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Price Trend> Echemi Analysis

Chinese Aniline Market Saw More Fruits in 2017

Coco

2018-01-04

Introduction: The Chinese aniline market performed differently and positively than 2016. The average profit hit a new high in recent years. Influenced by the national environmental protection supervision and de-capacity policies, aniline producers released the capacity rationally. Supply and demand had more influences on the aniline market, and the dependence on benzene shrank. The unit accident in Shandong Jinling boosted the price jump in September and October 2017. Meanwhile, the export volume of aniline also reached a new high.     

In 2016, the Chinese aniline market fluctuated within a narrow range in most of the time except the great increases in September and October. In 2017, the Chinese aniline market changed greatly: higher profits, increasing export volume, frequent changes in price, etc. Today, Echemi will bring the detailed analysis of the aniline market for you!

1. Market Review

In 2017, the Chinese aniline market fluctuated frequently influenced by the national environmental protection supervision and de-capacity policies. Moreover, the supply changes became the major influencing factor in 2017. Maintenance and unexpected shutdown of units brought big changes in the aniline market. The overall trend in 2017 can be divided in to four stages.

Aniline Price

Phase one: narrow fluctuations from January to end April

Aniline prices in East China and North China were roughly the same. Influenced by the great declines in benzene market, the aniline market prices declined briefly. Then Sinopec raised the posted prices of benzene, and aniline producers raised offers actively. Buying activities were active before the Spring Festival. After the Spring Festival holiday, the demand recovered, which supported the firm aniline market. Though the aniline market declined during the end of February to early March, the jump in export market boosted the aniline market. Moreover, the 9% export rebates improved the production activity and market prices. In April, the aniline market increased obviously as the units in Shandong Jinling and Dongying Jinmao were shut twice at the end of March and in H1 April. The supply became tight in Shandong. Taking the aniline market in Shandong as the example, up to April 28, the highest and lowest prices were RMB 9,910/mt in H2 February and RMB 8,290 in H1 January. The price spread was narrow.  

Phase two: continuous declines from May to July

The Chinese aniline market fluctuated lower from May to July. The price spread between highest and lowest prices was RMB 3,000/mt or so. At the end of April, most units restarted and ran at high loads on the high profits. The overall operating rate reached 70.87%, which led to surplus supply. Moreover, benzene prices moved down. In June, though the benzene prices were adjusted for three times, the aniline market moved marginally. In July, the aniline market remained stable for a short time first and then showed a downtrend. At the end of June, the unit at Shanxi Tianji Chemical was shut unexpectedly, and the unit at Jinmao was shut. The supply in North China declined. Meanwhile, downstream units ran stably and the aniline market remained stable. However, the declined came again when most shut units restarted. Producers had to reduce prices on the inventory pressure.

Phase three: fluctuated upwards from August to early November

The unit accident in Shandong Jinling was the major push factor for the price increases from August to early November. The reduction of capacity decreased the supply of low-priced aniline. Taking the aniline prices in North China and Shandong as the example, up to August 11, the average price increased from RMB 7,130/mt at the end of July to RMB 9,705/mt/mt, slumping 26.53%. But, as the environmental protection supervision team entered Shandong, some downstream units of aniline were shut. Moreover, Shandong Jinling sold some goods to the market. The aniline prices went down. Entering the September, the declined capacity started to push the aniline market. Tight supply made the prices increased greatly and rapidly. Taking the aniline prices in North China and Shandong as the example, aniline prices increased from RMB 8,550/mt to RMB 12,620/mt, increasing RMB 4,770/mt or 47.60%. Downstream users showed high resistance to high-priced aniline.

Phase four: V-shaped Trend from mid-November to December

After November 8, units of Shanxi Tianji and Huatai restarted, and the supply of aniline increased. The operating rate of MDI and rubber additives were low. The supply exceeded the demand and prices went down. In December, supported by the supply and production cost supported the aniline market. Sinopec raised benzene prices twice. Moreover, units in PetroChina Lanzhou Petrochemical and Jinmao underwent maintenance. Players were bullish about the market and prices went up again. In H2 December, the supply and demand was largely stable, and the market remained largely stable.

