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Chemical price trend after China Blue Sky Action

Since from the middle of 2017, China begun to launch the movement of Blue Sky action nationwide.  Recently, the Ministry of Environmental Protection held the meeting of environmental protection. It announced that in 2019 China plans to carry out the second round of environmental protection inspection. According to CCTV news reports, Minister of environmental protection Li Ganjie said in 2018 National Environmental Protection Work Conference that the next three years is critical period to fight against pollution, and the most important is to win the blue sky and further reduce the concentration of PM2.5.


Chemical industry experts said: in 2018, the environmental protection situation is still grim, and chemical raw materials will continue to rise in price.

Environmental protection should be strictly checked for 3 years

According to CCTV, environmental protection will be checked continuously for 3 years in 2018. In addition to Beijing, Tianjin, Hebei and the surrounding areas and the Yangtze River Delta region, the Fen Wei plain (including Xi'an and Xianyang in Shanxi and Shaanxi provinces) will be included in the key areas of air pollution prevention and control for the first time.

In 2018, the Ministry of environmental protection needs to focus on the following tasks: to start the plan for the blue sky defense. The three year plan for the protection of the blue sky was formulated and the implementation plan for the prevention and control of air pollution in the key areas of Beijing, Tianjin and Hebei, the surrounding areas, the Yangtze River Delta, the Fen Wei plain and other key areas were introduced. The average concentration of PM2.5 in the urban and above cities is planed to decrease by 2%, and the ratio of air quality was improved by 79%, and the emission of sulfur dioxide and nitrogen oxides continued to decline, and the pollution control of coal and motor vehicles was continuously promoted.

Insufficient raw material capacity

The global De-capacity plan has been in operation for some time. Many TDI international companies began to reduce capacity in 2016. Market supply is insufficient, and domestic TDI prices rises to 50000 / ton, and the price continues to be high. In addition, the impact of the 2017 emergency on chemical production capacity is not small - some chemical giants, including BASF, need to suspend production because of the force majeure factors, and the shortage of international markets caused the domestic market. The price of the product has changed.

Price increase of crude oil and price monopoly

Saudi Arabia and UBS promised to extend production cut-off at the OPEC meeting held in Vienna in November 30th, which provides a good support for the supply of the crude oil market. The big investment banks such as Goldman and UBS have raised the expected price of crude oil accordingly.

The crude oil market is expected to continue to improve in 2018, but there will be little room for continuous fluctuation. International crude oil prices may run within the range of 45-70 US dollars / barrel throughout the year. The price fluctuation of crude oil has a certain impact on the chemical industry. In the current situation, the crude oil will still be good in 2018. The price rise of some chemical products has become an approximate event.

The other is the price monopoly. In recent years, China's Ministry of Commerce has been dealing with the dumping cases of chemical raw materials in their respective countries. In addition, some of the domestic products have high technical barriers, resulting in less production enterprises, which are prone to high prices and lower downstream skepticism.

 

According to TNJ Chemical, a chemical company from East China, many small and unqualified chemical factories has been stopped and shut-down since from last year. This echoes to the Blue Sky action and improved environmental protection. But the price will be in a higher level accordingly.