According to the Commodity Market Analysis System of Shengyi Society, the overall toluene market has been declining recently (7.26-8.5). On July 26th, the benchmark price of toluene was 7510 yuan/ton, and on August 5th, the benchmark price of toluene was 7300 yuan/ton, a decrease of 2.8% during the period. During this period, the toluene market operated weakly, with market prices fluctuating downwards. The decline in crude oil prices during the week has dragged down market sentiment, and the overall market atmosphere is bearish. On the supply side, with the increase of port cargo, the supply is relatively loose, which affects the bearish market atmosphere. The overall demand is weak, but with the downward trend in prices, there is some downstream demand to replenish inventory at low prices. As of August 5th, the mainstream price range in East China is between 7300-7350 yuan/ton, a cumulative decrease of 50-100 yuan/ton compared to last week.

Cost aspect: Due to the escalating geopolitical tensions, investors are concerned about the escalation of the Middle East conflict; The significant decrease in US crude oil inventories has provided support for oil prices. As of August 1st, the settlement price of the main contract for WTI crude oil futures in the United States was $76.31 per barrel. The settlement price of the main Brent crude oil futures contract is $79.52 per barrel. The crude oil analyst of Shengyi Society believes that in the short term, the situation facing crude oil is very complex, and crude oil may intensify its volatility. At present, it is necessary to pay attention to further developments in the Middle East situation, as the tense situation may continue to push up the risk premium of crude oil. At the same time, the expectation of the Federal Reserve cutting interest rates has also brought certain benefits to demand, and oil prices may continue to seek upward space. In the medium to long term, the supply uncertainty in the oil market is increasing, especially with the upcoming US presidential election. If the Republican Party wins, it may have a more profound impact on the oil market, and US crude oil production may be subject to policy increases. The future game of crude oil supply and demand may seek a rebalancing.

Supply side: Sinopec’s toluene quotations have generally decreased this week, but there are slight differences in the degree of adjustment among different underground sources. The company is operating normally, with stable equipment production and many products for personal use, resulting in stable production and sales. Among them, the East China Company quoted 7200 yuan/ton, the North China Company quoted 7350 yuan/ton, the South China Company quoted 7300-7350 yuan/ton, and the Central China Company quoted 7200 yuan/ton.

Demand side: The external market for xylene continues to decline, and the rigid demand support for toluene is relatively weak

On August 5th, Sinopec Sales Company temporarily stabilized the price of xylene, with the current execution price being 8500 yuan/ton. This price is implemented in East China, North China, Central China, and South China. Yangzi Petrochemical, Zhenhai Petrochemical and other units are operating stably and selling normally. As of August 2nd, CFR China’s closing price was 1005.33 US dollars/ton, a decrease of 3.34 US dollars/ton from last week.

On Friday (August 2nd), the Asian toluene market closed with mixed gains and losses, with the FOB South Korean closing price of $886-888/ton in August rising by $6/ton; The closing price of CFR China in August is 884-886 US dollars per ton, a decrease of 6 US dollars per ton.

Market forecast: The recent trend of crude oil on the cost side is weak, and the support on the cost side is weak. In terms of supply, the port cargo has slightly increased recently, and the supply is relatively loose. On the demand side, with the decline in market prices, some downstream enterprises have certain purchasing needs, and market trading is more active than before, which still provides some support for market sentiment. Overall, the toluene market is mixed with negative and positive factors, and it is expected that the market will mainly experience narrow fluctuations in the short term, with a focus on the operation of key downstream facilities in the future.

Since the end of April, the domestic acrylonitrile market price has continued to decline, with the mainstream self pickup price dropping from 10800 yuan/ton to around 8800 yuan/ton, a decrease of 18.5%, which has lasted for three months. At present, there is still no positive news in the market, and the supply-demand contradiction continues to exist. In the short term, the price of acrylonitrile may still have room for downward exploration.

The contradiction between supply and demand persists:

The price trend of acrylonitrile products mainly follows the logic of supply and demand. Due to the large number of maintenance and load reduction devices, the supply is temporarily tight, which stimulates price increases. Prices gradually rose from February to April this year; But starting from May, the maintenance equipment gradually resumed, and the capacity utilization rate of the acrylonitrile industry gradually increased from less than 65% to around 83%, with a significant increase in supply.

At the same time, downstream demand in various fields is gradually entering the off-season, especially in July when ABS and amide production rates are low, and consumption in other small and medium-sized downstream fields is also showing signs of weakening.

According to statistics, the supply-demand gap of domestic acrylonitrile products dropped to only 10000 tons in April, but rapidly expanded to 80000 tons in May, and remained above 50000 tons in June and July, with a very prominent surplus situation.

Significant increase in cost:

According to the trend chart, the acrylonitrile market fell rapidly in May, and the decline slowed down significantly from June to July, mainly due to increased cost pressure and acrylonitrile suppliers raising prices. Since the second half of June, the price of the main raw material propylene in the Shandong market has risen from around 6800 yuan/ton to over 7100 yuan/ton, resulting in a significant increase in the production cost of acrylonitrile and exacerbating the factory’s loss situation.

In this situation, it cannot be ruled out that some acrylonitrile plants will take production reduction measures, and the expected decrease in supply variables will slow down the pace of market quotations. However, up to now, apart from the major overhaul plan of Jilin Petrochemical from August to October, there are still no other units with maintenance or load reduction plans. Although the losses of acrylonitrile single products are gradually expanding, some acrylonitrile factories have been able to maintain stable production with the considerable benefits of by-products, especially the ACH MMA production profit, which is currently as high as 4000-5000 yuan/ton.

