Source: Huatai Futures Research Institute
Policy summary
Core ideas
Recently, parts of the world have experienced severe heat and drought weather
The combined intensity of regional high temperature events on the mainland has reached its strongest level since 1961 when complete meteorological observations were recorded. Since July 2022, most parts of the mainland have been subjected to continuous high temperature roasting, the Central Meteorological Observatory has issued high temperature warnings for 29 consecutive days, issued high temperature red warnings for 6 consecutive days, and more than 260 high temperature red warnings are taking effect across the country. Among them, Sichuan and Chongqing dominate the top ten of the national high-temperature cities. There is a rare phenomenon of "flood season anti-drying" in some sections of the Yangtze River Basin. The yangtze river basin continued to have high temperatures and little rainfall, and the rainfall was 40% to 50% less than that of the same period of the year, resulting in the continuous retreat of the water level of the Yangtze River (main stream, Dongting Lake and Poyang Lake), which was 4.85 to 6.13 meters lower than the same period of the year, a new low since the record. Sichuan Province implements the policy of power curtailment。 On August 14, the Sichuan Provincial Department of Economy and Information Technology and the State Grid Sichuan Electric Power Company jointly issued a document "Emergency Notice on Expanding the Scope of Implementation of Industrial Enterprises to Let Electricity to the People". The notice proposes to implement a full production shutdown (except for security loads) for all industrial power users (including white-listed key guarantee enterprises) in the orderly power consumption plan of Sichuan Power Grid from 00:00 on August 15, 2022 to 24:00 on August 20, 2022.
Energy shortages combined with high temperatures have hit many European countries. Data from the European Centre for Medium-Term Weather Forecasts shows that Portugal, Spain, France and parts of the United Kingdom all experienced temperatures above 40 degrees Celsius in July; The number of days with a maximum temperature of more than 35 degrees Celsius in the Iberian Peninsula has also increased dramatically. Not only has the continent experienced "one of the three hottest Julys on record" but it may also suffer "the worst drought in about 500 years." Declining river capacity in Europe constrains energy and commodity supplies. The Rhine River, which is the largest river in Western Europe, currently has 20 main sections of the Rhine in Germany, and 12 sections with a water level below 1 meter; Up to 8 river sections with water levels below 0.4 meters account for 40% of the statistical river segments. Low water levels disrupt European logistics, congestion increases in some ports, and transport costs rise significantly, which in turn will be transmitted to some commodities that rely on capacity. The United States is also facing relatively severe dry weather, and some agricultural product production has been damaged. The area of water-scarce areas in the topsoil of the United States accounted for 50% in the week ended August 14, an increase of 3% from the previous week; The area of the bottom soil water shortage area accounted for 50%, an increase of 2% over the previous week, and the overall soil moisture continued to be at a poor level in recent years.
Analysis of the impact of high temperature and dry weather on various commodities
For the energy sector, natural gas upstream benefits the most, and fuel oil is slightly supported; The demand for ARA refined oil, PTA, EG and PP in the middle and lower reaches is under pressure, and the price is facing certain adjustment pressure, and the impact of methanol, natural rubber, PVC and urea is not significant.
For the black plate, there are two main impacts: 1. The overall impact on supply and demand in the steel industry is limited. 2. The drought has led to a decrease in hydropower generation, and the daily consumption of thermal coal is expected to be boosted in the short term, which will form a certain support for the price of thermal coal.
For the non-ferrous plate, under the comprehensive perspective, aluminum was most significantly boosted, followed by zinc, and copper and industrial silicon were slightly supported. Among them, the capacity contraction of aluminum is significantly greater than the demand; Zinc showed a pattern of double damage to production and demand; Copper has been boosted by sentiment in the short term, but in fact the demand side risk is greater than supply; Industrial silicon is subject to high inventory restrictions, and if Sichuan's production cut lasts more than two weeks, it will have a greater impact on some downstream production, which may drive prices up sharply. The impact of high temperature and drought on nickel consumption in Europe is greater than that of supply, and the impact on nickel prices is empty, but because the global primary nickel supply and demand are concentrated in Asia, Europe accounts for a relatively small proportion, so its impact on nickel prices is relatively limited.
For agricultural products, the two most affected varieties are maize and sunflower seeds in the European Union, while U.S. cotton production has also been affected.
Market analysis
Events based on drought and high temperatures can currently only rely on weather forecasts to establish expectations, combined with specific capacity and power curtailment progress to correct expectations.
According to the early warning of the China Meteorological Administration on August 18, the Sichuan Basin to Jianghan, Jiangnan and other places will remain the core area of high temperature in the coming week. The power curtailment policy in Sichuan Province ended at 24:00 on August 20. Parts of the southern and eastern provinces of the continent will still face high temperatures and droughts, and the range of high temperatures will expand northward. There are moderate and above meteorological droughts and local droughts in southern Jiangsu, southern Anhui, western Hubei, most of Zhejiang, Jiangxi, Hunan, most of Guizhou, Chongqing, most of Sichuan, and central and eastern Tibet. In the coming week, the Sichuan Basin to Jianghan, Jiangnan and other places will still be the core area of high temperature, and the hot weather of 40 °C+ will still appear from time to time.
The World Meteorological Organization said that at least in parts of Europe, the trend of high temperatures and little rain will continue in August. The Met Office issued an extreme heat warning on Aug. 9, expecting temperatures to rise in the south of England, but not as extremely hot as in July. Meteo france said temperatures in southern France were 3 to 5 degrees Celsius higher than normal in the same period in previous years.
Specific to the varieties, in the context of high temperature and power curtailment, the duration exceeds expectations (the domestic Sichuan provincial power curtailment policy ends at 24:00 on August 20, and Europe needs to track the Rhine river level and natural gas stocks), natural gas, aluminum, industrial silicon (high inventory limit, the impact time takes more than two weeks), corn, sunflower seeds, U.S. cotton and other commodities will be further favorable. If the scope is further expanded, it is still necessary to re-respond to the supply and demand pattern of commodities one by one.
risk
geopolitical risks; global pandemic risk; Deterioration of Sino-US relations; The situation in the Taiwan Strait; The situation in Ukraine and Russia.
