In the first half of this year, the prices of several key domestic chemical products continued to climb, with some reaching their highest levels in recent years. Among them, raw material medicines were particularly affected, experiencing significant price fluctuations. Alongside these trends, the tightening environmental regulations imposed by the national government have further increased operational costs for companies in the sector, making it harder for them to maintain profitability.
However, a recent report from the National Price Monitoring Center brings some relief: it predicts that chemical product prices will stabilize in the second half of the year, with some products potentially seeing a slight decline. This outlook offers a more optimistic perspective for industry players who have been struggling with rising costs and volatile market conditions.
According to the data, the average price of polyethylene during the first half of the year was 11,740 yuan per ton, a 3.16% decrease compared to the same period last year. Polypropylene averaged 11,389 yuan per ton, showing a 6.62% increase. PVC prices dropped by 14.09%, averaging 70,020 yuan per ton, while polyester chips fell by 2.83% to 10,654 yuan per ton. Butadiene rubber saw a 9.09% rise, reaching 15,484 yuan per ton. Overall, the average price of the five major chemical products was 11,258 yuan per ton, up 0.27% year-on-year.
The report attributes the price increases in the first half to factors such as growing demand, rising production costs, and higher international market prices. Notably, the sharp rise in crude oil prices has significantly increased input costs for chemical manufacturers, providing strong support for price hikes. Additionally, the upward trend in global chemical prices has also contributed to domestic price pressures.
Looking ahead, the report suggests that as global economic growth slows in the second half of the year, international crude oil prices are expected to decline, which should help stabilize chemical product prices. Economic growth is likely to be slower than in the first half, which could impact the pricing dynamics of chemical products. On a global scale, the world economy has experienced rapid growth in recent years, leading to a surge in primary commodity prices and the accumulation of various risks. To combat inflation, the U.S. has raised its benchmark interest rate to 5.25%, and the EU has also slightly increased its rates. This indicates that countries will continue to monitor potential inflation and financial risks, leading to a more cautious approach to economic expansion.
In China, the implementation of macro-control measures is expected to bring stability to the demand for raw materials and prices. As a result, the pressure on chemical product prices to keep rising will increase. Looking at the second half of the year, international oil prices are expected to fluctuate. In July and August, due to peak summer gasoline demand and increased weather-related disruptions, crude oil prices may rise temporarily. However, high oil prices can dampen demand. For example, the International Energy Agency recently lowered its forecast for global oil demand this year from 1.8 million barrels per day to 1.24 million barrels per day.
As a result, oil prices are expected to drop during the off-season, which could lead to a slight decline in chemical product prices later in the year. While prices may see a small increase in the short term, they are likely to stabilize or even fall in the latter part of the year. Despite this, the overall demand for chemical products remains strong, suggesting that prices will stay relatively high. Therefore, raw material medicine producers will likely continue to face cost pressures in the near future, which could affect their competitive edge based on price advantages.
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