Polyquaternium-7

Market Dynamics Report on Polyquaternium-7

I. Price Trends
1. Domestic Market: Over the past week, the prevailing transaction price for industrial-grade Polyquaternium-7 (40% content) in East China fluctuated between 28,500 and 30,000 RMB/ton, representing an increase of approximately 2.3% compared to the previous week. Prices in South China were slightly higher, ranging from 30,500 to 31,500 RMB/ton, primarily due to regional supply tightness.
2. International Market: CFR quotations in Southeast Asia remained stable at 4,200-4,400 USD/ton. In Europe, energy cost increases prompted some suppliers to raise prices by 5%-8%; however, limited demand acceptance kept actual transaction price increases under 3%.

II. Supply and Demand Dynamics
1. Supply Side:
- Major domestic producers (e.g., plants in Zhejiang and Shandong) maintained operating rates of 85%-90%. However, environmental inspections led to temporary shutdowns of some small and medium-sized capacities, resulting in tight regional supply.
- Import volumes from South Korea and Japan decreased as overseas suppliers prioritized domestic demand, reducing export quotas to China by approximately 15%.
2. Demand Side:
- The downstream personal care industry (shampoos, conditioners, etc.) entered its traditional peak season, with order volumes increasing by 10%-12% quarter-on-quarter, supporting demand for Polyquaternium-7.
- Demand in the industrial sector (water treatment, papermaking) remained steady, but procurement pace slowed due to cost pressures, with buyers adopting a buy-as-needed inventory strategy.

III. Costs and Profits
1. Raw Material Costs: The price of the primary raw material, acrylonitrile, continued to rise, increasing by 4.5% over the past week. This pushed the production cost of Polyquaternium-7 up by approximately 600-800 RMB/ton.
2. Industry Profits: The industry average gross margin has compressed to 12%-15%, a decline of 3 percentage points compared to the previous month, placing some small and medium-sized enterprises under financial pressure.

IV. Relevant Policies and Events
1. Domestic environmental regulations have tightened, with multiple regions conducting special rectifications in chemical industrial parks. Some enterprises were subject to production restrictions or temporary shutdowns for rectification, impacting short-term supply.
2. The European Union intends to initiate an anti-dumping investigation on Polyquaternium products imported from China. This has heightened market concern, though it has not yet had a substantive impact on actual trade.

Analysis and Judgment
1. Short-term Drivers: The convergence of regional supply tightness on the supply side and peak-season demand downstream, coupled with rising raw material costs, is driving prices to remain strong.
2. Risk Factors: The intensity of environmental policy enforcement, adjustments in overseas suppliers' export strategies, and downstream acceptance of higher prices.

Forecast
1. Price Trend: Over the next two weeks, domestic Polyquaternium-7 prices are likely to continue a slight upward trend, with the mainstream price in East China expected to break through 31,000 RMB/ton. However, the magnitude of the increase will be constrained by downstream cost pass-through capabilities.
2. Supply-Demand Pattern: In late September, as some temporarily shut-down enterprises resume production, the tight supply situation will gradually ease, and price increases may narrow.
3. Long-term Outlook: If the price of acrylonitrile declines in the fourth quarter, combined with the release of new production capacity (estimated at 50,000 tons/year in Q4), the supply-demand contradiction will ease, and prices are expected to return to a rational range.