1 Recently, parts of the world have experienced severe high temperatures and droughts
Sichuan implemented power curtailment, and some commodities were affected
The combined intensity of regional high temperature events on the mainland has reached its strongest level since 1961 when complete meteorological observations were recorded. Since July 2022, most parts of the mainland have been subjected to continuous high temperature roasting, the Central Meteorological Observatory has issued high temperature warnings for 29 consecutive days, issued high temperature red warnings for 6 consecutive days, and more than 260 high temperature red warnings are taking effect across the country. This wave of extreme heat has swept through 18 provinces (autonomous regions and municipalities) on the mainland, including Chongqing, Sichuan, Xinjiang, Hubei, Jiangsu, Zhejiang, Fujian and Guangdong. According to the data of the National Meteorological Observatory, Chongqing and Sichuan dominate the top ten in the temperature list, with the highest temperature reaching 44.6 degrees and the lowest temperature reaching 42.9 degrees. In addition, according to the monitoring and assessment of the National Climate Center, taking into account the average intensity, impact range and duration, the comprehensive intensity of regional high temperature events from June 13 this year to the present (as of August 18, which has lasted for 67 days) has reached the strongest since the complete meteorological observation record was recorded in 1961.
Some sections of the river have a rare phenomenon of "flood season anti-drying". It is worth noting that since the flood this year, the Yangtze River Basin has continued to have high temperatures and little rainfall, and the rainfall is 40% to 50% less than that of the same period of the year, resulting in the continuous retreat of the water level of the Yangtze River (main stream and Dongting Lake and Poyang Lake), which is 4.85 to 6.13 meters lower than the same period of the year, a new low since the record, and the rare phenomenon of "flood season anti-drying", and because some areas in order to ensure the safety of dams, the flood season release leads to insufficient water storage, 12.32 million mu of arable land, 830,000 people in 6 provinces and cities along the Yangtze River such as Sichuan, Chongqing and Hubei. 160,000 large livestock suffered from drought. Droughts can affect the growth of agroforestry crops. From July to August, it is a critical period for crop pumping, flowering and filling, which requires a lot of water replenishment and supply. The drought affected by the high temperature weather will affect the growth of crops.
Sichuan Province implements the policy of power curtailment。 80% of Sichuan's electricity supply comes from hydropower, and this round of high temperature and drought has caused residential electricity consumption to soar, hydroelectric power generation to plummet, and industrial electricity consumption has been affected to a certain extent. On August 14, the Department of Economy and Information Technology of Sichuan Province and the State Grid Sichuan Electric Power Company jointly issued the document "Emergency Notice on Expanding the Scope of Implementation of Electricity by Industrial Enterprises to the People". The notice proposes that all industrial power users (including key guarantee enterprises on the white list) in the orderly power consumption plan of Sichuan Power Grid will be completely stopped (except for security loads) from 00:00 on August 15, 2022 to 24:00 on August 20, 2022. Under the high temperature, a number of listed companies announced the "temporary power curtailment and suspension of production", Chengdu Foxconn, Lutianhua, Sichuan Meifeng, Chuanheng shares, Huiyuan Communications, BOE, Futong Information, Chinatungsten High-tech, Qin'an shares, battery giant Ningde Times and many other listed companies have temporarily suspended production due to tight power supply. According to incomplete statistics, Sichuan's power rationing has caused different degrees of impact on the production capacity of some bulk commodities, such as the top varieties including industrial silicon, urea, soda ash, zinc and so on.
According to an early warning from the China Meteorological Administration on August 18, some provinces in the south and east of the mainland will still face high temperatures and drought weather, and the range of high temperatures will expand northward. There are moderate and above meteorological droughts and local droughts in southern Jiangsu, southern Anhui, western Hubei, most of Zhejiang, Jiangxi, Hunan, most of Guizhou, Chongqing, most of Sichuan, and central and eastern Tibet. In the coming week, the Sichuan Basin to Jianghan, Jiangnan and other places will still be the core area of high temperature, and the hot weather of 40 °C+ will still appear from time to time.
High temperatures increase the electricity load in Europe
Energy shortages combined with high temperatures have hit many European countries. Data from the European Centre for Medium-Term Weather Forecasts shows that Portugal, Spain, France and parts of the United Kingdom all experienced temperatures above 40 degrees Celsius in July; The number of days with a maximum temperature of more than 35 degrees Celsius in the Iberian Peninsula has also increased dramatically. Not only has the continent experienced "one of the three hottest Julys on record" but it may also suffer "the worst drought in about 500 years." Local precipitation records show that parts of France and the United Kingdom experienced the driest July, with the national average rainfall in France falling by 84% compared to the july average since 1991. Over the past few months, persistent severe droughts due to heat waves and lack of precipitation are affecting agriculture and energy management in many areas. Dry weather in many parts of the country, such as Spain, Greece and the Czech Republic, has led to the spread of wildfires.
The World Meteorological Organization said that at least in parts of Europe, the trend of high temperatures and little rain will continue in August. The Met Office issued an extreme heat warning on Aug. 9, expecting temperatures to rise in the south of England, but not as extremely hot as in July. Meteo france said temperatures in southern France were 3 to 5 degrees Celsius higher than normal in the same period in previous years. Data provided on the European Drought Observatory website on Aug. 18 showed that most of Europe was "dripping" in July, with only a handful of countries with a total monthly precipitation of 200 mm, while 47 percent of the EU's territories were under drought warning and 17 percent were on drought alert.
Declining river capacity in Europe constrains energy and commodity supplies
The Rhine is the largest river in Western Europe, originating in the northern foothills of the Alps in Switzerland, flowing northwest through Liechtenstein, Austria, France, Germany and the Netherlands, before flowing into the North Sea near Rotterdam. Relevant data show that Germany alone accounts for 865 kilometers of the 1232 kilometers of the Rhine River, and the basin area is 40% of Germany's area. The Danube is the second longest river in Europe, second only to the Volga in length among European rivers. It originated in southwestern Germany and flows from west to east, passing through Austria, Slovakia, Hungary, Croatia, Serbia, Bulgaria, Romania, Moldova, Ukraine, and finally into the Black Sea.
Recently encountered drought problem is more serious is the Rhine, June so far, Europe drought has not receded, as an important river Rhine water level continues to decline, according to our tracking data, the Rhine River in Germany currently has 20 river sections, water level below 1 meter there are 12 river sections; The water level is less than 0.4 meters up to 8 river sections, accounting for 40% of the statistical river section, and the problem of river water level decline caused by drought is more obvious, which has a greater impact on shipping and transportation.
The situation of the Danube is relatively good, and the current statistics of the water level of all sections of the Danube river flowing through Germany are more than 1.4 meters.
