Global base chemical outlook and benzene fundamentals
！！Ding Wei, Director of IHS Markit
2019-09-11 10:35:53
Ding Wei, Director of IHS Markit, delivers his report of Global base chemical outlook and benzene fundamentals
Mr. Ding's report mainly focuses on two major parts:
I. Global base chemical outlook:
Fundamentals have never changed. Base chemicals are major raw materials for downstream consumer goods, economic growth drives demand, low cost remains a development advantage, the keys are market access and logistics; In energy market, emerging trend is still evolving; social factors in production and business licensing, technological progress and world-class scale, application of digital technology.
Capital market is still looking for sustainable development advantages: Gain cost advantages of crude oil and raw materials (High oil prices and low natural gas costs coexist, vigorous develop natural gas; ethane has obvious advantages and the competitive area is enlarged; China is still dominant among all capital expenditure countries and regions.)
Mr. Ding thinks that 3 major problems that will bring about crucial impact on global petrochemical industry after 2020 are: vehicle power reform and oil demand peaks, direct production of crude oil into chemical products technique, and plastic waste problem.
II. Benzene fundamentals:
Various price indicators of benzene have turned red, indicating a downtrend cycle of benzene; benzene profits deteriorated since 2018; benzene is a kind of by-product, but could be used in many industries; benzene demand was around 49 million tons in 2018, and the demand growth mainly originates from Asia; the growth rate of demand for benzene comes close to GDP growth; the ratio of benzene capacity not integrated with downstream demand is very high, therefore, trading of benzene is very active. Chinese mainland is still a net importer of benzene, and there's uncertainty in the status of US benzene imports.
Mr. Ding thinks that the worse global economic growth expectation may weaken benzene demand.
Massive new capacity and benzene's characteristic as by-product indicate that it takes a long time for the industry to bottom out. It needs to focus on the progress of China's benzene self-sufficiency and periodical demand change in the US.
Mr. Ding's report mainly focuses on two major parts:
I. Global base chemical outlook:
Fundamentals have never changed. Base chemicals are major raw materials for downstream consumer goods, economic growth drives demand, low cost remains a development advantage, the keys are market access and logistics; In energy market, emerging trend is still evolving; social factors in production and business licensing, technological progress and world-class scale, application of digital technology.
Capital market is still looking for sustainable development advantages: Gain cost advantages of crude oil and raw materials (High oil prices and low natural gas costs coexist, vigorous develop natural gas; ethane has obvious advantages and the competitive area is enlarged; China is still dominant among all capital expenditure countries and regions.)
Mr. Ding thinks that 3 major problems that will bring about crucial impact on global petrochemical industry after 2020 are: vehicle power reform and oil demand peaks, direct production of crude oil into chemical products technique, and plastic waste problem.
II. Benzene fundamentals:
Various price indicators of benzene have turned red, indicating a downtrend cycle of benzene; benzene profits deteriorated since 2018; benzene is a kind of by-product, but could be used in many industries; benzene demand was around 49 million tons in 2018, and the demand growth mainly originates from Asia; the growth rate of demand for benzene comes close to GDP growth; the ratio of benzene capacity not integrated with downstream demand is very high, therefore, trading of benzene is very active. Chinese mainland is still a net importer of benzene, and there's uncertainty in the status of US benzene imports.
Mr. Ding thinks that the worse global economic growth expectation may weaken benzene demand.
Massive new capacity and benzene's characteristic as by-product indicate that it takes a long time for the industry to bottom out. It needs to focus on the progress of China's benzene self-sufficiency and periodical demand change in the US.
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