supply of cobalt market is weak in the near future and is expected to increase in the future.

Cobalt market demand

3C’s performance update in the electronic field has slowed down, consumers’ enthusiasm for changing machines has weakened, and mobile phone shipments have continued to decline. According to IDC’s report, China’s mobile phone market shipments are expected to decline by 0.9% year-on-year in 2023, and the demand for electronic cobalt will decline. The epidemic prevention policy has been relaxed, the national consumption level is in the recovery stage, the aviation consumption has not been significantly improved, and the demand for cobalt for alloy is still low. The rush loading period of the new energy automobile industry chain ended in the fourth quarter, and the first quarter was the traditional off-season. Some battery plants entered the production reduction plan, the export volume of precursor and positive electrode materials fell, and the demand for cobalt in the new energy automobile market weakened in the first quarter.

Overview and prospect

Bai Jiaxin, data analyst of the Business News Agency, believes that the supply and demand of cobalt market remain weak after the holiday, the international cobalt price has dropped sharply, the cobalt salt price has not stabilized, and the cobalt price has not been supported by the rise of cobalt price. It is expected that the cobalt price will fall in the future.