Introduction:
The relationship of supply and demand has always been the key to driving the direction of the commodity market. However, in 2020, the impact of the maleic anhydride market from the cost end is becoming less and less, and the relationship of supply and demand has become the absolute dominant force to determine the direction of the market at most moments.
Inadvertently, 2020 is drawing to a close what was destined to be an unforgettable year. The overall performance of the maleic anhydride market exceeded expectations in spite of the severe impact of a rare public health emergency in history during the year. According to data, the average domestic maleic anhydride market price from January to November 2020 is 6,753 yuan/ton, achieving a slight increase of 2.19% compared with the same period last year. Although the market price fell to a 13-year low of 4,000 yuan/ton at the beginning of April, the price between 11,000 yuan/ton and 11,500 yuan/ton in mid-November also set a new record after 14,300 yuan/ton in December 2017.
In previous years, cost and supply and demand constitute the “twin engines” driving the maleic anhydride market forward, and they influence and complement each other alternately. But for most of 2020, the “mono-core” drive has become the dominant force in the market, with supply and demand becoming the absolute dominant force in determining the direction of the market, and the impact from the cost side being close to zero. This makes the upstream products of maleic anhydride, which had attracted a lot of attention in the past years, become much less popular this year.
The balance of supply and demand is also out of balance
Although this year from the cost side of the driving force decreased, but only by the supply and demand “monocyte” driven by the maleic anhydride market is still in the second half of the year out of a number of broad gains. If the rise in August and September is driven by both ends of supply and demand, then the rise in October and mid-November shows a more obvious demand-driven feature. It can be said that the supply and demand relationship of maleic anhydride in 2020 is also unbalanced, and the tendency of buyer dominance is very obvious.
Although emergent public health events have serious impact on both ends of supply and demand of maleic anhydride, the impact on demand is obviously greater than that on supply. In February, the month with the most severe impact of public health events, the output of maleic anhydride was 42,900 tons, down 25.54% from the same month last year. Unsaturated resin production was only 26,700 tons in the month, down 74.13% from a year earlier, the lowest level since 2009.
Severe damage to the demand side of maleic anhydride increased the pressure on supply side. Price trend was also once depressed. When the purchasing power of downstream buyers will recover has become the key to market repair. Fortunately, the impact of domestic health incidents gradually subsided after March, and both ends of the supply and demand of maleic anhydride recovered rapidly. The market began to recover with the decrease of supply pressure and began to heat up with the significant increase of demand.
The cost impact may recover in later period, but it is difficult to change the supply-demand dominant pattern
Looking ahead to 2021, the influence of the global public health events will fall as many countries vaccine and waning, international oil prices is expected to return to run above $50 a barrel. Under the trend of oil price going higher, the upstream raw material prices may rise, so impact from the cost side is expected to strengthen in the future. At the same time, the domestic economy is expected to maintain the current strong recovery momentum, and the degradable plastics industry will gradually show its pulling effect on the demand driven by the policy. It can be said that the growth of demand in the downstream of maleic anhydride based on unsaturated resin is still worth expecting.
However, it is still early from the final landing time of vaccines, and there are still some uncertainties in the future trend of international oil prices. Although the downstream demand is expected to be good, but a new round of maleic anhydride capacity plans to put on the market pressure, which has also become the focus of the current market participants. The market pattern dominated by supply and demand may continue in 2021.
2020-12-1 exp1@gzchem.com