Chemical Industry Research Report Week 29: The Yangtze River flood affects certain chemicals supply
Abstract
Chemical Industry Research Report Week 29: The Yangtze River flood situation affects certain chemicals supply in the middle and lower reaches.
Recently, the National Defense Agency has decided to upgrade the flood response level III emergency response to level II. The flood situation in the Yangtze River is escalating, which may restrict the supply of some pesticides (Jiangsu) and phosphate fertilizers (Hubei) along the coast in the short term.
The chemicals that are mostly distributed within 3km along the Yangtze River are mainly pesticides and phosphorus chemicals: 1. The production of pesticides in Jiangsu in 2019 is 740,000 tons, accounting for 33% of the country, and more than 20% are distributed within 3km along the Yangtze River. Among them, the output of pesticides, herbicides and fungicides accounted for 47%/39%/56% of the country respectively. 2. The production capacity of phosphorus chemical products is mainly distributed in Hubei, Sichuan and other places. According to our calculations, the production capacity of monoammonium phosphate is within 1km along the Yangtze River, and the proportion of 1~3km is 16% and 7% respectively; the production capacity of diammonium phosphate is 1km along the Yangtze River The proportions within 1km and 3km are 11% and 4%, respectively. Flood conditions may cause some enterprises along the Yangtze River to shut down and stop production, and the production capacity of pesticides and phosphorus chemicals may be restricted in the short term.
Affected by extreme weather, the supply and demand of some areas in the middle and lower reaches of the Yangtze River are weak, but considering the relatively concentrated distribution of production capacity of pesticides and phosphorus chemical products, the impact of the flood situation on the supply side of some varieties is more obvious. For example, glufosinate ammonium rose more than 10% in the past month.
Flood relief will boost the short-term demand for plastic products and polyolefins. The severe flood control situation has driven the increase in demand for related materials. Among the flood control materials, plastic products such as plastic woven bags, raincoats, tents, assault boats, sand and gravel materials, geosynthetic materials, etc. need to be used to boost polyethylene (PE) in the short term , Polypropylene (PP) and other plastic products. Among them, plastic woven bags are more important materials for flood control, and there are temporary supply shortages in some areas. From the perspective of raw material composition, the main raw material costs of plastic woven bags are: PP granules (63%), PP powder (15%), recycled materials (12%), PE (7%). On July 13, the mainstream market prices of PP and PE were 7,981 yuan/ton and 7,550 yuan/ton respectively, which were +1.2% and +8.3% from the average price in June and -10.4% and -6.5% from the same period last year.
Source from CICC
