The Zhitong Finance App learned that Shanxi Securities released a research report saying that environmental protection regulations continue to be tightened, new coking production capacity is limited, and supply contraction is expected to provide stronger support for coke price differences. Overseas oil prices fluctuate at high levels, and the oil and coal price gap continues to widen. Fundamentals favor integrated coal chemical targets. Upstream coal self-sufficiency is combined with a diverse layout of downstream chemicals, and profit stability and long-term growth can be expected.
The main views of Shanxi Securities are as follows:
coke
As of August 31, the liquidation price of first-class metallurgical coke (tax included) was 1,930 yuan/ton, up 21.38% year on year and 6.63% month on month. The supply of coking coal is tight, supported by coking coal costs, weak demand for downstream steel and weak profits for steel mills. Subsequent shocks are expected to be strong, focusing on the resumption of production in coal mines, implementation of production restrictions on iron and water, and coking companies, and the fulfillment of demand.
urea
As of August 31, the spot price of urea was 1,740 yuan/ton, -0.57% year-on-year and -2.52% month-on-month. In August, the domestic urea market fluctuated and declined. The urea market had sufficient supply and poor market demand. On the supply side, some enterprises had equipment maintenance, the operating rate of enterprises declined, and inventories remained high.
On the demand side, downstream companies procure as needed, and demand is slightly lackluster. Urea exports increased markedly in August. As of August 31, urea exports were 1.43 million tons, an increase of 57.14% over the previous month. Coupled with the approach of fall fertilizer preparation, urea is expected to continue to fluctuate strongly in the short term.
soda ash
As of August 31, the spot price of light soda ash was 1,040 yuan/ton, -16.13% year-on-year and -1.89% month-on-month. The operating rate of soda ash on the supply side is around 70%, and the operating rate continues to decline. On the demand side, the downstream glass industry has low demand and high inventories. Currently, there is excess soda ash production capacity, supply pressure is high, and demand recovery is slow. In August, soda ash exports improved, with exports of 284,700 tons, up 32.15% year on year and 0.83% month on month. The soda ash market continues to be weak and volatile in the short term, and the subsequent recovery will have to wait for real estate chain glass demand to be substantially repaired.
ethylene glycol
As of August 31, the spot price of ethylene glycol was 6020 yuan/ton, up 32.6% year on year and 14.89% month on month. The sharp rise in ethylene glycol prices in August was affected by the geographical conflict in the Middle East. Combined with centralized maintenance of some installations, supply was tight. Geographic risk premiums raised crude oil costs. East China's ethylene glycol inventory fell to 141,000 tons, -65.3% year-on-year and -66.43% month-on-month. Spot is tight. Downstream polyester has ushered in traditional gold, nine, and silver. The start of construction is expected to pick up slightly. On the supply side, if navigation in the Middle East Strait improves, imports of goods to Hong Kong will pick up, and it is expected that it will still fluctuate at a high level in the short term.
carbon black
As of August 31, the domestic market price of N220 carbon black was 8,900 yuan/ton, up 21.92% year on year and 7.23% month on month. Affected by the tight supply of coal tar, the price of coal tar increased by 33.33% year on year and 6.73% month on month. Large fluctuations on the raw material side led to a rise in carbon black market prices. The overall demand for downstream carbon black tires is weak, and the short-term supply of coal tar is tight. The demand side is expected to pick up as Jinjiuyin 10 is expected, and overall carbon black expectations fluctuate strongly.
Opinions
The internal segmentation of the coal industry is remarkable. The coke sector is centered on the profit game of steel coke, and the tight supply of coking coal forms bottom cost support; the overall supply and demand of urea is loose, and the market mainly relies on export volumes and fertilizer preparation to bring phased pulse opportunities; the soda ash industry is overcapacity, compounded by weak demand for downstream glass, and the overall sector is weak; Ethylene glycol is driven by overseas geographical events, inventory removal, and short-term price elasticity is outstanding; the carbon black market is dominated by coal tar costs and is also constrained by weak demand for tires. The overall coal industry is mainly driven by structural market conditions and peak season events. Subsequent coke focuses on recovering steel coke profits and improving terminal demand. Urea is playing against the peak season and export sustainability in autumn, and soda ash recovery depends on real estate chain recovery. Downstream ethylene glycol polyester is expected to usher in the 10th peak season of gold, nine and silver, and carbon black is expected to usher in profit recovery brought about by peak season inventory replenishment.
Risk warning: macroeconomics falling short of expectations; risk of large fluctuations in coal prices; risk of increasing geopolitical tension; risk of falling short of expectations; risk of safety and environmental protection; risk of reducing emissions and energy saving.