Low water levels disrupt European logistics, and congestion in some ports increases. Relevant data show that the Rhine River flows through 1232 kilometers, Germany occupies 865 kilometers, flows through Germany and flows into the Netherlands, and flows into the North Sea from near Rotterdam, the Netherlands. Germany and the Netherlands are greatly affected by the decline in the rhine water level, affecting the transshipment of containers through water to the domestic region, the port of Hamburg, Germany, congested container ship capacity of 129 thousand TEU, in the stage of high, the Dutch Port of Rotterdam container ship congestion capacity has been increasing since the end of May, is currently 278 thousand TEU, in the history of relatively high.
In terms of dry bulk carrier congestion, this paper counts the main anchorages of four dry bulk carriers in Germany, namely E-Weg Anchorage, Elbe Aussenreede Anchorage, Rostock Anchorage and Elbe-Weser Deep Water Anchorage in Germany. At present, the number of congested dry bulk carriers in all of the above lower anchorages is 3, and the capacity of congested dry bulk carriers is about 290,000 DWT.
Falling water levels have significantly raised transportation costs. The low water level of the Rhine river makes it impossible for barges to be fully loaded, and cargo owners can only load part of some of the conventional cargo on the ship; The low water level of the Rhine has also drastically reduced the capacity of barges to the Interior of Germany, and the freight rates of The Rhine Barges are now rising rapidly, and barge freight rates have increased several times since the end of June.
2 Effects of global high temperatures and droughts on the chemical sector
Natural gas: Summer heat boosts consumption in the gas and power sector, driving a collective rise in global gas prices
The downstream consumption of natural gas has obvious seasonal characteristics, and the consumption demand of different consumption sectors in different seasons varies greatly. In general, in the summer, consumption in the gas and power sector is relatively high, driven by the demand for refrigeration. Although the current regional power generation structure varies greatly, the high temperatures in this summer have increased the consumption of gas and power sectors in various regions to varying degrees, and in the context of the current tight supply and demand pattern of the global natural gas market, a wave of collective rise in global gas prices has been promoted in the summer.
1.1 United States: The increase in demand for gas and electricity superimposed on the rise in LNG exports, and the regional gas price has seen two rounds of significant increases
In the United States, from the perspective of its current power structure, the proportion of gas-fired power generation will reach 34.83% in 2021, accounting for more than coal-fired power generation for three consecutive years, becoming the most important fuel for power generation in the United States. This spring, Texas in the United States was hit by a spring heat wave; In the summer, most of the U.S. mainland is hit by extreme heat and heat. During this period, the domestic demand for electricity in the United States has increased significantly, and from April to July, the power generation of the US power sector has increased by 4.08% compared with the same period in 2021. At the same time, due to the curbing of the trend of "gas to coal" in the United States in the first half of this year, the power generation of the gas and power sector during this period also increased by 3.95%.
In the current structure of natural gas consumption in the United States, the gas and power sector accounts for the largest proportion of consumption. Therefore, driven by the significant year-on-year increase in demand for natural gas in the power sector, domestic natural gas consumption in the United States increased by 3.43% year-on-year from April to July. In the same period, with the outbreak of the Russian-Ukrainian conflict, the demand for U.S. LNG in Europe surged, driving the U.S. LNG export volume to rise significantly, although the period was affected by the suspension of freeport export terminals, the U.S. LNG export volume was still up 8.08% during this period compared with the same period in 2021. Strong domestic and foreign demand has led to two rounds of significant increases in the price of the NYMEX HH main futures contract in April-June and July-August.
1.2 Northwest Europe: The increase in demand for gas and electricity has intensified the contradiction between supply and demand, and regional gas prices have once again ushered in a surge
In northwestErn Europe, at the same time as the hot weather occurred, the "Nord Stream 1" storm was also fermenting, and the supply went through several twists and turns, and finally maintained a low flow level of 20% of the pipeline capacity, which made the supply of Russian pipeline gas in the region was sharply reduced again, which led to the overall supply side continued to be tight. Under this dilemma, taking the United Kingdom and France as an example, from June to July, the gas consumption of the industrial, residential and commercial sectors has been reduced to varying degrees year-on-year, but the consumption of the power sector has increased significantly year-on-year during this period, driving the natural gas consumption of these two countries to increase slightly year-on-year.
This phenomenon is most evident in France. Due to the reduction in the amount of water in the river due to the summer exposure, France's nuclear power plants could not ensure sufficient cooling water, and the amount of nuclear power generation declined significantly, resulting in a surge in demand for gas and electricity. Taking the July data as an example, natural gas consumption in the French power sector increased by 60.3% compared with the same period in 2021, driving overall consumption up 5.6% compared with the same period in 2021.
Along with the increase in consumption in the gas and electricity sector, its share of total consumption has also increased rapidly this summer. Still taking the data from the United Kingdom and France as an example, in July, the consumption of the gas and power sector in the United Kingdom rose from 43.22% in 2021 to 49.65% in 2022, and the consumption of the gas and power sector in France rose from 10.65% in 2021 to 26.84%;
The shortage of Russian gas supply and the strong demand in the gas and electricity sector have re-intensified the contradiction between supply and demand in northwestern Europe, and natural gas prices have soared again since mid-June, and the momentum has continued to this day. At present, the settlement price of the ICE TTF main futures contract has soared by about 166% compared with mid-June, and the settlement price of the ICE NBP main futures contract has soared by about 194% compared with mid-June.
1.3 China: LNG imports fell and prices rose, and LNG market prices once again opened an upward channel
In the mainland, due to the characteristics of resource endowments and the differences in the attitude of provinces towards the development of gas and electricity, the overall installed capacity of gas and electricity accounts for a relatively low proportion. At present, the development of gas and power in the mainland is relatively fast and the demand for natural gas is concentrated in East China and South China. As a result, the gas and electricity sector became the main downstream receiving terminal for continental LNG receiving stations in the summer.
Since the outbreak of the Russian-Ukrainian conflict, the global LNG market supply has continued to be tight, and the mainland LNG import volume has always been lower than the same period in 2021, resulting in the continuous low shipment volume of the mainland LNG receiving station slot. At the same time, under the support of the overall tight supply and demand in the Northeast Asian market and the rising gas prices in Europe, the spot import price of LNG in the mainland also continues to be at a high level. Tight supply and high costs have led to the mainland LNG receiving station slot batch shipment price has been higher than the LNG factory shipment price since March this year, which in turn supports the mainland LNG market price hovering in the historical high range.
