Chart 1: Price trend of MPG in 2017
In the third quarter of this year, the market of MPG fluctuates obviously between ￥8000 to 10000/MT, which can be mainly concluded into two parts. Firstly, in July, the market of MPG stayed steady even the downstream industry was off-season. However, in August the production of MPG in Shandong province decreased sharply because of the national environmental control, which made the Ex-factory price of raw material(PO) and MPG boomed up in one single week to reach the highest price for MPG of the year which reached over￥10000 per MT. Then due to the substitute and lower price of PO, the market of MPG began to cool down until the middle of September when manufacturers that were limited on their production began to remanufacture again. On the other hand, the domestic plants were trying to get more orders from the foreign clients while many domestic manufacturers began to stock up as it is approaching the double-festival holiday, so the price of MPG still rose slightly in the late September.
Production: Still affected by policy and other factors, stay low
Chart 2: domestic production of MPG in 2017
In the third quarter, the total production of MPG showed a downward trend. Even some domestic manufacturers like DAPHOON Chemicals restarted their production in the beginning of June, but many others like DEPU chemicals stopped their production for maintenance for half month. What’s more, after the national environmental control unit arrived in Shandong province, most of the domestic manufacturers like DEPU, CNWELLS, and SHIDA were stopped while others were limited on their production.
Profits: both supply and demand markets are good as the prices stayed high with high profit rate
Chart 3: Trend of MPG/DMC/PO/Profit rate
In the third quarter, the market of MPG still depends on the trend of the raw materials. Since the supply of MPG was tight, the price stayed high all the time, which was the same for the relative production DMC. Under the impact of these, the profit of the device increased substantially in the third quarter.
Export: average prices rose but quantity shrunk
Chart 4: export of MPG of China in the past 3 years
In recent years, the export market has taken a significant proportion of the domestic MPG industry since the domestic supply was huge while the domestic demand was small. It is estimated that export volume of last year accounted for more than 30 percent of total domestic output. In the third quarter, the domestic capacity was low and export price was high, so it obviously turned out to be low volume in export market. In the second half of September the manufacturers restarted to actively seek export market and the price was going down. However, most orders will still be delivered in October, so the export volume for the fourth quarter may increase significantly. What’s more, the export demand may increase too as the winter is coming in the north.