Is the domestic pure MDI price strengthening channel open?

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Chem366—— Today (August 14th) afternoon, the latest news in the market: "Affected by the maintenance of the equipment, the supply of Wanhua Chemical's pure MDI is tight. From next Monday, it will be bottled The buyout price of pure MDI is raised by 300 yuan/ton, strictly enforced at 15,800 yuan/ton, and only guarantees the supply of contract customers.”

In the editor's opinion, this is a piece of unexpected news about mainstream manufacturers continuing to raise the price of pure MDI. The reason why the factory has raised the ex-factory price again is that there are supporting factors from both the supply and demand sides of domestic pure MDI in the near future. The brief description is as follows:

one. Supply side:
  As one of the major MDI manufacturers in China, Wanhua Yantai is still shutting down its devices for maintenance, and the factory's tight supply situation is within everyone's expectations. However, other domestic MDI manufacturers have recently adopted the operation of "tightening the control" on the supply of pure MDI in the distribution market. This is somewhat related to the fact that manufacturers are optimistic about the future market trend of pure MDI in domestic and foreign demand markets. From the perspective of overseas markets, the downstream manufacturing industries of pure MDI in many overseas countries have gradually resumed production, driving the demand for pure MDI to rise slowly. In late July, a European factory was caught off guard by force majeure, which widened the demand gap for pure MDI in overseas markets, especially in Europe. The market price of pure MDI in many regions including Europe and Southeast Asia has also risen recently. This aspect has also reduced the supply of goods imported by Japanese and Korean manufacturers to China since the end of July. At the same time, domestic manufacturers may increase their exports to overseas markets. Therefore, overall, the domestic supply side is tight. Holders of domestic pure MDI are more reluctant to sell at low prices.

two. Demand side:
On August 12, the General Office of the State Council issued the "Opinions on Further Improving the Work of Stabilizing Foreign Trade and Foreign Investment" (Guobanfa [2020] No. 28). Article 7 of the "Opinions" stated: "Increasing support for labor-intensive enterprises Support. For export enterprises of labor-intensive products such as textiles, clothing, furniture, shoes, plastic products, bags, toys, stone materials, agricultural products, and consumer electronics products, tax and fee reductions, export credits, export credit guarantees, and stable Further increase support on the basis of various inclusive policies such as employment, electricity and water use.”
This opinion was put forward against the background of the continuous spread of the current international epidemic, the severe recession of the world economy, and the complex and severe situation facing my country's foreign trade and investment. Since the beginning of this year, the outbreak and spread of the new crown epidemic at home and abroad have caused the main downstream industries of pure MDI, such as shoes, clothing and textiles, to suffer varying degrees and continuous blows. For several months, most of the downstream manufacturers, such as raw materials for shoe soles and slurries, have been operating at a relatively low load, resulting in a recovery in the market for domestic pure MDI that is less than expected. Compared with aggregated MDI, pure MDI is weaker both in terms of market price and trading volume, and its boosting support is relatively insufficient.
You may have doubts about how effective this opinion will be in boosting the downstream industry of pure MDI. It remains for us to pay more attention to the series of measures, implementation process and phased measures surrounding this opinion. effectiveness. Looking back to the first half of this year, in order to encourage the recovery and boost of the domestic home appliance and automobile consumer markets, the national and local governments have successively issued documents, introduced measures, supported related industries, and encouraged e-commerce promotional activities, etc., and achieved certain results. Therefore, let us wait and see again for the influence and effectiveness of this opinion.
The editor believes that, judging from the positive expectations of the pure MDI demand market at home and abroad, the domestic pure MDI market price may have opened up, and the price trend in the future market will be strong and upward as a whole.