Since the beginning of summer, most parts of the mainland have also suffered from the scorching heat of high temperature weather, and the acceleration of the economic recovery process has accelerated, and the demand for electricity on the mainland has continued to rise. In June and July, the mainland's power generation increased by 3.35% and 6.24% respectively from the same period in 2021, and the power generation of all fuel sectors also increased year-on-year. Driven by the strong demand from the coastal gas and power sector and the soaring gas prices in Europe, the shipment price of the mainland LNG receiving station slot has risen again since mid-June, becoming one of the important factors driving the mainland LNG market price to open an upward channel again in this summer.
Refined oil: The low water level of the Rhine River has exacerbated the energy shortage in the interior of Europe, and the ARA market may be bearish in the short term
Due to the continued high temperature and drought in Europe, the water level of the Rhine River has been urgent, which has seriously affected shipping. The water level of the Rhine has recently fallen to its lowest level since 2007, and some sections of the river are already less than a meter deep, making it impossible for most cargo ships to sail at full capacity.
As an important hub linking europe's inland and overseas markets, the low water level of the Rhine River will cause a significant impact on the supply of refined oil products from the ARA (North-West Europe) region to Germany, Switzerland and other places. According to FGE estimates, if the Rhine River is completely shut down, it will affect the delivery of refined oil products about 400,000 barrels / day, of which 250,000 barrels / day (diesel-based) in Germany and 50,000 barrels / day in Switzerland (including gasoline, diesel, kerosene), alternative transportation solutions or can only pass through road tanker trucks, resulting in a significant increase in transportation costs. Overall, in the current context of the current severe energy shortage in the interior of Europe, the decline in the rhine water level has exacerbated the contradiction.
From the perspective of overseas markets, Europe as an important demand side, the transport of the Rhine River is blocked, but it will cause a passive decline in demand in the short term, which has a potential negative impact on the ARA market.
Fuel oil: The contradiction between high temperature and natural gas shortage has boosted fuel demand at the power generation end
Demand for electricity in hot weather will be stimulated, which in turn will boost the consumption of raw materials in power plants. Therefore, as one of the fuels used in power plants, the demand for fuel oil will be supported in a high temperature environment.
From a year-on-year perspective, we expect the direct increase in global high temperature demand for fuel oil to be limited. Because the countries that use fuel oil as a raw material for power generation are mainly concentrated in the Middle East and South Asia (the proportion of fuel oil used in other regions to generate electricity is relatively small), the normal temperature level in these areas in the summer is extremely high, and this year's temperature has not significantly exceeded the same period in previous years, so the year-on-year increase in local electricity demand is not expected to be significant.
However, the indirect impact still exists, in the global high temperature environment, the demand and price of mainstream energy sources such as natural gas and coal have been further boosted, and the economic advantages of fuel oil over alternative fuels such as natural gas will be more prominent, driving the power industry to increase the load and use ratio of fuel-fired power plants, thereby indirectly increasing the demand for fuel oil. According to Kpler ship schedule data, the import demand of Saudi Arabia and Pakistan, representative countries of fuel power generation, is relatively strong in the summer high temperature, of which Pakistan's year-on-year increase is particularly significant, because the country's natural gas, fuel oil are dependent on imports, in the environment of high natural gas prices, Pakistan has correspondingly increased the load of fuel power generation.
PTA: High temperature power rationing in Jiangsu and Zhejiang affects the negative burden of weaving and drags down the demand for polyester
Under the background of continuous high temperature weather, Jiangsu and Zhejiang have begun an orderly electricity consumption policy. On August 6, Zhejiang Province issued the Letter on Agreeing to Start Grade C Orderly Electricity Consumption, paying attention to the impact of subsequent orderly electricity consumption on terminal loads. At present, Taicang, Changshu, Changxing, Shaoxing, Xiaoshan, Cixi, Haining, Tongxiang and other places have an orderly electricity policy, mainly affecting the terminal elastic and weaving, in mid-August Jiangsu and Zhejiang loom operating rate once fell to 39%, in mid-August the main weaving base new order index is at a low level of 35, domestic demand and export orders are weak, Wujiang water spray, Changshu warp knitting, Haining warp knitting and other key areas of the order is still weak, billet cloth inventory continues to accumulate, billet cloth inventory continues to historical high. In the context of shrinking demand, TA factories are also concentrated on maintenance, reduce supply, TA operating rate in mid-August is still less than 70% of the year's operating low, in the context of supply and demand shrinkage is expected PTA in August to go to the warehouse slightly, September slightly tired, so the contradiction between supply and demand is not large, it is expected that TA continue to consolidate. However, the weak downstream demand will limit the upward space of TA and TA processing fees.
EG: High temperature power rationing in Jiangsu and Zhejiang affects the negative impact of weaving, and the superimposed new production capacity is dragged down
EG's current port inventory is at a high level in the same period of history, the low load of terminal weaving further drags down the demand for EG, and under the expectation that the new plant with 800,000 tons of new production capacity of Zhejiang Petrochemical will be put into operation in late August, it is expected that the accumulation cycle will continue after September, the trend is weak, and more additional loss-making maintenance is needed to rebalance.
PP: High temperature power rationing in Jiangsu and Zhejiang affects the negative downstream of PP, and the margin weakens demand
From August 8 to mid-August, Cangnan County also launched C-level orderly power consumption, affecting the local BOPP operating rate, falling from 57% to 48% short-term impact on PP downstream demand. In the early July, the downstream point price procurement of polyolefins has overdrawn a certain follow-up demand, and in the context of downstream power curtailment, the downstream has not seen a new round of procurement. Under the background of the increased supply pressure of polyolefin outer disks, the pressure on the upper import window was large, and it failed to continue the previous rebound trend and continue to consolidate at the bottom.
Methanol: Sichuan-Chongqing high temperature power rationing affects the start of methanol plants, but the destocking cycle has not yet come
Under the background of high temperature electricity consumption, there are also limited electricity measures in the Sichuan-Chongqing area. Chongqing Cabelle 850,000 tons / year natural gas to methanol plant 8.16 due to power rationing shutdown maintenance, is expected to be overhauled for half a month. Lutianhua 400,000 years of equipment 8.13 overhaul 1 week. Jiuyuan's 500,000-ton plant maintained about 80% of its operation, and failed to meet maintenance expectations. Chuanwei's 870,000 tons is 90%. Overall, the supply impact is limited in magnitude, and the maintenance time is short, so pay attention to whether the follow-up high temperature weather can be suspended in late August. At present, methanol port inventories are still at a historical high, and in the context of downstream MTO device maintenance such as Xingxing, the overall destocking is expected to be postponed to September. At present, it is still a bottom range consolidation.
