Guangzhou China Nov. 5, 2010-Since Oct. 2010, the price of many basic materials has risen obviously in a month such as methanol, liquid ammonia, calcium carbide, etc., which pushes up most amines price. From the end of Sep. 2010 to the end of Oct. 2010, the price of methanol, calcium carbide and ammonia has risen about 17%, 17% and 10% respectively. In return, the price of monomethylamine and thiourea has risen 19% and 30% respectively.
The reasons of current skyrocketing price are listed as follows:
- Firstly, power rationing is the key reason. In 2010, it is the deadline of energy saving and emission reduction within five-year-plan, but by Jun. 2010, the energy consumption per unit of GDP just has reduced about 15% compared with that in 2006, which is a little far from the goal of energy saving and emission reduction (20%), so the local government carries out power rationing to reach the goal of energy saving and emission reduction in the second half year of 2010. It is known to all that the production of chemicals can not go without power, and for some chemicals, power cost accounts for rather big share in the total cost such as calcium carbide. For amines, power rationing not only reduces the raw materials supply but also directly pushes up the price of raw materials currently.
- Secondly, another important factor is that the capacity of raw material reduces. The government has closed many small coal mines and calcium carbide plants in recent years to reduce energy consumption per unit of GDP which directly decreases raw material supply and increase price of the coal, calcium carbide and their downstream chemicals price.
- Thirdly, the market background in China continues to moderately easy monetary policy and excess liquidity. Since the economic crisis broke out in 2008, Chinese government insists the policy and issues currency to ensure the economy recovery which causes the price trend of most basic chemicals increase in 2009 and 2010.
Due to the wrong methods to get the goal of energy saving, emission reduction and excess liquidity, the best present judgment is that current skyrocketing price will not reduce until the beginning of next year.
Source: CCM International