International oil prices fluctuate at high levels; chemical product prices generally rise

Reporter Xiang Yantao

Recently, against the backdrop of international oil prices remaining high, the overall prices in the chemical industry chain have strengthened. Prices of various basic chemical raw materials and downstream products have risen to different degrees, gradually passing cost pressures down the industry chain. Meanwhile, many chemical and building materials companies have issued product price adjustment notices, raising prices to ease the operational pressure caused by rising raw material costs.

Industry insiders believe that the current price increases in chemical products are mainly driven by rising crude oil prices. In the short term, given the ongoing geopolitical uncertainties, prices in the chemical industry chain may remain relatively strong, but the medium- and long-term trends will still depend on supply and demand fundamentals.

Crude Oil Prices Remain High

Recently, influenced by geopolitical conflicts, international oil prices have surged rapidly. On March 9, WTI crude oil futures broke through $110 per barrel, and Brent crude futures approached $120 per barrel at one point. Although prices retreated slightly over the following two days, they still remain in a historically high range.

As an important upstream raw material in the chemical industry chain, rising crude oil prices have significantly increased costs in the chemical market. Several industry research institutions have stated that, in the context of high oil prices, the cost pressure on chemical products has increased markedly, leading to higher prices along the industry chain.

Data from ZhuoChuang Information shows that recently, prices of chemicals such as propylene, olefins, polyether polyols, adipic acid, and phenol ketone have all increased.

Ning Lihong, an analyst at ZhuoChuang Information, told Securities Daily that in February, crude oil prices showed a high-level oscillation with a slight upward trend. Coupled with pre-holiday stockpiling demand before the Spring Festival, pure benzene prices fluctuated higher. After the holiday, commodity prices rose further, and with maintenance shutdowns at domestic and international refineries concentrated from March to May, market sentiment was somewhat supported, and prices remained relatively strong.

Wang Qiangfeng, Chief Analyst of the Chemical Industry at Huatai Securities Research Institute, said in an interview with Securities Daily that the essence of rising chemical prices is the transmission of costs downstream after a significant increase in oil prices. As a result, downstream chemical products have begun to raise prices accordingly.

“Oil price transmission follows certain industry chain rules,” Wang explained. First, rising oil prices spread to other bulk energy sources and raw materials, such as natural gas (LNG, LPG) and coal; then further to basic chemical products like ethylene, propylene, and methanol; and then extend downstream to aromatic hydrocarbons, PTA, chemical fibers, coatings, and other terminal products, ultimately affecting industries such as construction materials and textiles.

Ning Lihong further analyzed that escalating geopolitical conflicts have caused broad increases in crude oil prices, leading to varying degrees of price rises across the industry chain driven by costs. The recent market upward trend depends on the development of geopolitical situations; once external tensions ease or stabilize, the market will return to supply and demand fundamentals.

Multiple Companies Raise Product Prices

In the context of rising costs, some chemical and building materials companies have begun to raise product prices to offset the pressure from increasing raw material costs.

Recently, global chemical giant BASF announced price hikes of up to 20% for antioxidants, processing aids, and light stabilizers used in plastics worldwide. Meanwhile, several domestic companies have also issued price adjustment notices, including Wanhua Chemical Group, Jinfeng Technology, Keshun Waterproof Technology, and Beijing Oriental Yuhong Waterproof Technology Co., Ltd. (hereinafter “Oriental Yuhong”).

Among them, Oriental Yuhong has recently issued multiple product price adjustment notices. The notice from its civil building materials division states that, due to continuous increases in raw material prices, the company will raise prices for products such as sealants, waterproof coatings, adhesives, reinforcement agents, and asphalt products, with increases ranging from 5% to 20%. These adjustments will take effect from March 25.

Prior to this, the company also announced a 5% to 8% price increase for all silicone sealant products starting March 11, and plans to dynamically adjust prices for silicone, foam, and MS adhesives based on raw material cost changes. Additionally, from March 15, the prices of asphalt roofing membranes and asphalt coatings for engineering purposes will also be increased by 5% to 10%.

Securities Daily contacted Oriental Yuhong as an investor, and staff there stated that most of the company’s raw materials are petrochemical products affected by international crude oil prices, which have been rising steadily, leading to ongoing increases in raw material costs. As a result, the company has adjusted prices for some products. Other industry players have also issued price adjustment notices, and raw material prices are expected to continue rising in the short term.

Wang Qiangfeng said that Oriental Yuhong mainly produces waterproof materials, with upstream raw materials primarily from basic chemicals. The industry landscape has gradually optimized in recent years, and current inventory levels are not high. Under the rapid rise in raw material prices, downstream companies face increased operational pressures, prompting them to raise prices to mitigate cost impacts.

“He expects that downstream companies will continue to raise product prices as crude oil prices increase, which is a concrete reflection of the transmission of crude oil price increases to the end market,” Wang said.

Industry insiders note that the current price increases in the chemical industry chain are mainly driven by cost factors. In the short term, the market will closely monitor international oil prices and geopolitical developments; in the medium to long term, industry price trends will still depend on changes in supply and demand.

(Edited by: Wen Jing)