Introduction: According to the monitoring of Jinlianchuang Chemical Index, the chemical bulk market rose briefly in November and then fell. The market showed various signs of turning points in the first half of the month: the domestic epidemic prevention policy “New Twenty” was implemented; internationally, the United States is expected to raise interest rates. Slowing down; the conflict between Russia and Ukraine also showed signs of easing, and the meeting between the heads of state of China and the United States at the G20 summit yielded fruitful results. Boosted by this trend, domestic chemical bulks showed signs of growth, and a bucket of cold water poured over them in the second half of the month: the spread of the epidemic accelerated in some areas of the country, and weak demand resurfaced; internationally, although the minutes of the Federal Reserve’s November monetary policy meeting were released, suggesting a slowdown in growth. However, there is no trend guidance for the wide fluctuations of international crude oil; it is expected that the chemical market in December will end weakly due to weak demand.
It’s hard to describe the chemical market in November.
In early November, off-season demand in the chemical market emerged, continuing the decline at the end of October. However, in early November, the market seemed to be turning for the better, and various turning point theories were rampant for a while, which can be attributed to both domestic and international aspects:
Domestically, the “New Twenty Articles” of the epidemic prevention policy were implemented on Double 11. For those who have close contacts, they will be reduced by two, and for those who have close contacts, they will be exempted from the order. Precise prevention and control may indicate the possibility of gradual relaxation in the future.
Internationally, after the United States raised interest rates by 75 basis points in early November, it subsequently released a dovish signal and may slow down the pace of interest rate increases. At the same time, the conflict between Russia and Ukraine showed signs of easing.
More importantly, the meeting between the heads of state of China and the United States at the G20 Summit yielded fruitful results.
Data source: Jin Lianchuang
For a time, there were signs of an uptick in the chemical market: According to Jinlianchuang monitoring, although the domestic chemical spot trend continued to be weak on November 10 (Thursday), domestic chemical futures opened mainly with gains on November 11 (Friday). On November 14 (Monday), the chemical spot performance was relatively strong. Although the trend on November 15 was mild compared to that on the 14th, the chemical futures on the 14th and 15th mainly rose. As shown in the chart above, in mid-November, under the downward trend of international crude oil WTI’s wide fluctuations, the Jinlianchuang Chemical Index showed signs of upward movement.
But then the market changed dramatically.
Domestically: The epidemic situation has rebounded severely, and the international “village” epidemic prevention policy that fired the first shot was “reversed” after 7 days of implementation. The spread of the epidemic is accelerating in some areas of the country, making prevention and control increasingly difficult. Affected by the epidemic, weak demand has resurfaced in some areas.
Internationally: The minutes of the Federal Reserve’s November monetary policy meeting showed that it is basically certain to slow down the pace of interest rate hikes in December, but expectations of a 50 basis point interest rate hike still exist. As for international crude oil, which underpins the chemical bulk, after the deep V trend on Monday, both internal and external oil prices showed an oversold rebound trend. The industry believes that oil prices are still in a wide oscillation range, and large fluctuations will remain the norm. At present, the chemical sector is weak due to demand drag, so the impact of crude oil fluctuations on the chemical sector is limited.
Entering the fourth week of November, the chemical spot market continued to weaken.
On November 21, domestic spot prices closed. According to the 129 chemical products monitored by Jinlianchuang, 12 varieties increased, 76 varieties remained stable, and 41 varieties fell, with an increase rate of 9.30% and a decrease rate of 31.78%.
On November 22, the domestic spot market closed. According to the 129 chemical products monitored by Jinlianchuang, 11 varieties increased, 76 varieties remained stable, and 42 varieties fell, with an increase rate of 8.53% and a decrease rate of 32.56%.
On November 23, the domestic spot market closed. According to the 129 chemical products monitored by Jinlianchuang, 17 varieties increased, 75 varieties remained stable, and 37 varieties fell, with an increase rate of 13.18% and a decrease rate of 28.68%.
The domestic chemical futures market remained mixed, with unsatisfactory performance.
Industry analysis: Weak demand may dominate the subsequent market, and the chemical market in December may end weakly under this influence. However, some chemical products have lower initial valuations and are more resistant to falling prices.