Recent prices of chemical products: Why are they rising?

      While the recent oil price still hovering at the bottom, chemicals and other commodities are building a broad based commodity of market prices. Butadiene has soared 33% last week, rose 13% ethylene glycol, and this week, PTA futures trading, volatility is not even always ethylene and propylene also rose more than 5%. Long before the holiday hoard goods receipt in the post quite good.

     Orient Securities analyst Zhao Chen said that the demand side has not improved significantly, and the current round of price rebound reflected chemicals is characterized by a large midstream products rose, but lagged behind the downstream product price increases, raw material prices only to be passive reaction.

     So, the root cause of this rally there? Orient Securities believes that the core oil inventories approaching the limits of the refinery led to large scale production, midstream petrochemical product supply and cause tensions. The logic on butadiene reflected more obvious.

      Orient Securities analysts said Chen Zhao, butadiene rose because supply terminal decline in production. Global butadiene almost entirely from ethylene cracking byproduct, since the proportion of total output accounted for petrochemicals is very low, only about 4%, so no matter the price level will not affect the petrochemical plant operating rates. Also under pressure gaseous butadiene, from poly strong, basically no way to store goods, the price of the end petrochemical production capacity utilization rate is very sensitive. In the current context of weak demand, the price of butadiene rose able, to a large extent can be identified petrochemical operating rate fell sharply.

      But the problem will follow, either in North America or Asia, are now refining spreads at record highs, while China is due to the oil prices around 50 dollars down to stop, only $ 35 compared to the current cost of raw materials, its 15 dollar spread can be completely converted to the basic profit margin to an unprecedented high level, this point in time chosen to stop, certainly puzzling.

      Orient Securities believes that the capacity limit is the root cause of petrochemical production. Starting in 2014, the root causes of the drop in oil prices is that oil consumption needs of the global downturn, but they do not cut all oil producers, consumer demand is greater than supply start duration, the difference between the two can only rely on inventory needs to make up. This is reflected in two aspects, one is the crude oil inventory increase, and the other is oil inventories increase.

      Currently, various regions of the world the presence of refined oil depot have reached record highs, and experienced the peak winter heating oil, the March-April oil consumption has entered a stage of the trough. Refinery profitability even better, you can only choose shutdowns to ease the pressure expansion library.

      In summary, Orient Securities is expected in the second quarter will continue to suppress the high inventory refinery operating rates, so prices are relatively chemicals will remain relatively strong, which is expected to benefit significantly from the direct product of oil refining, such as ethylene, propylene, butadiene and benzene, PX, etc., corresponding to the expected company will also be expected to benefit.

      For the relatively strong performance chemicals, Assistant Director, Institute of Boseong futures financial Cheng Xiaoyong think, on the one hand is the elasticity of supply of chemicals related to the relatively rigid, that the upstream petrochemical enterprises the right to speak is large, very strong relative price strength; on the other hand, crude oil prices on the cost of petrochemical products may be delayed conduction, so the short-term trend was stronger chemicals to crude oil prices.

     In addition to chemicals, copper, iron ore and other commodities generally rose. Wall Street knowledge mentioned March 1, since February of this year, iron ore prices have risen 17.8% since December 2012, the biggest monthly gain. Steel production complex is expected to heat up, driven by seasonal demand peak season and other iron ore as the representative of the infrastructure and other varieties of coal steel rose across the board. Last week, the spot price of iron ore for the first time exceeded $ 50 / tonne since last October.

     March 2, the London Metal Exchange (LME) three-month copper futures extended gains, up 1.6 percent, the highest since November 16 last year, a new high, a further rise in the previous day up 0.5% basis. Shanghai Futures Exchange, the main copper contract rose 2.7% and up 2.6% to promote nickel, zinc rose 1.7%.

     Reuters quoted the Institute of British goods (CRU) in Beijing, said analyst Li Chunlan, although the scale of China's copper inventories are very high, but the price has rebounded, mainly because of China's property market bullish sentiment.

     Wall Street knowledge mentioned today, following yesterday rose more than 4% of the largest one-day gain since a four-month after the stock index continued to rise today, nonferrous metals, real estate sector once again showed significant gains. Haitong Securities chief strategist Xun Yu root that, A shares rose the past two days in a row, which nonferrous metals, steel, real estate and other "price concept" and continues to be a recent favorite, while the "price" of the power sourcis nothing less than spring "supply-side reform" monetary authorities cut capacity  "rescue."