period, the internal logic of passive components, cement, hydrofluoric acid, propylene and other raw materials that have increased prices due to the epidemic have different internal logic, including strong demand, suppliers, and urgent demand for the epidemic, which has also led to differentiation in their subsequent performance.
Under the influence of the epidemic, the resumption rate and poor traffic have caused passive components, cement, hydrofluoric acid, propylene and other raw materials to rise after the holiday, which has also had a great impact on the upstream and downstream of their respective industrial chains.
is both price increase, but its internal logic is different, which makes some price increase varieties rise all the way, some of which have price increase fall to a lower level after a period of time, while others show "price increase-price decrease-price increase", which is different. Securities Times·Data Bao sorted out the price increase after the holiday and its impact on the upstream and downstream of the industrial chain, and analyzed the supply and demand and price changes of the raw material market after the holiday.
price increase led by the supply side: passive component prices have risen all the way
Unlike the price increase of many raw materials, the price increase of passive components has already started since the second half of last year. Taiwan's passive component factory led by Guoju Electronics has led several waves of price increases in passive components such as MLCC and chip resistors, based on the high demand for 5G and autonomous driving.
Guoju Electronics accounts for a very large share in the passive component industry, and its price increase will often form a general increase in industry prices, which has a strong driving effect. According to public information, Guoju's market share in MLCC is 10%, ranking third; its market share in chip resistors is 34%, far ahead of other competitors, ranking first.
The second half of last year until before the festival was the first phase of price increase, and was dominated by industry leaders when passive component inventory declined. At the end of November last year, resistor manufacturer Dayi Technology took the lead in saying that it had completed price increase for its resistor products. Guoju closed the trading system, cleared orders that had not been completed and orders that had not yet been confirmed, and made a wave of fancy price increases. At the beginning of this year, Guoju Electronics announced that its two major products, MLCC capacitors and thick film resistors, had increased by at least 10%. After the holiday, with the outbreak of the new crown epidemic, passive components ushered in the second phase of price increase. In the case of poor transportation and difficulty in resuming work by employees, inventory on the demand side continued to decline, causing suppliers such as Guoju to start price increases. During this period, suppliers frequently updated the price increase, causing prices to continue to rise. It was Guoju that was the first to disclose the news of the price increase of chip resistors. The increase was first set at 30%, and after continuous adjustments, it was set at 70-80%, and other manufacturers followed suit.
The third phase of price increase occurred during the resumption of work and production in China and the outbreak of overseas epidemics, and was still dominated by supplier giants. At this time, the production capacity in the Philippines, Malaysia and other places was partially affected, but the production capacity in South China and East China has been fully released, with a small overall impact. Regarding price increases, Guoju once stated that prices are left to market supply and demand, and prices will not be capped.
Under the influence of the epidemic, the global demand for passive components has not returned to normal levels. In the first two stages, there are price increases caused by inventory replenishment. With the full resumption of work in China, the output of passive components supply side is sufficient, and the factors of inventory replenishment are less affected. The price increase in the third stage is largely a strong price increase led by passive component manufacturers.
In consumer electronics, the function of passive components is indispensable, but their value accounts for a low proportion. The price increase of passive components has little impact on downstream consumer electronics, so it generally will not be subject to too much rebound from downstream. This is also one of the main reasons why manufacturers such as Guoju frequently raise prices after the holiday.
In recent years, Guoju has been the most active manufacturer in the passive component industry for price increases. Taiwanese passive component manufacturers have cheered, and sometimes even a notice will surprise price increases. This is not difficult to explain the behavior of manufacturers still increasing prices while demand has weakened recently. However, according to some downstream manufacturers in the supply chain, although manufacturers frequently raise prices, the actual transaction volume is not large.
The frequent price increase of manufacturers such as Guoju may have another meaning. According to Taiwanese media reports, the market value of manufacturers such as Guoju and Huaxinke has increased significantly recently after the holiday.Guoju and Huaxinke have successively raised funds in the Taiwan market. Stimulated by the news of price increases, the stock prices of passive component-related stocks in Taiwan have surged, becoming the most popular industry in the Taiwan stock market.