Natural rubber: At present, there is no impact, pay attention to the large-scale power curtailment in the country in the later period may inhibit the operating rate of downstream tire factories
The impact of domestic high temperature and drought on rubber, for the supply side, is mainly affecting the output of raw materials. Domestic rubber production areas in Yunnan and Hainan, the current rainfall in the production area is relatively normal, and even the Rainfall in the Hainan production area is more than in the same period of previous years. Therefore, the domestic high temperature and drought have no impact on the rubber supply side. For the impact of the rubber demand side, mainly due to the high temperature weather caused by the increase in electricity consumption will be limited electricity possibility, at present, some parts of the country have introduced power curtailment policies. Reviewing last year's domestic power curtailment policy on rubber, the impact is mainly concentrated in the production of downstream tire factories, due to the phased power curtailment in Shandong, the operating rate of downstream tire factories has declined significantly. The impact of the power rationing policy on upstream rubber production enterprises is almost negligible, because domestic rubber production enterprises are mainly concentrated in Yunnan and Hainan production areas, and some processing plants have their own standby power generation equipment to support the production of their own factories, so in the context of last year's electricity shortage, the local power curtailment policy has less impact on domestic rubber processing plants.
At present, the market is worried about the follow-up power curtailment caused by domestic high temperature and drought weather, and the overall impact on rubber is also small. Mainly because the upstream rubber processing plants in China are located in Yunnan and Hainan, the current rainfall in the two regions will be abundant and there is no higher temperature than in previous years. Downstream tire production is mainly concentrated in Shandong region, the output of tire factories in the region accounted for nearly two-thirds of the national output, the high temperature weather in August did not make the Situation of power curtailment in Shandong, tire factory production as usual, and for the follow-up power rationing is more unlikely, on the one hand, Shandong region water conservancy power generation is less, at the same time, at the end of August, Shandong region will gradually cool down, high temperature weather does not reappear, therefore, excluding last year's similar policy power rationing, the probability of high temperature and drought weather power curtailment in the later period is small.
PVC: At present, there is a small impact on the upstream and downstream of PVC, but it is not enough to reverse the pattern of supply and demand
Domestic high temperature weather caused by the power rationing on pvc upstream and downstream have an impact, for the upstream, is currently mainly sichuan and Hubei limited electricity impact, the output of these two regions accounted for 15% of the total domestic PVC production, but because Sichuan is currently a temporary power curtailment week, the later with the high temperature weather ease, it is expected that the power ratio will not continue, therefore, the total loss accounted for a relatively small, for the current PVC supply of ample pattern, the impact can be ignored. The downstream impact is mainly due to the inhibition of power curtailment in East China for the start of downstream plate factories, but the current downstream demand has been relatively sluggish, and the impact is expected to be more limited. The risks of later attention are mainly whether there will be a possibility of large-scale national power curtailment similar to last year, under the current sluggish demand, or the reduction of the supply side will have a greater impact, which will promote the acceleration of domestic inventory dematerialization.
Urea: Southwest power curtailment leads to a decline in urea production per day, but the yield impact is limited
Recently due to the continuous high temperature weather in Sichuan, in order to give priority to meeting the civilian, Sichuan region has adopted a power rationing policy, resulting in a temporary shutdown of urea production enterprises in Sichuan for a week, according to the current weather conditions, Sichuan's round of high temperature weather is expected to maintain for 10 days, and then with the domestic "three volt days" after the past, it is expected that the temperature will fall, therefore, the power ration in the region is mainly for the temporary measures of high temperature weather, and last year's electricity shortage took a significant difference, for urea, The current supply and demand pattern is not enough to reverse the suspension of urea enterprises in Sichuan for one week, so the overall impact is relatively limited, and the later period mainly focuses on other regions to follow, resulting in the risk of large-scale power curtailment.
3 Effects of global high temperatures and droughts on black plates
Recently, the global high temperature and drought have struck, and many provinces and cities in the south of the mainland have experienced high temperatures above 40 °C, and the maximum temperature values and high temperature days in many places have broken records. At the same time, due to the influence of high temperature weather, the water level of many rivers in the south has dropped significantly, and the output of hydropower has decreased due to this impact. In order to ensure that residents' domestic electricity consumption is not affected, many places have issued a new round of electricity use arrangement plans. Overall, the power shortage caused by this round of high temperature and drought has two main impacts on the domestic black plate: 1. The overall impact on supply and demand in the steel industry is limited. 2. The drought has led to a decrease in hydropower generation, and the daily consumption of thermal coal is expected to be boosted in the short term, which will form a certain support for the price of thermal coal.
Steel: The overall impact of supply and demand is limited
The power curtailment measures caused by the high temperature and drought are mainly concentrated in East China and Southwest China, and steel production in Sichuan, Zhejiang, Anhui, Jiangsu and Chongqing has been greatly affected (see Table 2). At present, the power cut mainly affects the output of building materials, the long process only affects the rolling link, it is expected that the power cut shutdown time is generally 5-10 days. According to SMM statistics, the power cut is expected to affect the daily output of nearly 60,000 tons. After the rapid rebound in scrap prices in the near future, the profit of the electric furnace is quickly compressed to a state of loss, and the rhythm of the resumption of electric furnace production will be disrupted.
With the reduction of short-process steelmaking, it is not excluded that steel mills will increase production through long-process steelmaking, and the blast furnace operating rate and molten iron production are expected to continue the previous upward trend. This will further stimulate the demand for raw coal coke and iron ore, but the current production is less affected by the production limit and the impact of raw materials is also small. In the later stage, it is necessary to continue to track the relevant progress, if the duration is extended or the scope of influence is increased, it will form a strong stimulus to the original low inventory and high elasticity of raw material prices.
Coal: Daily consumption is expected to boost in the short term
In the short term, drought has led to a decrease in hydropower output, and high temperatures have led to a significant increase in electricity demand. The daily consumption of thermal coal is expected to be boosted in the short term, forming a certain support for thermal coal prices. From the high-frequency daily consumption data of coal, the daily consumption data of 25 provinces of thermal coal in the country began to turn positive year-on-year since late July, which has supported the short-term market coal prices, and the recent moving coal prices have rebounded slightly. However, due to the continuous existence of the domestic thermal coal supply policy, the amount of thermal coal supply is also correspondingly at a high level, and the output adjustment capacity is significantly strengthened compared with last year. Therefore, comprehensively considering the current supply and demand pattern of the thermal coal market, the short-term price stop and rebound due to high temperature is not high, the national energy security and price control will continue in the medium and long term, and the market price of moving coal will fall with the high temperature.
