3. Pricing strategy in the global production capacity pattern: the game between cost promotion and demand acceptance
As an important global producer of polyether, China has a strong influence on the supply side.However, whether cost fluctuations can be smoothly transmitted downstream still depends on the actual demand situation in the domestic market.The trend of domestic prices in the short term will be a game of "cost promotion" and "demand acceptance"：
On the one hand, the power of cost increases is very clear and strong. As the price of Brent crude oil continues to contain a geographic premium, propylene, the core raw material of the chlorohydrin method, will inevitably rise.Considering that the chlorohydrin method is still an important process for the production of propylene oxide in China, the rigid increase in cost will force PO suppliers to raise prices.If the price of PO rises and the production cost of polyether increases, the seller must have a strong willingness to transmit pressure downstream.
On the other hand, there is uncertainty about the willingness to undertake demand. Whether the price can really rise depends on whether the buyer is willing to "pay".After the export tax refund was cancelled in April, the pre-overdraft orders will take time to digest.If overseas customers suspend purchases due to skyrocketing freight costs, or domestic downstream sponge, car seat and other companies resist high prices due to weak terminal consumption, then the pressure on the cost side will accumulate in the middle reaches, and it is easy to form a stalemate.
Based on comprehensive judgment, there is a high probability that short-term domestic prices will show a "phased digestive increase": that is, the seller resolutely raises the price due to the upside down of the cost, but after each round of price increases, it takes time to wait for the market to digest.The price center will rise due to the upward movement of costs, but the upward path will be volatile and full of games, rather than a smooth unilateral market.
In the medium term: we need to be wary of the destruction of downstream demand by the logic of "stagflation".If oil prices remain high for a long time, polyether terminal industries such as furniture, automobiles, and sponges will be under huge cost pressure.The cancellation of export tax rebates has put pressure on the profits of foreign trade companies, and any increase in sea freight will lead to the loss of overseas orders or an increased risk of default.
4. Strategic suggestions and prospects
In the face of the overlap between war and policy, a single-point strategy such as logistics supervision warehouse alone is no longer enough to resist systemic risks.Several suggestions can be used for reference in the industry：
1. Reconstruct the quotation mechanism: It is recommended to fully introduce the "floating freight clause" and "oil price linkage clause" for export orders after April 1.The quotation of stable sea freight in the past can no longer be based on the past, but the geographic risk premium should be included in the base price.
2. Pay attention to logistics alternatives: Although European routes are affected, it is necessary to pay close attention to whether there will be alternative demand for China-EU trains and land transport routes in the direction of Russia.Although the capacity is limited, it may be an alternative to ensure the stability of the supply chain for high-value-added polyether specialty products.
3. Be wary of Iran's long-tail risks: Be wary of the risk of Iran's blockade of the Strait of Hormuz and the "beheading" operation leading to power reorganization.In view of the extremely rapid changes in the situation, once the Strait of Hormuz is closed for a long time, the global petrochemical supply chain will face the risk of fracture. At that time, any cost forecast will fail. It will be a wise choice to keep low inventory and cash king.
In the long run, geopolitical instability will intensify countries' anxiety about supply chain security.China has the world's most complete polyether industry chain and 60% of its production capacity.This round of European energy crisis and soaring freight costs, although it is a pain in the short term, in the long run, it is forcing overseas customers to re-examine their dependence on China's supply chain. We can invest more energy in the assessment of supply chain resilience.Only a ship that has passed through the geopolitical fog can reach the other side of the sea.When we survive the short-term order trough, we will usher in a new pattern of more stable global polyether supply led by China.