An update from the air separation industry, 20160712: CO2 prices saw volatile fluctuations in the first half of the year, with many uncertainties ahead in the second half

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Carbon dioxide experienced fluctuations in the first half of the year, with many uncertainties in the second half. [Introduction] At the end of 2015, Zhuochuang Information made predictions about the carbon dioxide market for 2016 in an article titled “Weak Supply and Demand and Stable Prices in the Carbon Dioxide Market in 2015.” The article stated that “although the growth rate of production capacity for carbon dioxide facilities is slowing down, there is still room for an increase of several million tons per year in domestic production capacity for this substance in 2016.” The oversupply situation in the domestic carbon dioxide market is unlikely to change in the short term; as long as demand from downstream industries remains weak, the low operating rates of carbon dioxide production facilities and low market prices will continue. ”. Time flies by; half of 2016 has already passed, and our previous predictions are gradually coming true. 1. Analysis of carbon dioxide prices in the first half of the year: As Zhuochuang predicted, there were no signs of improvement in the tight supply-and-demand situation in the carbon dioxide market in 2016. Although there were some brief periods of strong price performance in certain areas, most manufacturers continued to show modest performance. The operating rates of domestic carbon dioxide production facilities and market prices remained at low levels. According to Zhuochuang’s statistical data, as of late June 2016, the average price of carbon dioxide in the domestic market was 345 yuan per ton, a decrease of 1 yuan per ton, or 0.29%, on a year-on-year basis. As shown in the figure, the average price of the carbon dioxide market in 2016 was below that of the same period last year for most of the time, with it being higher only for a little over a month during that period. In March, the simultaneous shutdowns or reduced production by multiple carbon dioxide manufacturing enterprises in Hebei, Tianjin and other areas led to a shortage of supply of this substance in the North China region. As a result, the prevailing transaction price in the Hebei area rose to 350–370 yuan per ton, while prices in Shandong also increased to 260–360 yuan per ton. From mid-to-late March to the end of April, shortages of carbon dioxide supplies in South China occurred due to production shutdowns for maintenance at key manufacturers such as Huayuan, which also led to an increase in market prices. As the supply of carbon dioxide resources across various regions returned to normal, carbon dioxide market prices began to decline gradually starting from the end of April. In mid-May, negotiation prices in carbon dioxide markets across various regions were relatively stable. Starting in late May, as some carbon dioxide-producing enterprises in Shandong region ceased operations one after another, the supply of carbon dioxide in that region tightened. Driven by rising sales prices from the major carbon dioxide manufacturers in Weifang, the market prices of carbon dioxide in Shandong, Hebei, northern Jiangsu and other areas also increased successively. According to Zhuochuang’s statistics, as of now, the negotiated prices for carbon dioxide in Shandong range from 260 to 400 yuan per ton. In Hebei, the prevailing price for carbon dioxide is between 250 and 290 yuan per ton, while in northern Jiangsu, the price ranges from 240 to 300 yuan per ton. 2. Analysis of carbon dioxide production and consumption in the first half of the year: According to data from Zhuochuang, since 2016, the new capacity for carbon dioxide production in China has been around 350,000 tons per year. However, demand from end-user industries has not increased in parallel; in sectors such as welding and oil field injection, consumption has not only failed to rise but has actually declined. Given the oversupply in China’s carbon dioxide market, some manufacturers operating in this sector were not able to operate at full capacity. Additionally, other manufacturers experienced intermittent shutdowns of their carbon dioxide production facilities due to factors such as facility upgrades or irregular supplies of raw materials. As a result of these factors, the operational rate of carbon dioxide production facilities in China was around 45.9% during the first half of 2016.