4 Effects of global high temperatures and droughts on non-ferrous plates
Zinc aluminum: there are different degrees of production reduction
Overseas, there have been high temperature weather in many places in Europe this summer, the United Kingdom, Spain and other places have ushered in the impact of heat waves, and Italy and France have sounded the drought alarm. The combination of insufficient natural gas supplies and sweltering heat has seen electricity prices rise in Europe. Zinc and aluminum smelters continue to lose money due to high electricity costs, and the scope of production reductions may be further expanded. In terms of aluminum, from the perspective of energy structure and power contracts, smelters that have announced production cuts may face the risk of expanding production cuts, unless the government can provide more financial support compensation, and this part of the remaining capacity reaches about 700,000 tons. However, if the continuous high temperature and drought weather affects the supply of hydropower in some countries, the nearly 2 million tons of electrolytic aluminum production capacity mainly based on hydropower in the European region may also be at risk of suspension of production. Zinc, also affected by high energy costs, on August 16, Nyrstar, one of the world's largest zinc smelters, said that it will close its BUDEL zinc smelter with an annual production capacity of 300,000 tons in the Netherlands from September 1, the actual output is about 280,000 tons, if the energy crisis is fermented on a large scale, there is a surge in natural gas prices to drive the refinery cost line up and promote the possibility of smelters being forced to expand the possibility of reducing production, there are still more than 400,000 tons of production capacity at risk of production reduction, Continued high temperatures and droughts may exacerbate this situation. In addition, the impact of continued high temperatures and high energy costs on the start-up of zinc downstream processing enterprises is also worthy of attention.
Recently, many places in China have also been affected by the continuous high temperature weather, and the tension between power supply and demand has further intensified. Among them, Sichuan region due to high temperature and little rain weather continued, the Three Gorges and other hydropower stations water volume declined, superimposed power delivery increased inside and outside the province, the province's power is tight, in order to ensure the safety of the power grid and people's livelihood, to ensure that there is no power curtailment, Monday announced that from 00:00 on August 15 to 24:00 on the 20th, all industrial power users in Sichuan (including the white list of key guarantee enterprises) to implement a full shutdown of production (outside the security load), the supply and demand of zinc and aluminum varieties also affected.
In terms of aluminum, Sichuan electrolytic aluminum has a built production capacity of 1.07 million tons, accounting for 2.4% of the total domestic production capacity, and since the 70,000 tons of production capacity of Guangyuan Zhongfu has not yet been put into production, the operating capacity in Sichuan Province at the end of June is about 1 million tons. However, due to the impact of limited electricity, since July, the corresponding staggered peak production of electrolytic aluminum enterprises in Meishan and other places has been stopped and repaired, coupled with the sudden fire of an aluminum plant in Sichuan due to equipment failure on August 9, involving a production capacity of 200,000 tons, and the overall production capacity reduction in July and August is about 285,000 tons, and it is expected that the scale of production reduction will be further expanded, and the remaining production capacity may face the risk of short-term total shutdown. In terms of zinc, the refining capacity of zinc in Sichuan is about 480,000 tons, accounting for 7% of the total domestic production capacity, considering that the smelter shutdown will not return to normal until at least the 20th, which is expected to affect the output of about 67,700 tons in August. In addition, due to the high temperature weather not only affects Sichuan Province, other provinces and regions such as Guangxi Autonomous Region, Guizhou Province, Hunan Province, Yunnan Province and other places of zinc and aluminum smelter electricity consumption and production is also worthy of attention.
Demand side, the recent high temperature weather affected by Zhejiang, Jiangsu and other places of some enterprises appeared in the peak production situation, the current aluminum processing enterprises due to the current level of operation has been at a relatively low level, is expected to have a short-term impact on demand is not obvious, follow-up still need to pay attention to the impact of power rationing on the production of processing enterprises, if the processing enterprises due to power rationing to reduce production, demand or will be further downturned. In terms of zinc, some downstream enterprises such as zinc alloys and zinc oxide in East China have been reduced and stopped to varying degrees, the operating rate has remained low, and consumption has continued to be sluggish.
Copper: There is a short-term sentiment boost, and in fact the demand-side risk is greater than the supply
In terms of the distribution of copper smelting capacity in Europe, which is currently relatively affected by drought (excluding Russia), the total production capacity reached about 2.664 million tons, accounting for about 11.46% of the global total, of which the production capacity concentration in Poland and Germany is more prominent (the above two countries are also significantly affected by the previous limited natural gas supply), totaling 1.151 million tons. Coupled with the previous natural gas prices also showed a sharp rise in the situation, smelting in Europe may be further affected. However, because the power consumption part of the smelting process of copper varieties is relatively limited compared with zinc and aluminum varieties, the fluctuation of electricity prices may not be very prominent for the suppression of final production capacity. However, if the large-scale suspension of production in The European region is caused by drought and energy shortages, it is not excluded that nearly one-third of the production capacity in the European region will be seriously affected in extreme cases, with a total of about 880,000 tons.
Looking ahead, the smelting capacity in Europe will remain at a level around 11%.
In terms of scrap copper, the proportion of European production capacity is also about 11% (1.0137 million tons), but the capacity distribution is more dispersed than that of refined copper smelting enterprises, and the proportion of Northern Europe is relatively high, which also disperses the impact of energy and drought on scrap copper smelting output to a certain extent. However, Germany's production capacity has reached a level of about 270,000 tons, so in a relatively extreme case, the affected production capacity of scrap copper may also reach the level of 150,000-200,000 tons.
In terms of consumption, the proportion of copper terminals in Europe is relatively high compared with the supply side, and the main demand is concentrated in Germany and Italy (41.7%), so if there is a large-scale shutdown caused by drought and energy shortages, then the short-term impact on the demand side of copper varieties will be more significant. In extreme cases, there may be a demand of nearly 1.8 million tons.
Overall, if the European region does have a large-scale production stagnation due to drought and energy problems, the impact on the demand side of copper varieties is more significant. However, because other non-ferrous varieties may be more obviously affected by supply, the probability of the market taking the lead in speculating on the supply side is relatively large, and in the process, copper prices also have a greater probability of rising with the overall non-ferrous plate, but after the market attention gradually shifts to the demand side, the increase in copper prices is expected to be significantly weaker than that of zinc and aluminum.
