A new round of central environmental inspection is about to carrying on! Chemical raw materials will again increase drasticly!

February 27, 2018

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Recently, the Ministry of Environmental Protection of PRC held an enlargement meeting. At the meeting, it was announced that in 2019 the second round of central environmental supervision was being planned.

 

The Ministry of Environmental Protection stated that it plans to launch the second round of Central Environmental protection Supervision in 2019. From the end of 2015 to 2017, China has completed the first round of central environmental protection supervision in 31 provinces (autonomous regions and municipalities), effectively promoted local environmental protection work, and solved a large number of outstanding environmental problems.

 

According to the statistics, the first round of central environmental inspections directly promoted the settlement of more than 80,000 environmental problems around civilians; at the same time, helped the local governments to solve of a number of environmental issues that had been delayed for many years. Among the 1,532 extremely serious environmental issues, half of them were resolved.

 

At the same time, the first round of inspections carried out individual talks with 768 provincial and above leading cadres and 677 ministry cadres, and conducted interviews with 689 provincial departments and units. Through the accountability of the inspections, a group of leading cadres were alerted and the environmental protection pressure was effectively transmitted.

 

Since the beginning of inspection, each province (autonomous regions and municipalities) has issued or amended more than 240 ecological environmental protection policies, regulations, and system standards. Thirty-one provinces have issued documents for each environmental protection responsibility division, environmental protection inspection programs,the enforcement measures for the cadres’ responsibility for the damage to the ecological environment; Twenty-six provinces have carried out or are conducting provincial environmental protection inspections.

 

Recently, CCTV News reported that at the National Environmental Protection Working Conference of 2018, the Minister of Environmental Protection, Mr. Li Ganjie, pointed out that, in the next three years the top priority is to win the battle with environmental pollution is to protect the blue sky and furthermore, significantly reduce the concentration of PM2.5.

 

Industry experts stated: the environmental protection situation in 2018 is still severe, and chemical raw materials price will continue to increase!

 

Environmental protection will be continued do investigation strictly for 3 years

 

According to CCTV, beginning from 2018 and the environmental protection will be investigated strictly for three years. Apart from Beijing, Tianjin, Hebei and its neighboring areas and the Yangtze River Delta region, this time, the Plain of Pelicans (including Xi’an in Shanxi Province and Xianyang Shan’xi Province) will be included for the first time as the key air pollution prevention and control regions.

 

In 2018, the Ministry of Environmental Protection needs to focus on doing a good job at: draft a comprehensive plan to win the Blue Sky Battle. Formulating a three-year plan for the implementation of the strategy of winning the battle and introduce air pollution prevention and control programs in key regions such as Beijing, Tianjin, Hebei and surrounding areas, the Yangtze River Delta, and the Chongqing Plain. The average concentration of PM2.5 in urban areas above and below PM2.5 decreased by 2% year-on-year; the ratio of days with good air quality in cities above prefecture level reached 79%; sulfur dioxide and nitrogen oxide emissions continue to decline; continue to promote the management of bulk coal and vehicle pollution .

 

Insufficient raw material production capacity

 

Global de-capacity has been undertaking for some time. After many TDI international companies started to de-capacity in 2016, the market supply was insufficient. Domestic TDI prices soared to RMB 50,000/ton, and the price is still continuing to rise, which highly surprised many people!

 

In addition, the impact of the 2017 emergency on chemical production capacity is not small — some chemical giants, including BASF, need to suspend production because of the force majeure factors, and the shortage of international markets has caused changes in domestic product prices. For example, the price of MDI (Diphenyl-methane-diisocyanate) was deeply affected by the Hurricane Harvey on the Gulf of America.

 

Rising crude oil prices and price monopoly

 

Saudi Arabia and Russia promised to extend their production cuts at the OPEC meeting in Vienna on November 30th, which provided good support for the supply side of the crude oil market. Investment banks such as Goldman Sachs and UBS raised their expected prices of crude oil. It is expected that the crude oil market will continue to improve in 2018. However, there is still little room for further development. The international crude oil price may run within the range of US$45-70/barrel for the whole year. Crude oil price fluctuations have a certain impact on the chemical industry. Judging from the current situation, crude oil market will still be very optimistic in 2018! There is a great possibility that the price increase of some chemical products will come true.

 

The other is price monopoly. The Ministry of Commerce of the PRC has been dealing with dumping of chemical materials in its own country recently. Apart from this, some domestic products have high technical barriers, which resulting in fewer manufacturers, which are prone to high prices and downstream joint work to increase the price. In the plastics industry, many companies have penalized for joint-price-increasement of PVC, and in the chemical industry, four major domestic manufacturers of TDI have been reported by downsteam manufacturers of price-controlling. Not to mention whether there is a monopoly on prices. In terms of certain products, there are few manufacturers, and the initiative is turned to sellers. In addition, some middlemen and traders are squeezing prices and the price is higher during this process.

 

These are the existing facts. Additionally, the unexpected incidents, the new policies, and force majeure will also lead to the price increasing of chemical raw material. Therefore, in the following year, we shall pay more attention to the changes in the market and make sufficient pan for stocking.

 

 


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