Price increase caused by urgent needs: The shortage of masks triggered a chain of upstream chemical products
During the COVID-19 pandemic, masks have become extremely scarce urgent needs products, and the global daily consumption of masks is astonishing. A large number of domestic companies have invested in the production of masks. Stimulated by huge demand, the prices of meltblown fabrics and related chemical raw materials for masks have soared.
China is the country with the largest mask production capacity in the world, and its annual output before the outbreak accounted for about 50% of the global total output. With the rapid spread of the epidemic abroad, companies such as BYD, Gree, and Wuling Automobile have begun to switch to producing masks, and China has become the main source of supply of masks worldwide.
According to public information, since the outbreak of the epidemic, about 9,000 companies have joined the mask production industry by the end of March, a 20-fold increase from more than 400 in 2019. Production capacity has also seen explosive growth, with daily output of more than 200 million, a sharp increase of 13 times compared with 14 million last year.
In the early days, meltblown fabrics, the most direct upstream of masks, were the first to increase their prices. Meltblown cloth is a key material for bringing virus filtration to masks and is an indispensable "heart" for medical surgical masks and N95 masks. Before the epidemic, the meltblown cloth market was lukewarm and the production capacity was not high. The sudden epidemic caused the demand for meltblown cloth to reach several levels, with supply exceeding demand and prices soaring. At the beginning of March, meltblown fabrics with prices ranging from 10,000 to 30,000 yuan had increased by at least 10 times, and some middlemen even asked for 400,000 yuan per ton.
The hot market for meltblown fabrics quickly attracted a large number of manufacturers. After the industrial chain transmission, the price of propylene upstream of meltblown fabrics soared in April. From early April to April 12 in just 10 days, the price of propylene increased by as much as 80%, forming a national trend of grabbing goods. However, after the boom, propylene prices quickly fell back to March levels.
The sharp increase in the output of propylene and polypropylene has also affected the price of propylene oxide. In the chemical industry chain, propylene oxide and polypropylene are both direct downstream of propylene and are derivatives of propylene. The expansion of polypropylene production has seized some of the propylene originally used for propylene oxide, which is the most direct reason for the price increase of propylene oxide.
According to public information, the national average price of propylene oxide on April 14 was 9,200 yuan/ton, which was 21% higher than 4 days ago (April 10). Although the price fell sharply at one point, it quickly stopped falling and rebounded at the end of April, with an increase of nearly 20%. As of May 19, the national quotation was around 9,500 yuan/ton, which has exceeded the previous high on April 14.
Entering May, the overseas epidemic has not only not eased, but the situation is still worsening. In addition to the continued growth of the epidemic in Europe and the United States, Russia, Brazil, India, Peru and other regions have become new outbreak centers. It seems that it will take some time for the epidemic to improve significantly around the world. Some experts said that another global outbreak period will usher in between August and November, and the demand for masks will rise to a higher level.
The global popularity of masks has an all-round impact on chemical prices. Although the price of large manufacturers such as Sinopec fell after expanding propylene production capacity, according to observation, it has a trend of rising again; propylene oxide production capacity has not expanded significantly, and its price will immediately rise to a higher price as soon as it falls slightly. Masks will be a global demand this year, and their demand will be determined to grow in the short term, which determines that the prices of upstream chemicals will be difficult to truly fall back to the usual level.
The epidemic triggered a short-term price increase: demand is weak, and the price of hydrofluoric acid has dropped more after the price increase
Fluorine chemical industry includes upstream fluorite mining, hydrofluoric acid fluoride salt production, downstream refrigerant manufacturing and other links. After the holiday, the insufficient operating rate, poor transportation, and shortage of raw materials caused by the epidemic continued to affect the fluorine chemical industry. The prices of fluorite and hydrofluoric acid have continued to rise, with a cumulative increase of about 10% by early March.
fluorite is the upstream of hydrofluoric acid. After the holiday, fluorite manufacturers started construction with limited supply, and the price was very tight. The price was at a high level. In early March, the price rose by 8.7% compared with before the holiday. According to data from the Business Society, the average price of fluorite on March 3 was 3133.33 yuan/ton, and the supply of goods in the national market was relatively tight.
