In March, the chemical market showed a noticeable upturn, with rising prices becoming the dominant trend. Among the 48 products monitored by the National Development and Reform Commission, 24 experienced an upward movement, making up half of the total. Thirteen products remained stable, while only 11 saw a decline compared to the previous month. This marked a significant shift from the previous months, where downward trends were more prominent.
The market's slight warmth in March was evident, as the majority of products moved in a positive direction. For example, sulfur and epichlorohydrin, which had dropped by around 10% in January, rebounded sharply, increasing by over 30% in March. Additionally, the top ten products that had fallen in February reversed their trend and became the biggest gainers in March, signaling a strong recovery.
One key factor behind this rise was the low inventory levels after the Spring Festival holiday. Traders were eager to restock, leading to a stronger supply-demand balance that pushed prices higher. However, this momentum was not uniform across all products.
Another notable aspect was the significant reduction in declining products. In February, 11 products fell, but in March, the number dropped to just 11, with fewer products experiencing steep declines. In January, six products fell by more than 10%, but in March, only one product did so, showing a clear improvement.
Some products, however, still struggled against the overall trend. For instance, stearic acid, DOP, and light soda ash, which had shown a brief upward movement at the end of February, failed to maintain their gains in March. This was partly due to weak downstream demand. Many manufacturers had high inventories before the holiday, and the low shipping costs meant that some goods were already in circulation. As a result, the market for DOP stalled around 8,600 yuan per ton before beginning to decline.
While the chemical market appeared to be entering a "warm spring" after the Spring Festival, the broader economic outlook remains uncertain. The global financial crisis continues to impact the real economy, and long-term challenges such as weak demand and oversupply are likely to persist. With refinery operations gradually increasing, supply is expected to rise, but demand may not keep pace.
Globally, economic conditions are bleak. The International Monetary Fund recently projected a negative growth rate of between -0.5% and -1% for 2009, marking the first global contraction in 60 years. Advanced economies, including the U.S. and Japan, are expected to face deep recessions. Unemployment rates have also surged, with the U.S. unemployment rate reaching 8.1% in February—its highest level since 1983.
Domestically, China’s macro-control measures have started to show results, and some industries have seen signs of recovery. However, overall conditions remain challenging. Imports continued to fall sharply, reflecting weak domestic demand. In the first two months of 2009, China’s total foreign trade volume declined by 27.2%, with imports dropping by 34.2%.
On the global stage, the U.S. industrial production fell by 1.4% in February, marking the fourth consecutive month of decline. The equipment utilization rate dropped to 70.9%, well below historical averages. This further highlights the difficulty in boosting external demand.
As a result, exports of Chinese plastics and related products continue to decline, impacted by the deteriorating international economic environment. While the chemical market showed some resilience in March, the underlying fundamentals remain fragile, and the road to recovery is still long.
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