The downward trend of future prices is difficult to change:

The downward trend of product prices caused by supply and demand contradictions is difficult to change. In the short term, downstream demand for acrylonitrile is difficult to be optimistic. With the traditional off-season and poor economic situation, there is no obvious improvement in domestic and foreign terminal consumption. Therefore, positive support still needs to be found from the supply side. The trend of acrylonitrile plants will be the direct factor affecting the appearance of price turning points in the future.

According to the monitoring of the commodity market analysis system of Shengyi Society, the 1 # tin ingot market in East China fell this month (7.1-7.31), with an average market price of 274490 yuan/ton at the beginning of the month and 247760 yuan/ton at the end of the month, a decrease of 9.48% in the month.

Affected by overseas macro sentiment this month, tin prices have fluctuated and fallen. Tin prices have fluctuated significantly, and currently the Federal Reserve’s interest rate cuts have not yet landed, and potential risks on the supply side of fundamentals still exist.

At the mining end, supply issues will continue to exist for at least the next few years, and there is strong uncertainty about the resumption of tin mining in the Wa State of Myanmar. Currently, negotiations on the ownership of mining rights are ongoing, and there is no clear news of resumption of production. However, the tin ore production in the Democratic Republic of Congo in Africa continues to increase, which to some extent compensates for the reduction of tin ore in Myanmar, and the overall tin ore situation is not overly tense.

On the refining side, the operating rate of smelters has not significantly declined this year, and domestic refined tin production remains high. In addition, the export of Indonesian tin ingots is gradually recovering, and the supply expectation for Indonesia in the second half of the year is expected to significantly increase compared to the first half. We can pay attention to the import volume of Indonesian tin ingots in August.

On the demand side, the consumption of solder has slightly decreased year-on-year, while the consumption of tin bars has been maintained, and the consumption of tin foil has rapidly declined. Recently, it is a low season for demand, and domestic terminal consumption is still sluggish. Downstream consumers are cautious and cautious in purchasing. The consumption of electronic products is relatively strong, and photovoltaic orders have significantly declined, with photovoltaic orders decreasing by 30% -40% month on month in June.

It is expected that there will be little support on the demand side in the short term. Recently, due to the decline in tin prices, a large amount of Shanghai tin has been destocked, and inventory has provided support for tin prices. In the short term, it has mainly been fluctuating.

1、 Price trend

According to the commodity analysis system of Shengyi Society, the overall price of caustic soda increased in July. At the beginning of the month, the average market price in Shandong was around 794 yuan/ton, and at the end of the month, the average market price in Shandong was 807 yuan/ton. The overall price increased by 1.64%, decreased by 1.34% compared to last weekend, and increased by 9.44% year-on-year. On July 29th, the chemical index was 874 points, a decrease of 1 point from yesterday, a decrease of 37.57% from the highest point of 1400 points during the cycle (2021-10-23), and an increase of 46.15% from the lowest point of 598 points on April 8th, 2020. (Note: The cycle refers to the period from December 1, 2011 to present)

2、 Market analysis

From the beginning of the month to the middle of the month, the price of caustic soda increased. Due to equipment maintenance in the Shandong region, some companies did not have much inventory pressure. Most companies increased their caustic soda prices by 10-20 yuan/ton, boosting downstream market sentiment and increasing downstream purchasing enthusiasm. At the end of the month, the equipment maintenance in Shandong region resumed, downstream procurement was average, demand was relatively weak, and caustic soda prices declined.

Can caustic soda prices rebound in August?

In terms of supply, there were 6-7 companies undergoing maintenance in July and August, with a production capacity of approximately 1.77 million tons. The supply and maintenance have narrowed or supported the price of caustic soda.

From a downstream perspective, some domestic alumina enterprises have increased their procurement of imported minerals to improve production, and currently mainly focus on fulfilling long-term orders. Aluminum oxide traders have a strong sentiment of cherishing their goods. It is expected that the short-term operating range of domestic alumina prices will be between 3850-4000 yuan/ton, and alumina prices may maintain a stable operating trend.

Business analysts believe that in recent times, caustic soda prices have fallen by the end of July, and the equipment of previous maintenance companies has gradually resumed, resulting in an increase in supply and inventory. The price of caustic soda is declining, but with the maintenance of the caustic soda plant in the later stage, it is expected that the price of caustic soda in late August may rise, depending on downstream market demand.

Aluminum prices drop to around 19000

Aluminum prices continue to decline. According to the Commodity Market Analysis System of Shengyi Society, the average price of aluminum ingots in the East China market on July 29, 2024 was 19140 yuan/ton, a decrease of 6.16% from the market average price of 20396.67 yuan/ton at the beginning of the month (July 1).

Reasons for the decline

Macro factors: There are signs of a weakening recession in overseas data, and the Federal Reserve’s Beige Book shows that businesses expect future growth to slow down, and the labor market continues to be weak. CME shows that the probability of the Federal Reserve’s descending order in September has increased to 91.9%, and the expectation of a rate cut in July has fallen through. Domestically, the economic data for the second quarter was released, with a GDP of 4.7%, which was lower than expected.

The supply and demand fundamentals are weak, downstream replenishment is falsified, and destocking is not smooth. As of July 29th, the inventory of electrolytic aluminum in major domestic markets was 795000 tons, which is 33000 tons higher than the inventory of 762000 tons on July 1st.

Short term long short game intensifies

At present, the price of aluminum ingots has fallen to near the marginal cost, and the upstream raw material side is tight, which provides some support for the price. In the short term, the long short game is intensifying.