Chemical market encounters two attacks
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In March, domestic chemical product prices continued to climb due to rising energy, raw material, labor, and logistics costs. While the general trend remained upward, some products saw particularly sharp price increases. The previous supply-demand imbalance has shifted, leading to a situation where upstream cost pressures are difficult to pass on to downstream consumers, creating a challenging environment for certain chemicals. It is expected that chemical prices will undergo a period of adjustment in the near term.
In the plastics and synthetic materials sector, prices saw modest increases. In 36 major cities, the average monthly prices for high-density polyethylene, polypropylene, PVC, and polyester chips 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%. Meanwhile, prices for soda ash and other chemicals rose more sharply. Pure benzene, methanol, industrial soda ash, and butadiene rubber averaged 8,881 yuan, 3,444 yuan, 2,101 yuan, and 20,988 yuan, with increases of 9.57%, 7.16%, 30.74%, and 21.68% compared to the same period last year.
Agricultural chemical products experienced even steeper price hikes than industrial ones. Urea, diammonium phosphate, and mulching films had average prices of 2,020 yuan, 4,000 yuan, and 14,420 yuan, up by 9.78%, 52.09%, and 10.16% year-on-year.
The high cost of crude oil and other raw materials has significantly increased production expenses for chemical companies. Crude oil futures in New York have remained above $100 per barrel, driven by geopolitical tensions, a weaker U.S. dollar, global inflation, and speculative trading. This trend is likely to continue. Meanwhile, coal prices have surged over 50% in five months, outpacing oil price increases due to poor weather, limited stock levels, and rising Asian demand. Additionally, rising food prices have further strained labor costs for businesses.
Despite these challenges, market supply and demand dynamics have somewhat tempered chemical price growth. During the snow disaster, some chemical producers faced disruptions due to raw material shortages, power cuts, and transportation issues. However, most operations have since recovered, and short-term supply imbalances have improved significantly. Some factories are now running at high capacity, with mulching film production rates exceeding 90%. Many facilities in Jiangsu, Henan, and Shandong are operating nearly at full capacity.
Higher chemical prices have also led to reduced consumer spending. With the start of spring farming season, fertilizer demand is typically at its peak. However, elevated fertilizer prices have dampened farmer enthusiasm. According to Jilin price monitoring data, many farmers are currently holding back from purchases, and trade in the fertilizer market remains sluggish. Market participants expect farmers to reduce their use of chemical fertilizers this year or switch to lower-concentration alternatives to cut costs. Moreover, with cotton planting yields falling below those of other crops, the area dedicated to cotton cultivation has decreased, indirectly affecting agricultural film demand.