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Industry dynamics

There was heavy pollution before, and then there was a wide range of power cuts. It’s really hard for choline prices to fall.

Author:Source:Visit:Time:2020-12-30 15:46:11

In the recent two issues of Choline Chloride Market Information, we have been analyzing the impact of environmental factors on choline chloride and its upstream raw materials. I kept shouting, the wolf is coming, the wolf is coming, this time the wolf is really coming.

Affected by this, the tight supply of trimethylamine, the upstream raw material of choline chloride, has reappeared. The long wait for delivery at the trimethylamine factory and the phenomenon of dumping cars are serious. Many downstream customers choose to automatically increase prices in order to obtain scarce sources. There has been a sharp increase of 700 yuan/ton (the current mainstream ex-factory transaction price of trimethylamine refers to 7000-7500 yuan/ton). The shortage of trimethylamine has made the supply and production chain of choline chloride manufacturers even tighter, making the tight supply of choline chloride even worse. According to market news, the price of betaine, which is also downstream of trimethylamine, has recently jumped from 9,000 yuan/ton to 13,000 yuan/ton. Under the background that the extremely tight supply of trimethylamine cannot be effectively alleviated in the short term and the price of trimethylamine continues to rise, the continued rise in the price of choline chloride will not be a surprise.

Since December, Zhejiang, Hunan, and Jiangxi provinces have issued power rationing notices. 

Different industrial parks have taken turns to stop production, and other non-industrial parks require production companies to take turns to stop production. In addition, power grids in Shaanxi, Hubei, Hebei and other places have repeatedly hit new highs. The grid is in a "tight balance" state, and it is possible at any time to make policy arrangements for power rationing like other brother provinces. With reference to 2010 experience, it can be roughly determined that the impact of long-term power cuts on the price of industrial products may be greater than the impact of industrial added value.

It is currently the "Nineteenth" season of the lunar calendar. If the temperature drops further with the advent of thirty or nine days later, the electricity load gap will further expand, then there may be more industrial power outages in more areas that will cause factories to stop production. The suspension of production restrictions by many production companies may lead to a reduction in the supply of industrial products and chemical raw materials, which in turn will trigger a new round of supply and demand imbalances, leading to the emergence of pre-holiday price hikes. The production capacity of choline chloride and its upstream raw materials are mainly concentrated in Shandong, Hebei, Henan, Liaoning and other places. At present, it has not been directly affected by the power cut, but the central and eastern my country will usher in a king-level cold wave in the past two days The weather process this time has the characteristics of wide impact, severe cooling, low temperature, and long duration of strong winds. Most of the central and eastern regions will experience the coldest weather since the beginning of winter. Will these provinces experience power shortages and open gates? No one can predict the situation of power curtailment. I hope that power curtailment and production suspension will not be the black swan boosting the soaring market of choline chloride.

The Lunar New Year will be ushered in less than 50 days. With the approach of the Spring Festival, many customers will enter the stocking cycle before the year. Although the article on the early 2021 logistics suspension that was widely spread in the circle of friends a few days ago was refuted, it is undeniable that considering factors such as cargo supply, transportation time, extreme weather, and inventory safety, it is extremely important. Most customers will choose to bring the raw materials back to their own warehouses before the end of January or even the end of January to achieve safe storage. But the reality is that almost all choline manufacturers are currently executing the pre-concentrated orders. Even if no new orders are received, it will take mid-January to complete the old contracts. The old contract has not been executed yet, and customers’ contracts for stocking up during the Spring Festival will be oncoming again. It is really "a wave has not subsided, and another wave is invading." It is foreseeable that the overall production of choline chloride manufacturers will be released before the Spring Festival. The situation of tight cargo will not be effectively alleviated. The tight supply side determines that the price of choline chloride will remain firm during the period before the Spring Festival.

Based on the analysis of the above-mentioned information at all levels, the author believes that the price of choline chloride is expected to maintain a firm trend during the period before the Spring Festival, and it is easy to rise and difficult to fall. It cannot be ruled out that a sharp rise will occur under the stimulation of sudden factors.

 Starting from last night, most areas of Shandong ushered in the snow, and the feather-like snowflakes rustled down, filling the sky and moisturizing the earth. After the snow stopped,  the branches of the fields and mountains were covered with ice, crystal clear, and when viewed from a distance, it was like full of white flowers. It was really like a spring breeze, thousands of trees and pear blossoms. open".Big Snow means a prosperous year, and hope the coming year will be a good year!


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