Why are chemical products rising in price across the board

Small partners who pay attention to the chemical sector should have noticed recently that the chemical industry has ushered in a strong price rise. What are the realistic factors behind the price rise?

(1) From the demand side: the chemical industry as a procyclical industry, in the post-epidemic era, with the comprehensive resumption of work and production of all industries, China’s macro economy fully recovered, the chemical industry is also highly prosperous, thus driving the growth of upstream raw materials such as viscous staple fiber, spandex, ethylene glycol, MDI, etc. [Procyclical industries refer to the industries that operate with the economic cycle. When the economy is booming, the industry can make good profits, and when the economy is depressed, the industry profits are also depressed. Industry profits are constantly changing according to the economic cycle.

(2) On the supply side, the price increase may have been influenced by extreme cold weather in the US: The US has been hit by two large spells of extreme cold in the past few days, and oil prices have been pushed up by news that oil and gas production, processing and trade in the energy state of Texas have been severely disrupted.Not only is this having a broad impact on the U.S. oil and gas industry, but some of the shuttered fields and refineries are taking longer to recover.

(3) From the perspective of the industry, the production and supply of raw materials of chemical products are basically controlled by leading companies with high barriers to entry. The high barriers to entry of the industry protect the enterprises in the industry, leading to the sharp rise of raw material prices all the way. In addition, the bargaining power of middle and downstream enterprises is weak, which makes it impossible to form an effective joint force to restrict the price rise.

(4) After a year of recovery, the international oil price has returned to the high of $65 / BBL, and the price will rise faster and more rapidly due to lower inventories and higher marginal costs of restarting upstream production activities.

Media Contact
Company Name: Xuzhou Huide New material Technology Co., Ltd
Email: Send Email
Country: China
Website: https://www.xzhdindustry.com/


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