Chemical market encounters two attacks
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In March, domestic chemical product prices continued to rise due to increasing energy, raw material, labor, and logistics costs. While the overall trend remained upward, some products saw particularly sharp price increases. The previous tight supply and strong demand dynamics have shifted, leading to a situation where some chemicals face pressure from rising upstream costs and limited downstream price transmission. As a result, it is expected that chemical prices will undergo a period of adjustment in the near future.
Plastic and synthetic materials saw modest price increases in March. The average monthly prices for high-density polyethylene, polypropylene, PVC, and polyester chips in 36 major cities were 13,840 yuan, 12,678 yuan, 7,882 yuan, and 11,965 yuan respectively, showing year-on-year growth of 7.22%, 4.62%, 11.64%, and 6.49%. Prices for soda ash and other chemicals rose more sharply, with pure benzene, methanol, industrial soda ash, and butadiene rubber averaging 8,881 yuan, 3,444 yuan, 2,101 yuan, and 20,988 yuan respectively—up by 9.57%, 7.16%, 30.74%, and 21.68% compared to the same period last year.
Agricultural chemicals experienced even greater price hikes than industrial ones. Urea, diammonium phosphate, mulching film, and shed films had average monthly prices of 2,020 yuan, 4,000 yuan, 15,110 yuan, and 14,420 yuan, reflecting increases of 9.78%, 52.09%, 10.29%, and 10.16% over the previous year.
The high cost of crude oil and other raw materials has significantly increased production costs for chemical companies. Crude oil futures in New York have remained above $100 per barrel, driven by geopolitical tensions, a weaker US dollar, global inflation, and market speculation. These factors are expected to keep oil prices elevated. Meanwhile, coal prices have surged over 50% in five months, outpacing oil price growth due to poor weather, low stock levels, and rising Asian demand. Additionally, rising food prices have contributed to higher labor costs for enterprises.
Despite this, market supply and demand imbalances have somewhat curbed price increases. During the snow disaster, some chemical producers faced restrictions on raw materials, electricity, and transportation, but most have since recovered. Short-term supply disruptions have largely eased, and many companies are operating at high capacity. For example, mulching film production is currently running at over 90%, with most equipment in Jiangsu, Henan, and Shandong nearly fully operational.
However, higher chemical prices have led to reduced consumer spending. With the start of spring farming season, fertilizer demand is typically high, but farmers are less willing to buy at current price levels. According to Jilin’s price monitoring agency, most farmers are still cautious, and trading activity in the fertilizer market remains light. Market participants expect farmers to reduce their use of chemical fertilizers this year or switch to lower-concentration alternatives to cut costs. Additionally, with cotton planting profits lower than other crops, the area under cotton cultivation has declined, which has also affected the demand for agricultural films.