Crude Oil Oscillates at High Levels, Domestic Chemical Enterprises Launch Price Adjustment Wave

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Reporter: Huang Xiang

Recently, international crude oil prices have remained high and volatile. The main contract price of U.S. crude oil on NYMEX has risen from $71.23 per barrel in early March to close at $99.05 per barrel on March 19, a monthly increase of over 39%. As a core raw material in the chemical industry, the high oil prices have directly driven up costs across the entire industry chain. Domestic chemical companies like Wanhua Chemical have started adjusting prices, spreading from upstream basic chemicals to downstream end products. The price adjustment wave is expanding, highlighting the industry’s cost transmission effects.

According to statistics, as of March 15, about 60% of chemical products increased in price that week, up 4.55% month-on-month. Among them, acrylic acid, p-nitrochlorobenzene, and methionine saw the largest increases, at 90.7%, 80.3%, and 56.3%, respectively.

Upstream cost pressures continue to transmit downstream, forcing midstream chemical companies to raise product prices, creating a chain reaction.

Since March, industry leaders such as BASF, Wanhua Chemical, and Baofeng Energy have announced price adjustments covering olefins, aromatics, waterproof materials, and other categories. Notably, Baofeng Energy’s polypropylene (PP) products have been priced higher for two consecutive days, with a total increase of 600 yuan/ton. The national average price of PP filament market surged by 15.52% in one week to 8,657 yuan/ton, over 30% higher than at the end of February. Wanhua Chemical raised MDI prices, with mid-March prices reaching 15,200–15,300 yuan/ton, up 1,300–1,500 yuan/ton from before the Spring Festival, and expected to rise to 16,500 yuan/ton in late March, a total increase of 13%.

Cost pressures are further passed down to downstream end-users, which face significant cost challenges. Some terminal companies have been forced to follow suit with price hikes. As key downstream applications, industries such as textiles, building materials, and home appliances are notably affected by rising chemical raw material prices. On March 1, Oriental Yuhong announced a price increase of 5%–10% for asphalt-based roofing materials and coatings, citing the rise in upstream asphalt prices from 3,000 to 3,350 yuan/ton and the expectation that crude oil prices will continue to rise, further increasing raw material costs. Several domestic coatings and plastics processing companies have also gradually raised their product prices, generally by 5%–15%, to cope with cost pressures. Keshun Co., North New Materials, and others have also adjusted their waterproof product prices.

Industry insiders say that the smoothness of cost transmission depends on downstream demand absorption capacity. Currently, the price increases in chemical products are mainly driven by costs rather than demand pull. Therefore, the ability of downstream companies to absorb these costs is critical. Most downstream users are currently mainly consuming existing contracts and inventories, with limited acceptance of high-priced raw materials. Overall procurement remains just-in-time, and some small and medium-sized enterprises may face operational difficulties due to cost pressures.

CITIC Construction Investment Securities believes that high oil prices will continue to push up chemical product prices, especially for oil-sensitive varieties like aromatics and olefins, with further cost transmission effects. Meanwhile, as the “Golden March and Silver April” demand peak season progresses, downstream demand will gradually recover, supporting price transmission. It is expected that chemical companies will continue to adjust prices, but the rate of increase may slow down gradually.

It is worth noting that sustained high oil prices also bring certain uncertainties. Huatai Securities warns that if Middle Eastern geopolitical conflicts ease, oil prices could see a temporary correction, easing cost pressures on the chemical industry. Conversely, if conflicts escalate, oil prices may rise further, intensifying industry costs and potentially suppressing downstream demand. Additionally, the ongoing “anti-involution” policies in China’s chemical industry will combine with cost factors, affecting industry price trends.

Overall, the high and volatile oil prices are transmitting costs through the industry chain, prompting a wave of price adjustments in the chemical sector. This trend reflects industry cost pressures and is gradually improving supply-demand dynamics. For chemical companies, technological upgrades and cost control will be key to coping with raw material price fluctuations; for downstream companies, managing rising costs and optimizing supply chains will directly impact their operational performance.