Hydrofluoric acid prices have also risen after the holiday. On the one hand, it is affected by the price increase of fluorite upstream, and on the other hand, it is due to the insufficient operating rate due to the epidemic, which makes hydrofluoric acid output unable to meet downstream demand. In March, its price rose to 11,520 yuan/ton, up 13% from before the holiday.
With the full resumption of work across the country, hydrofluoric acid production has been restored. On the other hand, the demand for downstream refrigerants is relatively sluggish, causing the price of hydrofluoric acid to fall below 9,000 yuan/ton in April, and there is still a trend of continuous decline.
demand is sluggish and prices are sluggish. The hydrofluoric acid and fluorine chemical sectors have performed averagely recently and have not seen a large increase with the market rise.
Further demand has led to price increases: infrastructure has made efforts to stop the decline and rebound
In the early stage of the epidemic, many infrastructure in the country were in a stagnant state, causing cement demand to shrink extremely and prices to fall rapidly.
National Cement Price Index shows that after the holiday, cement prices have continued to fall, reaching a low point around April 22, with a drop of more than 10%. (The national cement price index is compiled by China Cement Network, and the data is collected from the main cement consumption markets in 31 provinces across the country, which can reflect the overall trend of domestic cement prices.)
With the resumption of work and production and the issuance of special bonds from various places, the progress of national infrastructure construction has significantly accelerated recently. According to data from the Bureau of Statistics, real estate development investment increased by -3.3% year-on-year from January to April this year, but increased by 7.0% in a single month in April. From January to April, narrow infrastructure grew by -11.8% year-on-year, 2.3% in a single month, and broad infrastructure investment grew by -8.8% in January to April, and 4.8% in a single month, and the growth rate rebounded from January to March. Huatai Securities believes that the impact of the epidemic has weakened and investment data is recovering at an accelerated state. It is expected that the recovery of infrastructure is expected to continue to drive the growth rate of orders for infrastructure enterprises to return to the upward trend.
Cement demand is relatively rigid, and the overall demand for the whole year will not change too much due to the shutdown time. The construction progress affected by the epidemic will be made up in the second half of the year. It is understood that in order to accelerate economic recovery, some infrastructure projects that have been approved in previous years but have not been fully started are also being accelerated, which objectively led to a concentrated outbreak of cement demand. The recovery in infrastructure is accompanied by the rapid increase in the national cement shipment rate. The delivery rate of some enterprises even exceeds 100%, and sales exceed production. This has also caused the national cement and clinker inventory to drop rapidly, and the inventory of most enterprises has dropped to less than 60%.
Conch Cement said that it has basically resumed work and production since mid-to-late March. The whole month of April was full of work and production, and the production and sales volume in April was a historical high, with an average daily sales level of more than 1.05 million tons. Cement sales have increased sharply, causing the inventory of conch cement to drop rapidly, and the production and sales of peak cement are basically similar.
Cement price changes are mainly affected by supply and demand. At present, downstream demand is strong and its own inventory has dropped rapidly, driving cement prices to rise on a large scale since late April. Zhejiang, southern Jiangsu and Jiangxi have generally risen by 20-30 yuan/ton, Guizhou has rebounded by 10-20 yuan/ton, and the northwest region has seen 2-3 rounds of price increases, and Gansu Tianshui and Pingliang cement prices have been raised by 30-50 yuan/ton.
The recent positive for listed companies in the cement industry is not only that cement prices finally stopped falling and rebounded, but also the cost side decline. The coal prices this year, including international energy prices, have dropped significantly, so the benefits of listed companies in the cement industry may have good performance this year. (Data Bao Wang Linpeng)