2. Analysis of 2013-2017 Co-Movement Between Benzene and Aniline

benzene

From the price comparison between benzene and aniline markets, the co-movement became weak gradually. Based on the co-movement change, it could be divided into three stages: strong period during 2013-2014, stepwise weakening stage in 2015, rapid weakening stage during 2016-2017. Benzene is the raw material of aniline and the influence on aniline market is continuous. As for the declined co-movement, other influencing factors started to play a key role in the aniline market.

From 2013 to 2014, the aniline industry developed slowly on the surplus capacity. The overall inventory was high ans the demand increased quite slowly. The supply and demand couldn’t support the aniline prices, and the aniline market had high dependence on the benzene market. From 2015, with the de-capacity, increases in demand and the expanded export market, the influence of supply and demand on the aniline market started to be active. From 2016 to 2017, the aniline market became mature gradually. Supply and demand became the major influencing factor gradually. Thus, the co-movement between benzene and aniline declined.   

3. Aniline Export Analysis

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In 2017, the Chinese aniline market performed optimistically. Prices were higher than those in 2016, and the profits increased greatly in 2017. Beside the supply side reform, jumping export of aniline also promote the development of aniline market in 2017.    

From the export destinations of China’s aniline, Hungary was the largest importer with the import volume being 59.4kt in the first 11 months of 2017, occupying around 35% of the total. In 2016, around 40.9kt of aniline were exported to Hungary. The U.S. ranked the third place. The import volume was 22.7kt from January to November, taking up 13% of the total. In 2016, around 16.7kt of aniline were exported to the U.S. Moreover, Spain imported 14.9kt and Belgium imported 7kt of aniline from China from January to November. The demand from Europe and America was the major driving factor for the great increases in China’s aniline export. There were two major reasons: First, the global MDI market were at high levels, and some backward units restarted again on the high profits. The demand for aniline jumped. Second, the operation of some aniline units in Europe was unstable. Moreover, influenced by the hurricane, some units were shut in the U.S. The demand for aniline became quite high.      

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Besides the Europe and America, India, South Korea and Japan were still the major importers of China’s aniline. India imported 41.8kt of aniline from January to November, occupying around 25% of the total. In 2016, India imported 43.2kt aniline. China exported 14.3kt and 2.6kt of aniline to South Korea and Japan respectively.

In 2015, Wanhua purchased the MDI unit in Hungary, and China exported to 30kt-40kt of aniline to Hungary. In 2017, as the demand for aniline boomed, the export volume to Hungary may increase by 18kt-30kt.

4. Aniline Profit Analysis

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As mentioned in the context, the aniline market jumped in September and October on the tight supply and hit a new high. Meanwhile, the profits also went to a high point. Last time when the profit hit RMB 3,000 was in 2010.

In 2017, the profits of aniline hit a new high from 2010. October 2017 saw the highest profit at RMB 4,795/mt. Rapid increases in aniline prices boosted the profits. Up to October 26, the aniline prices in North China increased from RMB 8,550/mt in early September to RMB 12,620/mt by acceptance. The price increased RMB 4,770/mt or 47.60%.  

Compared with the profits in 2016, the profits of aniline increased obviously in 2017. More and more aniline were exported to the foreign market and the capacity declined. Currently, the 200kt/a unit at Shandong Jinling will restart in 2018. The 100kt/a unit at Shandong Huatai cannot produce normally now. The 360kt/a unit at Wanhua may be put into operation in H2 2018. Therefore, the profits of aniline in 2018 may shrink.

5. Conclusion

The Chinese aniline market was fruitful in 2017. Aniline prices, profits and export volume increased greatly. With the restart of Shandong Jinling’s aniline unit, the overall capacity won’t change greatly in 2018. With the safety supervision, the operating rate and profits in downstream industries will decide the aniline market trend in 2018. 

Source: Echemi
Disclaimer: Echemi reserves the right of final explanation and revision for all the information.

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