Both China's Domestic IIR Output and Import Volume Rose After Declining in H1, 2024
Highlights: IIR market price dropped after rising in H1, 2024. Reduced supply supported IIR market price, while weaker demand and lower cost dragged on that. The IIR market price is predicted to increase first but then drop in H2, 2024 due to increased supply, weaker demand and limited cost support.
China’s IIR price dropped after rising in H1, 2024, which was basically consistent with the price trend forecast in 2023-2024 China IIR Market Annual Report. On one hand, the supply of imported resources was tight, supporting IIR market price rising. On the other hand, China’s domestic IIR producers produced regular IIR gradually, which led to a rise in IIR supply. What’s more, lower demand and decreased feedstock price also dragged on the market price. From January to June 2024, the price of 1675N averaged RMB 16,110/mt in the Jiangsu market, which increased by 12.4% Y-O-Y (Chart 1).
China’s domestic regular IIR market price in China reached its peak of the first half of 2024 in April, and the monthly average price was RMB 16,554/mt. From the fourth quarter of 2023 to March, 2024, the supply of some imported goods dropped, and domestic producers didn’t produce regular IIR, which changed regular IIR supply-demand structure. Therefore, IIR market price increased in Q1, 2024. However, weakening demand and the continued decline in the cost side led to a fall in IIR market price.
China’s regular IIR output totaled 16.1kt from January to June 2024, up 9.5% Y-O-Y (Chart 2). The operating rates of domestic IIR were low in Q1, 2024. In the second half of 2023, domestic regular IIR output was low, social inventory was insufficient and the overall domestic supply replenishment was limited. China’s regular IIR import volume totaled 63.5kt from January to May 2024, up 16.8% Y-O-Y (Chart 3). Domestic IIR imports declined, and domestic output was low in Q1, 2024, so the overall tightening supply side supported market prices increase. Although domestic IIR output and import volume increased notably in Q2, 2024, limited cargoes were available in the spot market, as most of them directly flowed to downstream users. Therefore, IIR market price dropped limitedly.
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