The price of plasticizer DBP stabilized after falling this week

 

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According to the Commodity Market Analysis System of Business Society, as of January 5th, the DBP price was 9675 yuan/ton, a decrease of 0.77% from the DBP price of 9750 yuan/ton on December 29th. After the holiday, the prices of raw materials n-butanol and isooctanol first rose and then fell. DBP cost support still exists, DBP enterprise operating rates have decreased, downstream procurement enthusiasm has decreased, and DBP prices have fallen after the holiday.

 

The price of isooctanol first fell and then rose

 

According to the Commodity Market Analysis System of Shengyishe, as of January 5th, the price of isooctanol was 12962.50 yuan/ton, which was a decrease and then an increase of 0.10% compared to the price of isooctanol on December 29th, which was 12950 yuan/ton. After the holiday, the operating rate of downstream plasticizers has fallen, and large plasticizer factories have a strong demand for procurement. The transaction of isooctanol is poor, and the high price support for isooctanol is insufficient. After the holiday, the main manufacturers of isooctanol have offered discounts for sales, but the price of isooctanol has fallen. As DBP enterprises start operating lower, DBP prices have risen, and the support for the rise of isooctanol still exists.

 

The price of n-butanol first fell and then rose

 

According to the Commodity Market Analysis System of Shengyishe, as of January 5th, the price of n-butanol was 8716.67 yuan/ton, which decreased first and then increased compared to December 29th when the price of n-butanol was 8700 yuan/ton, with an increase of 0.19%. At the beginning of the week, the trading atmosphere on the n-butanol exchange was light, with limited transactions. The n-butanol market was weakly declining, and the n-butanol factory quotation was lowered. During the mid week period, some devices in the n-butanol plant were shut down for maintenance, and downstream demand for n-butanol improved. The inquiry atmosphere in the plant warmed up, and the n-butanol market began to decline before rebounding. The overall market price returned to the beginning of the week and slightly increased.

 

Future expectations

 

Business Society plasticizer product data analysts believe that in terms of raw materials: after the holiday, the prices of n-butanol and isooctanol first fell and then rose, and DBP raw material cost support still exists. In the future, n-butanol and isooctanol are expected to remain stable and strong, while plasticizer cost support still exists. DBP supply is decreasing and demand is weak. It is expected that DBP prices will remain stable and strong in the future.

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Zinc prices continue to rise in December

 

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According to the Commodity Market Analysis System of Shengyishe, as of December 29th, the zinc price was 21588 yuan/ton, an increase of 3.92% from the zinc price of 20774 yuan/ton on December 1st; From December 13th to December 26th, zinc prices rose continuously, with a growth rate of 3.42%. The macroeconomic data is positive, and the supply of zinc in the market is limited. Zinc prices fluctuated and rose in December.

 

Macro data is positive

 

According to S&P’s global market intelligence data, the initial PMI for the Markit service industry in the United States in December was 51.3, reaching a new high since July. The initial value of Markit’s manufacturing PMI in the United States fell to 48.2 in December. This is the lowest number since August this year. The Markit service industry PMI and comprehensive PMI in the United States reached new highs since July in December, while the manufacturing industry PMI shrank. The US economy slightly rebounded in December, ending the year at its fastest growth rate since July. On December 13th local time, the Federal Reserve held a meeting of the Federal Open Market Committee (FOMC) to discuss interest rates and issued a statement that the current rate hike cycle may have ended and the rate cut cycle is about to begin: the Federal Reserve will have three 25 basis point rate cuts in 2024. The Federal Reserve’s interest rate cut signal has boosted market enthusiasm and brought macroeconomic benefits; In December, the US dollar index continued to decline significantly, with metals denominated in the US dollar being cheaper for holders of other currencies. The non-ferrous metal market was positive, and non-ferrous metals generally rose.

 

Expected decrease in zinc supply in the market

 

The sanctions imposed by the Office of Foreign Assets Control, a subsidiary of the US Department of Commerce, have made Russian mining giant Sviblov the latest business person to be blacklisted. Another company affected by the Sviblov sanctions is Ozernoye, which is developing one of the world’s largest zinc mines. The mine is expected to account for 4% of global production. Affected by sanctions, the expected supply of zinc in the market has decreased, leading to an increase in zinc prices.

