Following the Xiangshui incident, some raw materials saw sharp increases and then sharp drops in price, prompting chemical giants to break off ties with this company

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In June this year, at the national press conference on the theme of Safety Production Month held by the Ministry of Emergency Management and the State Council Information Office, Sun Huashan, deputy director of the Office of the State Council Safety Committee and vice minister of the Ministry of Emergency Management, said that the extremely serious explosion that occurred at Tianjiayi Chemical Company in Xiangshui, Jiangsu on March 21 revealed prominent fundamental, root-level, and bottleneck issues in safety production. The Rongshui explosion, which had remained quiet for nearly 3 months, has resurfaced in people’s attention; although as of now, the relevant authorities have not issued any report on the investigation into this incident. Yet Tianjiayi Chemical, the company responsible for the accident that caused over 600 deaths and injuries, has repeatedly been the subject of various shocking revelations. Tianjiayi is one of the major domestic suppliers of phthalic aniline. It is estimated that its market share ranges from 25% to 30%. Furthermore, according to information published on the website of the People’s Government of Xiangshui County, Tianjiayi’s products are exported to various countries, supplying related products to many international chemical giants. Such a serious accident at Tianjiayi Chemical, and the significant damage it has caused, will also have a major impact on some of its customers. Following the explosion in Xiangshui, the domestic chemical industry experienced a wide range of reactions: some companies closed down, others were busy cleaning up the accident site, while still others decided to suspend production temporarily in anticipation of new policies. Many enterprises in these industrial parks were forced to shut down for rectification, which affected the market for chemical raw materials, leading to sharp price increases; in some cases, the prices of certain raw materials rose by more than 300%. Since then, raw material prices have remained volatile. According to relevant data, the current price of m-phenylenediamine in China is around 120,000 yuan per ton, a 40% drop compared to 200,000 yuan per ton on April 17th. Apart from Tianjiayi Chemical, which was involved in the accident, Zhejiang Longsheng is the largest producer of para-phenylenediamine in China. Currently, Zhejiang Longsheng has a global production capacity of 300,000 tons of dyes per year and around 100,000 tons of auxiliaries per year, placing it at the top of the global market. At the same time, Zhejiang Longsheng also has an annual production capacity of 110,000 tons for intermediates, and its output of m-phenylenediamine and resorcinol ranks among the highest in the world. Luntu Co., Ltd. has an annual total dye production capacity of nearly 190,000 tons, and its market share in dye sales ranks it among the top two in China’s dye industry. Tianjiayi, the company where the explosion occurred, as well as Zhejiang Longsheng, a leading player in the chemical industry, are both important suppliers of chemical raw materials in China. Every step in their development and operations plays a crucial role in the entire industrial chain and in the chemical industry as a whole. After the accident, the shortage of raw materials contributed to an increase in their prices. Before the accident, the price of m-phenylenediamine was between 45,000 and 50,000 yuan per ton, but it rose sharply to 140,000 yuan per ton after the accident. However, with the subsequent drop in raw material prices and weak demand from downstream industries, the rise became a thing of the past. Following the explosion at the Xiangshui chemical plant, Zhejiang Longsheng saw its market value double within just half a month, driven by expectations of rising product prices; it reached a peak of 82.3 billion on April 8, after which it began a steady decline. As of the close on June 17, Zhejiang Longsheng was trading at 15.21 yuan per share; the total trading volume for the day was 1.841 billion yuan, with a turnover rate of 3.76%, resulting in a loss of 32.8 billion in market value. In just over 2 months, the stock price of Zhejiang Longsheng dropped by 42%, with trading volume exceeding 260 billion yuan; this decline drove down the entire chemical sector, and it is estimated that at least 100 billion yuan in funds are now trapped in these investments. The once-real surge of 60 yuan per kilogram referred to the latest price of Disperse Black ETC at 300% – it is a basic dye among disperse dyes, and one that is used extensively in various applications; for this reason it is regarded by the industry as an indicator of trends in the dye sector. However, even for dyes of the same type, the current quotes from various dye factories in Shangyu also vary. Zhejiang Longsheng is often regarded as a benchmark in the industry thanks to its strong brand influence. The trucks coming and going are a testament to the hustle and bustle here. In the shipping area of a dye factory, the trucks that go in and out reflect the activity that takes place there. The guard at the shipping area told the reporter that there were significantly more trucks delivering goods in March this year compared to before; some distributors used to pick up goods once every two weeks, but now many of them do it twice a week. Distributors are an important channel for the sale of dyes in Shangyu. Along both sides of