Uncertainty about demand does not affect global chemical price rise in July

In a particularly strong second quarter, with relatively strong production demand due to high petrochemical and polymer prices, companies are more confident about the full year, but wary of negative trends in the second half of the year
.

Chemical producers face continued high supply chain costs and complexity, and there are legitimate concerns about the proliferation of delta variants and the possible impact of renewed lockdowns and movement restrictions on demand and production plant operability
.

However, these disruptions did not put much downward pressure on prices
.

continue to soar

The surge in petrochemical and polymer commodity prices for most of the year continued into July
.
Petrochemical and polymer prices are well above their July levels
.

The ICIS Global Petrochemical Index (IPEX), which reflects changes in petrochemical and polymer prices for 12 commodities, rose 1.
7% month-on-month in July
.

IPEX values ​​peaked in May, but a key question is whether this represents a fundamental turning point and the start of a clear downward trend
.

The July figures seem to suggest otherwise
.
Even in a world ravaged by the coronavirus, chemicals are still in high demand
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Supply constraints have eased, but logistical bottlenecks remain, whether from coronavirus-induced lockdowns or recent weather-related events such as floods in China and Germany
.

Uncertainty about the epidemic

Going forward, the company remains confident in the second half of the year, but is also cautious about the impact of the delta variant on demand growth, as well as its ability to continue to run the business effectively
.

The West is still in the early days of stimulus-driven growth, but faces an increasingly disconnected world where stimulus and vaccine availability help drive demand for chemicals, while growth is constrained in countries facing the continued spread of the virus and its long-term economic fallout
.

There is still enough demand for basic petrochemicals and plastics, as well as most intermediate products, to keep customers and the companies that supply these products afloat
.

Companies in most supply chains are no longer comfortable with just-in-time inventory operations, and it is believed that the market will take time to recover to what might have been considered normal two years ago
.

About China

This uncertainty is evident in market data from China, where the ICIS China Chemicals Price Index fluctuated from the end of June and rose again by the end of July
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Market participants tended to be cautious
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In China, there were some bright spots on the demand side, but it was still hurt by recent floods and a resurgence of Covid-19 infections
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The price jump at the beginning of the year was caused by an unprecedented situation whose effects are far from dissipated
.
This has never happened before
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Market players in China are facing a period of higher raw material costs, while supply chain disruptions and market distress will continue into the end of the year and even into 2022
.