 

On December 21st, Myra Falls, a subsidiary of Tok, announced that it will close the mine and beneficiation plant due to increased operating costs and accept long-term maintenance. The zinc production of the mine is about 30000 metal tons per year. It is estimated that these mines will continue to bring a reduction of 154600 metal tons next year, accounting for 1.29% of the global zinc ore supply.

 

Due to weather conditions, mines in northern China have gradually experienced seasonal production reductions, with a shutdown period of about 4-5 months. The overall impact on production is 55000 metal tons, compared to 47000 metal tons in the same period last year. The expected decrease in domestic zinc ore production and the expected decrease in zinc market supply.

 

Weak demand for zinc in the market

 

Environmental protection and production restrictions have reappeared in the northern region, and the commencement of galvanizing has declined; There is no significant increase in zinc oxide orders, and overall production has shrunk; The number of new orders for die-casting zinc alloy has declined, and the impact of domestic cold waves has led to a decline in infrastructure and real estate construction. Terminal demand has entered a seasonal off-season, and downstream demand for zinc ingots has declined.

 

Future Market Forecast

According to data analysts from Business Society, macro economic data in the United States has rebounded, with the US dollar index falling in December and non-ferrous metals generally rising; In terms of supply, the United States has imposed sanctions on Russia, resulting in a reduction in the production of Tok Group’s zinc mine and a phased reduction in domestic zinc mine production, leading to an expected decrease in zinc mine supply; The impact of environmental protection and seasonal off-season has led to weak demand for zinc in the market. In the future, there has been an oversupply of zinc ore in recent months, and the overall zinc market is still oversupplied. The supply of zinc ore has continued to decrease in the past 24 years. With the end of the seasonal off-season, the demand for zinc in the market will eventually rebound. The weak zinc market in January is still expected, and the zinc price is expected to fluctuate slightly. With the end of the seasonal off-season in the zinc market, the expectation for medium and long-term zinc prices to rebound and rise.

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Aluminum prices slightly rebounded in December

 

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According to the Commodity Market Analysis System of Business Society, the average price of aluminum ingots in the East China market on December 29, 2023 was 19593.33 yuan/ton, an increase of 4.93% compared to the aluminum price of 18673.33 yuan/ton at the beginning of the month (December 1).

 

In the long run, the current price is at a high level in the range of sideways fluctuations. Since May, it has been fluctuating below 19000 yuan/ton, and by the end of August, it has exceeded 19000 yuan/ton. In September, aluminum prices first fell and then rose. In October, the center of gravity of aluminum prices fell back to around 19000 yuan/ton and fluctuated. In November, aluminum prices were weak and began to recover after mid December, standing above 19000 yuan/ton.

 

Observing downstream demand in the future market

 

In the short term, the supply of bauxite is relatively scarce. In addition, the heavy pollution weather range in the Beijing Tianjin Hebei and surrounding areas is from December 22, 2023 to January 4, 2024, and some areas may continue to support the cost of electrolytic aluminum due to weather difficulties and transportation difficulties, resulting in tight supply of goods.

 

The bearish factor lies in downstream consumption. The operating rate of downstream processing enterprises in the Central Plains region is expected to decrease. Recently, processing enterprises in Henan Province have experienced a decline in production due to environmental control measures. The mainstream consumer area in Henan is facing production restrictions due to environmental protection, and coupled with the off-season of consumption, there is an expectation of significant accumulation of aluminum inventory in the future. Fortunately, according to the data from the social inventory, it is in a low inventory state. As of December 25th, the mainstream social inventory of electrolytic aluminum ingots in China was 414000 tons, with 149000 tons of inventory removed compared to November 30th. Based on year-on-year data, it is at a low level in the same period of nearly five years.

 

Future market forecast

 

The strong price of alumina may continue, and cost support may strengthen. But currently, aluminum prices are also rising rapidly, digesting some of the positive news; Gradually entering the downstream consumption off-season, fortunately, the current social inventory of aluminum ingots remains low, providing some support for aluminum prices, but the upward space is narrowing.

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