Core view
1. From January to March 2022, the export volume and price of caustic soda in China rose simultaneously. In terms of export volume, according to the data of Baichuan Yingfu, the export volume of caustic soda in China from January to March 2022 was 560700 tons, a year-on-year increase of 263.55%. In terms of price, as of April 22, 2022, the FOB price of 50% ionic membrane of liquid alkali in East China was US $630 / ton, an increase of 31.3% over the beginning of the year. China is a net exporter of caustic soda. From 2017 to 2021, China’s exports of caustic soda were significantly higher than its imports, with net exports of more than 1 million tons. Among them, in 2021, China exported 1.4838 million tons of caustic soda, with a net export of 1.4291 million tons, mainly to Australia, Indonesia and other countries. According to the data of China Chlor Alkali Industry Association, in 2020, the output of caustic soda in Southeast Asia was 2.29 million tons, the consumption was about 5 million tons, the self-sufficiency rate was about 45.8%, and the import dependence was high. The rise in the price of global energy products has pushed up the export volume and price of China’s caustic soda.
As of April 22, 2022, the main continuous futures price of Brent crude oil was reported as USD 106.7/barrel, and the settlement price of WTI crude oil was reported as USD 102.1/barrel, up 35.0% and 34.2% respectively over the beginning of the year; The closing price of NYMEX natural gas futures in the United States rose 69.24% over the beginning of the year. The rise in global energy prices has led to a rise in the prices of international high-energy consuming chemicals, widening the price difference between China and abroad, opening up export profit margins and promoting the simultaneous rise in the volume and price of China’s caustic soda exports. The export price of caustic soda is much higher than that of China’s export market. As of April 22, 2022, the FOB quotation of 50% ionic membrane caustic soda in East China is 630 US dollars / ton, and the average market price of 50% ionic membrane caustic soda in East China is 2219 yuan / ton. Calculated according to the spot exchange rate of 6.4875 on April 22, the difference between the two is 1868.1 yuan / ton. The increase of export volume may significantly enhance the profitability of caustic soda enterprises. With tight supply and demand and high energy prices, the export price of caustic soda is expected to remain high in 2022.
2. As of April 22, 2022, the price index of China’s chemical products was reported at 5845 points, up 1.4% on a weekly basis. Chemical products were mixed, with acrylic acid up 6.9% and acetic acid down 13.5%. In terms of acrylic acid, the price rise was due to the shutdown and maintenance of some units, the reduction of market supply and the improvement of downstream demand, which supported the steady rise of acrylic acid price. In terms of acetic acid, the price decline was mainly due to the resumption of production of Huayi in Shanghai, the normalization of manufacturers’ devices in Shandong and Henan, and the obvious increase of market supply. Poor transportation in some areas has led to high inventory and downward price of manufacturers.
3. In the past week, international crude oil prices fluctuated downward. As of April 22, 2022, the main continuous futures price of Brent crude oil was reported at US $106.7/barrel, down 4.5% in the week, and the settlement price of main continuous futures of WTI crude oil was reported at US $102.1/barrel, down 4.6% in the week. Early last week, the European Union planned to draft a plan to ban the import of Russian oil. At the same time, the shutdown of Libya’s largest oil field exacerbated market concerns about supply, and crude oil prices rose slightly. Later, Iraq said that it was considering increasing the export of oil to Europe, in order to fill the supply gap caused by the ban on the import of Russian oil by the United States and the west after the outbreak of the Ukrainian war, release bad signals, and lead to the downward fluctuation of crude oil prices.
4. Market review. Last week, among the 33 CITIC tertiary chemical sub industries, one sector rose or remained flat last week, and 32 sectors fell. Among them, the polyester sector rose by 0.69%; Nitrogen fertilizer sector fell the most, with a decline of 8.45%. In terms of individual stocks, the top three weekly gains were Nanjing Chemical Fibre Co.Ltd(600889) , Jiangsu Lopal Tech.Co.Ltd(603906) , Jiangsu Suyan Jingshen Co.Ltd(603299) , with weekly gains of 16.0%, 15.5% and 14.1% respectively; The top three weekly declines were Yangmei Chemical Co.Ltd(600691) , Aba Chemicals Corporation(300261) , Jiangsu Boiln Plastics Co.Ltd(301003) , with weekly declines of 21.5%, 20.3% and 20.1% respectively.
Investment advice
When the export volume and price of caustic soda rise together and the industry boom, relevant production enterprises may benefit, such as Shanghai Chlor-Alkali Chemical Co.Ltd(600618) , Zhejiang Oceanking Development Co.Ltd(603213) , Shaanxi Beiyuan Chemical Industry Group Co.Ltd(601568) , etc.
Risk tips
Abnormal fluctuations in caustic soda prices, repeated outbreaks outside China, exchange rate fluctuations, etc.
