In a recent market development, inorganic products have seen an 11% surge over seven days, sparking concerns among investors. According to data from the business community, the upward trend in inorganic chemicals has been persistent since last week, with two key industry chains standing out: the fluorine chemical and the salt-alkali industries.
The fluorine sector rebounded strongly, with dry aluminum fluoride, hydrofluoric acid, and fluorspar prices rising between 2% and 0.31%. The overall fluorine index climbed from a low of 630 to above 640, marking a 2% increase in just one month. Zhang Ming, a chemical analyst from the business community, explained that environmental regulations have had a significant impact on the fluorine industry. Recently, the Ministry of Environmental Protection and the World Bank announced a phase-out plan for China’s HCFCs (hydrochlorofluorocarbons) production. This move aims to protect the atmosphere by significantly limiting the production of fluorine-based refrigerants, which is beneficial for larger companies as it leads to capital withdrawal from smaller players.
According to the schedule set by the Ministry of Environmental Protection, China’s HCFCs production should be frozen at the average level of 2009–2010 by the end of this year. By 2015, production will be cut by 10%, and further reductions of 35% by 2020 and 67.5% by 2025 are planned, with full elimination by 2030.
Juhua Co., Ltd. and San Aifu are adopting a dual strategy, focusing not only on new refrigerants but also on building a more environmentally friendly fluorine chemical supply chain. Institutional sources note that restricting HCFCs will create opportunities for HFCs (hydrofluorocarbons), cleaner alternatives. In 2012, China produced over 450,000 tons of HCFCs, accounting for nearly 79% of global production. As the reduction plan takes effect, new refrigerant markets are expected to grow, with an estimated 30% expansion in the first phase of the 10% reduction goal. Companies investing in these new refrigerants could benefit from this growth.
Meanwhile, the salt-alkali industry saw a general price rise, with hydrochloric acid leading the pack at an 11% increase. Zhang Ming attributed the price surge to a combination of reduced sea salt production in northern regions due to colder temperatures and strong demand from the caustic soda and soda industries. The supply-demand imbalance has become the main driver of price increases in this sector.
Currently, there are limited stocks available, and sales remain strong. For example, Shanxi Lushe Chemical Industry & Chemical Co., Ltd. reported normal operations at its synthetic ** facility, producing about 100 tons per day at a price range of RMB 200–300/ton. The ** market in Shandong remains stable, with synthetic acid prices around RMB 200/ton and good downstream demand.
Zhang Ming noted that after last week's market correction, some of the speculative bubbles from the third quarter were removed. This adjustment is part of a natural market process, with inorganic products once again leading the gains due to supply-demand gaps. Unlike previous policy-driven surges, this rise is primarily driven by market forces.
Organic chemical products are also experiencing shifts. Major manufacturers are undergoing maintenance, such as Gaoqiao Petrochemical’s 200,000-ton/year phenolic ketone plant shutdown and Yangzhou Jianye Group’s 320,000-ton/year plant repair. Meanwhile, increased demand from downstream pesticide plants has boosted the demand for **, making it the most stable product since the third quarter.
As more products see price increases, some previously declining items are showing signs of recovery. However, factors like profit-taking by manufacturers and shrinking downstream demand have contributed to earlier market declines. Calcium carbide prices fell mainly due to reduced demand from PVC and trichloroethylene sectors. Crude benzene, a top performer in the first half of the year, dropped after several benzene processing plants in Shandong went offline. Glyphosate, still under close watch by investors, has also entered a downward trend due to seasonal demand changes.
Looking ahead, Zhang Ming believes that while the second and third quarters were dominated by organic products influenced by crude oil fluctuations, the fourth quarter will focus more on policy changes, external factors, and short-term domestic supply-demand dynamics. Inorganic products deserve closer attention. It is expected that the chemical market will enter a weak consolidation phase, with lower trading activity before mid-November.
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