1. The domestic epidemic is severe, and the economic downturn is severe, especially the suspension of operations in Shanghai, which has affected various industries. The National Bureau of Statistics announced that the manufacturing PMI fell 2.1 percentage points to 47.4 in April, while the service industry business index decreased 6.7 percentage points to 40.0. The overall PMI was 42.7. The Caixin China General Service Industry Operating Activity Index (Service PMI) was 36.2, a decrease of 5.8 percentage points from March and a new low since March 2020. In April, Caixin China's manufacturing PMI dropped to 46.0. In April, Caixin China's comprehensive PMI decreased by 6.7 percentage points to 37.2, the lowest since March 2020.
2. There has been a serious decline in imports and exports. The latest data from the General Administration of Customs of China shows that the year-on-year growth of China's goods trade import and export in April was only 0.1%, a significant decrease of 5.7 percentage points from March. Among them, exports increased by 1.9% year-on-year, far lower than March's 12.9% growth rate; Imports decreased by 2%, an increase of 0.3 percentage points compared to March.
3. There has been a significant decline in investment, especially in the real estate sector. In the first quarter of 2022, sales of the top 100 domestic real estate companies decreased by 47.2%. Affected by the epidemic, the transaction volume of the real estate market in April further declined, with a month on month decrease of 16.2% and a year-on-year decrease of 58.6%. The scale of land acquisition by the top 100 companies decreased by 55.9% year-on-year from January to April.
The outbreak of the Russo Ukrainian war has led to a shortage of natural gas supply in Europe and a significant increase in international oil prices. The COVID-19 outbreak in Shanghai has led to production shutdowns, not only affecting domestic economic development, but also causing damage to supply chains in Europe and America. In addition, the nationwide monetary policy in the United States has led to sustained price increases, and inflation in the United States has reached a new high in 40 years.
5. In the polyethylene glycol industry, the production of ethylene oxide from January to April was about 1.5 million tons, a year-on-year decrease of 6%, and the operating load remained low. In April, multiple units such as Yangzi Petrochemical, Taixing Jinyan, and Sanjiang Chemical shut down and limited production, with a minimum operating load of only 66%. Despite the significant shutdown and production restrictions of the equipment, there are still serious losses. From January to April, the average profit from external ethylene extraction of ethylene oxide was -23 yuan/ton, and the average profit from MTO process route was -421.7 yuan/ton. The largest downstream polycarboxylate water reducing agent monomer for ethylene oxide accounts for 60% of the total consumption, resulting in a loss of 821.86 yuan/ton in April. The short-term ethylene oxide industry chain is affected by weak supply and demand, with limited upside and downside potential. In the long run, with the recovery of demand in the later stage and the gradual flow of logistics, the market has a stable and positive expectation, and the rational return of prices is an inevitable choice for the market.
6. Currently, the domestic market for propylene glycol in China remains stable and cautious. The high prices of raw materials support, coupled with the unsatisfactory operating rates of factories in the north, but the domestic demand for propylene glycol is weak, and there is a strong demand for procurement. It is expected to be mainly volatile in the short term.