Longsheng Avenue, in front of the headquarters of Zhejiang Longsheng, there are **dozens of dye distributors. During the reporter’s interviews here, several distributors said that although the current price of Zhejiang Longsheng Dispersed Black ETC 300% is 60 yuan per kilogram, the actual price at which distributors sell it to printing and dyeing factories is generally between 47 and 48 yuan per kilogram. It may seem like a loss-making deal, but the distributor profits from the inventory they acquired at low prices in the past. “A couple of days ago, everyone was asking where the goods could be found; now they are starting to distribute them. At a price of 60 yuan per kilogram, no one dares to purchase it; even the dye factories downstream cannot afford it – the price is too high. ”That’s what a dealer in Shangyu said. The rumors of production shutdowns are not true. Previously, there were rumors in the market that \"all domestic para-phenylenediamine manufacturers had stopped production for maintenance.\" When reporters asked employees from several dye manufacturers, they were all told that the companies were not shut down for maintenance and were operating normally. As is well known, the Xiangshui explosion was the catalyst that triggered the surge in prices of dyes. The explosion occurred at Jiangsu Tianjiayi Chemical Co., Ltd. (hereinafter referred to as “Tianjiayi”), one of the major domestic suppliers of phthalic aniline, which is an important intermediate for dyes. This explosion is expected to cause a supply shortage of m-phenylenediamine, which in turn will affect the production of downstream products such as resorcinol and dyes ； Meanwhile, Xiangshui and its surrounding area of Guanyun are another major dye-producing region in China. Following the explosion, local chemical companies ceased operations entirely, and it is expected that they will undergo comprehensive restructuring. This has also become an important factor behind the rise in dye prices this time. The actual selling price of m-phenylenediamine has risen from 45,000 yuan per ton before the explosion incident to 100,000 yuan per ton; reportedly, the latest quote from manufacturers has reached 150,000 yuan per ton. Meanwhile, the work safety authorities in Shangyu also confirmed to reporters that \"after the Xiangshui explosion, inspections for safe production were carried out at Annuo Fangamine Chemicals Co., Ltd. at the provincial, municipal, and district levels. After those inspections, we did not order them to suspend operations for maintenance.\" ”Although m-phenylenediamine at Zhejiang Longsheng is still being produced normally, its price has continued to rise steadily. Industry experts analyze ； M-phenylenediamine has become a \"pawn\"; in the eyes of industry experts, there are mainly three reasons for the rise in dye prices this time. 1. It is the chain reaction resulting from the explosion accident in Xiangshui, Jiangsu, as production capacity has decreased. 2. The printing and dyeing industry is currently entering its traditional peak production period. The previously pessimistic outlook for this industry led to companies in this sector stocking up less, and the sudden reduction in dye production capacity exacerbated panic among downstream users. 3. The printing and dyeing industry is relatively fragmented, while the capacity in the upstream dye industry is concentrated, giving that sector control over the industry. When changes occur on the supply side of the industrial chain, price increases are an inevitable outcome. In the production process of disperse dyes, m-phenylenediamine is an important intermediate, but its cost accounts for a small proportion. In terms of composition, on average, about 30 kilograms of m-phenylenediamine are required to produce 1 ton of dye. Therefore, the increase in the price of m-phenylenediamine has little impact on dye manufacturers, and downstream companies can also accept it. During the interview, a distributor did some calculations for the journalist: \"Even if the price of m-phenylenediamine increases by 100,000 yuan, the cost of producing one ton of dye only rises by 3,000 yuan; if all that extra cost were passed on to downstream companies, the dye industry wouldn’t be in its current state.\" Therefore, the rise in m-phenylenediamine is merely an excuse for dye manufacturers to raise prices. ”Nearly three months have passed since the explosion in Xiangshui, Jiangsu, yet for many chemical companies, each day feels like an eternity. Some executives from companies in the Xiangshui Ecological Chemical Industry Park said that their companies have been shut down for some time, and they cannot disclose the specific details ； Some owners of fine chemical companies said that their businesses are still operating as usual at their current locations, but the situation these days is much worse than before; profits are not satisfactory, and their tone revealed a hint of helplessness ； There are also some companies whose contact numbers cannot be reached; the specific situation is unknown. It is understood that the Xiangshui Chemical Ecology Park where Tianjiayi is located, along with two other nearby chemical industrial parks, house a total of 318 chemical enterprises. Many of these enterprises are engaged in the production of pharmaceuticals, pesticides, and chemical intermediates, and they constitute an important part of the supply chains in the global chemical and pharmaceutical industries. Upon investigation, it was found that 275 of these companies had **environmental violation records issued by their respective departments**.