As far as the domestic situation is concerned, in the Sichuan region, which is greatly affected by power curtailment, there are only some sporadic primary processing enterprises related to the copper industry chain, so the overall impact is relatively limited. However, it is necessary to pay close attention to whether the scope of the impact of domestic production and power curtailment will be further expanded.
Industrial silicon: Limited by high inventories, the duration of production cuts is key
In the global industrial silicon production pattern, it can be seen that China's industrial silicon accounts for up to 78%, and overseas industrial silicon production enterprises mainly include Global Metallurgy, Norway Elkem and Brazilian Rima. There are relatively few European production enterprises, mainly located in Ferroatlantica in Spain and France, Elkem and Holla in Norway, and RW Silicium in Germany. Recent high temperatures and high energy prices in Europe have affected some production, and according to reports, the Eckerne Norway factory strike: due to the breakdown of negotiations between the union and employers on August 13, workers at the four ECKERM plants in Norway have begun strike action, which began on August 15 and involved 435 people, including workers at elken's plants in Salten, Rana, Thamshavn and Fiskaa. Of the four plants, Elkem's Thamshavn plant produces metallurgical silicon for the production of silicones, polysilicon and ceramics; The Rana plant produces nine grades of special and standard ferrosilicon with an annual capacity of 90,000 tons of ferrosilicon and 23,000 tons of Elkem micro-silicon powder; the Salten plant's main products are silicon and micro-silicon powders with a purity range of 96%-99%; and the Fiskaa plant produces carbon products, including electrode pastes and synthetic graphite. Elkem is now working to assess the operational impact of the strike on each plant, as well as the duration of the strike. On the whole, the industrial silicon production in Europe has recently received a greater impact, and it is expected that the output will be reduced to a certain extent, but because of its small proportion, the global impact is not large.
For the domestic market, from the perspective of production distribution, domestic industrial silicon has three major production areas, namely Xinjiang, Yunnan and Sichuan, accounting for a total of 79%, the recent Sichuan Provincial Electric Power Company suddenly "on expanding the scope of industrial enterprises to let electricity in the people to get an emergency notice", local industrial production has been seriously affected. Sichuan region is the main industrial silicon production area, according to SMM research to understand, the current Ya'an, Leshan and Aba area silicon enterprises have been in accordance with the document notice all stop production, a single day shutdown time of 24 hours, the provisional suspension cycle of August 15, 2022 00:00 to 20 days 24:00, the follow-up can resume production on time is still uncertain, Liangshan silicon enterprises are currently in the production of pressure load. At present, the industrial silicon production in Sichuan is basically all restricted, and it is expected that the affected production capacity in Sichuan will be about 800,000 tons of production capacity, and the Chongqing area will also have limited electricity, and some production capacity will be affected.
Xinjiang has recently been greatly affected by the epidemic, from 0 to 24:00 on August 16, there were 307 new cases of asymptomatic infection in Xinjiang Uygur Autonomous Region, including 87 cases in Urumqi City, 126 cases in Yining City, Ili Prefecture, 4 cases in Wusu City, Tacheng District, 63 cases in Hutubi County, Changji Prefecture, 15 cases in Yizhou District of Hami City, 7 cases in Gaochang District of Turpan City, and 5 cases in Korla City of Bazhou. As of 24:00 on August 16, there were 0 confirmed cases in the Xinjiang Production and Construction Corps; There are 356 asymptomatic infected patients, including 156 cases in the Fourth Division, 30 cases in the Sixth Division, 169 cases in Shihezi City of the Eighth Division, and 1 case in the 13th Division. At present, the epidemic situation in Xinjiang has caused a greater impact on the local industrial silicon production and transportation, the main production area of industrial silicon in Xinjiang region, the national production capacity accounted for 44%, the total production capacity of about 2.2 million tons / year, in the early Stage of Yili region a number of industrial silicon was classified as a medium and high-risk area, affecting about 110,000 tons of production, the recent outbreak of the epidemic in Shihezi area, the local 400,000 tons / year production capacity of large factories caused an impact.
The epidemic has affected the production of some enterprises, but the biggest impact in Xinjiang is sales and transportation, if the transportation in Xinjiang is blocked, superimposed on the current power curtailment and production limitation in Sichuan, it will have a significant impact on the national industrial silicon supply, and it is expected to promote continuous price increases. However, the current inventory is high, if the impact duration is short, the price increase will be limited, and there is a risk of falling back in the later stage, if the impact is more than two weeks, it will have a greater impact on some downstream production, which may promote a sharp rise in prices, and the follow-up needs to continue to pay attention to the impact of power curtailment in Sichuan and the development of the epidemic in Xinjiang.
Nickel: The impact on nickel consumption is greater than supply
The impact of high temperature and drought on nickel consumption in Europe is greater than that of supply, and the impact on nickel prices is empty, but because the global primary nickel supply and demand are concentrated in Asia, Europe accounts for a relatively small proportion, so its impact on nickel prices is relatively limited.
Due to the European region outside Russia, nickel suppliers are concentrated in Norway, Finland, the United Kingdom and other countries in the Nordic and Northwest Regions, and the consumer countries are concentrated in Germany, Italy, Belgium, France, Spain and other countries in central and southwestErn Europe, and the high temperature and drought in Europe are concentrated in Central Europe, Western Europe and Southern Europe, especially in France, Italy, Spain, the Netherlands and other countries, and the supply and demand impact of European high temperature and drought on nickel is mainly in the consumption link.
And from an energy point of view, the integration of renewable energy in Northern Europe is in a leading position, which is less affected by traditional energy sources than in central and southern Europe, and if the high temperature and drought in Europe exacerbate the energy crisis, its consumption impact on nickel is greater than the supply impact, so it may have a certain negative impact on nickel prices.
Recently, there have been high temperature and little rain in many parts of the country, of which Sichuan, Chongqing and other regions are more obvious, but because the main production and consumption of nickel is concentrated in the northwest and east coastal areas, the current domestic high temperature weather has not directly affected the supply and demand of nickel, and it is still necessary to pay attention to the climate change of the main production areas and consumption areas in the later stage.
5 Effects of global high temperatures and droughts on agricultural sectors
Europe is experiencing its worst drought in 500 years, many rivers are drying up, and such a severe high-temperature drought has also had a very serious impact on agricultural products, with the two most affected varieties being maize and sunflower seeds. The western and southern regions of the United States are also affected by extreme drought conditions, especially the long-term rainfall in Texas this year, which has damaged the production of new U.S. cotton.
EU corn
Looking at the data, the EU's maize production in 2022/23 is expected to be 60 million tonnes, a figure that is down 12% from the previous month, 15% below last year's production and 10% below the five-year average. The area is estimated at 9 million hectares, down 1 percent from last month and 3 percent from last year, but 3 percent from a five-year average of 8.8 million hectares. Yields are estimated at 6.67 tonnes per hectare, down 11 per cent from the previous month, 13 per cent from last year and 12 per cent below the five-year average.
The decrease in maize crop yields was mainly affected by high temperatures and widespread drought during pollination and ear extraction. Europe's major maize-producing regions are located in the south – Spain, southern France, Italy and the Balkans – which have been under constant pressure from drought and extreme heat during the plant-sensitive mid-season, which can lead to crop failure and low precipitation and soil moisture to small grain weight. Rainfall in these southern regions has been much lower than normal for months.
Regionally, the intensification of dry weather in July has covered all of Romania's major growing areas, which has reduced Romanian maize production by 3 million tons or 23% from 10 million tons in the previous month. This figure is 27% lower than last year and 23% below the five-year average. Hungary's maize production has fallen by 1.5 million tons to 6.2 million tons, and satellite imagery from the European Space Agency shows that the summer heat and drought conditions in eastern Hungary in 2022 are much worse than in 2021, and the high temperatures mainly cover Hungary and the plains around Hungary. The NDVI seasonal chart shows that the vegetation situation in Hungary also continued to decline in 2022 due to unfavorable weather, similar to the situation of other EU corn producers this year. In addition, Production in France fell by 1.2 million tons because the hot and arid regions of France are mainly concentrated in the maize-growing areas of the southwest. France has the highest maize production in Europe, estimated at 12 million tonnes. Italy's main agricultural region, centered on the northern Po Valley, continues to be affected by drought. Italy's maize production fell by 700 000 tonnes to 4.8 million tonnes, the lowest level since 1972/73. Spain's maize production also fell by 600,000 tonnes to 3.5 million tonnes, the lowest level since 2010/11. In Ukraine, maize production for the 2022/23 sales year is expected to be 30 million tonnes, up 20% from the previous month but down 29% from last year; Yields are expected at 6.67 tonnes per hectare, up 20 per cent from the previous month but down 13 per cent from last year, while harvested area is expected at 4.5 million ha, unchanged from the previous month but down 18 per cent from last year.
EU sunflower seeds
The EU's sunflower seed production for 2022/23 is estimated at 9.7 million tonnes, down 8% from the previous month and 6% below last year, but the same as the 5-year average. The area harvested is estimated at 4.7 million hectares, up 4% from the previous month, 8% from last year and 9% higher than the five-year average. Yields were estimated at 2.06 tonnes per hectare, down 11 per cent from the previous month, down 13 per cent from last year and 8 per cent below the five-year average.
Due to high temperatures and droughts, sunflower seed production in Hungary, Romania and France, the main producers of the European Union, has declined. Although sunflowers are generally drought and heat tolerant, they are particularly susceptible to high temperatures during flowering. When crops peak in Bloom in July, high temperatures throughout Southern and Central Europe are severe. The red areas marked in the image below are areas with poor vegetation vitality.
Regionally, the volume of sunflower seeds in Hungary fell by 400 000 tonnes to 1.5 million tonnes, down 20 per cent from the previous month and 13 per cent from last year. Romania's sunflower seed production fell 300,000 tonnes to 2.7 million tonnes, 9% lower than last month and 3% lower than last year. In addition, French sunflower seed production fell to 1.6 million tons, down 8 percent from the previous month and 21 percent from last year.
U.S. cotton
Similar to the situation in Europe, Texas, the main cotton-producing region in the United States, has also been affected by extreme weather conditions of high temperatures and droughts, and the production of cotton in the United States has also suffered a certain degree of decline. According to the latest monitoring data on drought in the United States, as of August 9, the area of arid areas in the United States accounted for 50.1%, a decrease of 1.3 percentage points from the previous week (51.4%), of which extreme and abnormal drought area accounted for 18.6%, a decrease of 0.4 percentage points from last week (19.0%). From the perspective of Texas, the proportion of arid area in the area is 96.3%, a decrease of 0.8 percentage points from last week, of which the area of extreme and abnormal drought accounts for 68.2%, a significant increase of 6.3 percentage points over last week. As of August 9, about 66 percent of the U.S. cotton-growing areas were plagued by drought, an increase of 1 percentage point from last week, of which 37 percent were extremely and abnormally arid areas, an increase of 4 percentage points from last week.
According to the U.S. Department of Agriculture, the U.S. cotton plant deviation rate is 35%, up 1% from the previous week, an increase of 30% over the same period last year, of which the Texas cotton plant deviation rate is 50%, a sharp increase of 2% over the previous week, a sharp increase of 45% over the same period last year, all of which continue to be at a high level in recent years. From the perspective of soil moisture content, as of the 14th, the area of surface soil water shortage area in the United States accounted for 50%, an increase of 3% over the previous week and a decrease of 2% year-on-year; The area of the bottom soil water shortage area accounted for 50%, an increase of 2% from the previous week, flat compared with the same period last year, and the overall soil moisture continued to be at a poor level in recent years. Specifically from the perspective of The main cotton-producing area in Texas, the area of surface soil water shortage accounted for 77%, a decrease of 6% from the previous week, and a significant increase of 37% year-on-year; The area of the bottom soil water shortage area accounted for 84%, down 3% from last week, expanded by 58% year-on-year, and the overall area of the water-scarce area in Texas continued to be at a high level in recent years, and there was no sign of drought relief.
According to the latest USDA report, U.S. cotton production in 2022/23 is expected to be 2.737 million tons, a sharp decrease of 638,000 tons, or 18.9%, down 28.3% year-on-year; exports are expected to be 2.613 million tons, a sharp decrease of 435,000 tons, a sharp decrease of 14.3%, a year-on-year decrease of 18.1%, and the ending stocks are expected to be 392,000 tons, a decrease of 131,000 tons, a decrease of 25.0%, a year-on-year decrease of 48.6%. From the sub-data, the harvest area in the United States in 2022/23 was 43.273 million mu, a month-on-month decrease of 16.7%, of which upland cotton and pima cotton decreased by 17.0% and 0.3% respectively. In addition, the national abandonment rate rose sharply to an all-time high of 43% (36% in 2011), an increase of about 12 percentage points from the previous quarter.
This article originated from the financial world