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06 17 2021
International commodities soaring─ steel, paper pulp, plastic, rubber |Aquasky

The spread of the novel coronavirus has caused a great impact on global trade. At the same time, in addition to the subsequent shortage of cabinets and a surge in shipping freight, it also affects the difficulties in the import and export of many commodities, causing the prices of commodities used in many products to rise accordingly. This article will classify and elaborate pressure tanks' commodities, steel, plastic, rubber, and carton boxes in separate paragraphs.

[Steel]
Iron ore is the main raw material of steel. The main producing countries in the world are Australia and Brazil. Behind these two countries are four iron ore producers: the so-called "Big Four Mine": Brazil's Vale, Australia's Rio Tinto, BHP Billiton, and FMG. The iron ore productivity of these four major mines accounts for nearly 60% of the global output. The pricing model of the current international iron ore price is the "long-term agreement mechanism," that is, mines and steel companies negotiate about the price and reach a long-term contract.

In addition to China, Russia, Ukraine, Turkey, and Brazil are the main international suppliers of steel blanks. As domestic demands in these producing areas have also grown, the supply volume has also decreased. Mainland China the is not only one of the world's leading steel manufacturers, but also the largest importer of iron ore. Mainland China controls the expansion of iron production capacity, coupled with the increasingly stringent environmental protection requirements of the Kyoto Protocol, and the limited capacity of new steelmaking in various countries, the international steel billet supply is gradually tightening.

Steel production can be divided into two modes. The first is blast furnace steelmaking, which produces automotive steel plates and electromagnetic steel sheets. The other method is electric furnace steelmaking, which uses scrap iron as commodities for construction steel bars, stainless steel, or special steel. Brazil, the world's second-largest iron ore exporter in 2020, has cut down production due to the impact of the novel coronavirus. Blast furnaces that are used for steelmaking also get influenced, too. It will take a while for the capacity to back to normal. After the start of the vaccination, many emerging countries apart from China have restarted their infrastructure and also require a large amount of steel that caused the steel to be in short supply more quickly. Some experts pointed out that this situation may continue until the end of 2021.


[Polypropylene]
PP, also known as polypropylene, is one of the petrochemical raw materials. It is made from the reaction of propane, a by-product of refined petroleum. Polypropylene has excellent chemical properties and even at high temperatures will not be corroded by minerals, acids and alkalis. Since petroleum is the raw material of plastic, the demand for petroleum will subsequently affect the supply and demand of the plastics industry.

According to PLATS reports at the end of 2020, the prices of the five major general-purpose resins in the Far East (Asia) have also soared that benefiting from the rise in international oil prices. Moreover, there was severe freezing rain in Texas where the petrochemical plastics plants are in the United States in February this year. The disaster had stopped these plants from manufacturing and had caused a serious impact on the global supply of plastic raw materials. After the vaccines began to be administered in various countries, economic demand in various regions also tended to recover. Many plastic manufacturers began to worry about insufficient inventory and started to order material replenishment, which also exacerbated the situation of short supply.

The U.S. plasticization plant has been suspended for four weeks until the end of March according to the Financial Times. Although it has begun to gradually resume its operations, it may not return to the usual capacity until June this year. This has caused a heavy blow to the supply of the world's three most commonly used plastic polymers: PVC, Polyethylene (PE), and Polypropylene (PP). Joel Morales, executive director of IHS Markit, also said that Texas' Freezing Rain is the "largest single event so far" in the propylene market. Compared with May last year, the quotations have soared nearly three times.

[Rubber]
Rubber is an elastic polymer. Rubber can be obtained from the sap of some plants, or it can be artificial. Artificial rubber is also called synthetic rubber. So is the butyl rubber which is used in AQUASKY pressure tanks is a type of synthetic rubber. Butyl rubber has good chemical and thermal stability and has particularly excellent air and water tightness. Synthetic rubber is a highly elastic polymer made through artificial synthesis. The main raw materials are coal, petroleum and natural gas. Therefore, the price will vary with these three raw materials.

Under the influence of the new crown pneumonia, the rubber industry chain is not unexpectedly got influenced. Entering the post-pandemic era, as countries continue to inject pneumonia vaccines, the market has gradually recovered. Unexpectedly, Texas, a major oil town in the United States, was hit by freezing rain. Many shale oil production lines were shut down, and the operation of refineries was completely halting production, which in turn led to a rise in oil prices. On top of that, OPEC+ had decided not to increase the production in April which caused Saudi Arabia to continue to cut production by 100 million barrels per day. This policy had further aggravated the soaring oil prices. Furthermore, the supply of natural rubber was also in short supply which drove the raw material of synthetic rubber to follow up. Experts pointed out that this wave of rubber price increases may continue until the end of this year.

 

[Carton (pulp)]
Papermaking uses wood as the main raw material to produce pulp, paper, and cardboard. At present, the production bases of the world’s paper industry are dominated by the United States and Canada in North America, Sweden, Finland, and Russia in Northern Europe, and China, Japan, and Russia in East Asia. Australia and Brazil also have large-scale paper and pulp mills. industry.

 

Since the outbreak of the novel coronavirus, many countries have closed cities or banned flights due to the epidemic at the beginning of this year. On account of the continuous increase in raw materials and the shortage of cabinets, the prices of pulp and waste paper have also risen steadily. Hence, the industrial paper (corrugated paper) whose main raw material is waste paper in turn drives. That is, the cartons and paper used for packaging. Box prices have also continued to rise.

Since 2020, China has banned the import of waste paper. Although 60% of the raw materials for Taiwan's industrial paper are from domestic recycled waste paper,30 to 40% still rely on imported overseas waste paper. Due to the recent shortage of the shipping container market, the rising sea freight price, the increase in the cost of imported waste paper, and the epidemic is driving e-commerce online shopping, the consumption of packaging white card paper has also hit a record high. In the post-pandemic era, countries have got back to work to revitalize the economy, and the demand for cardboard and paper has greatly increased as a result. What's worse, international pulp mills have even offered rationing policies. Even if the area paper mills have money, they cannot purchase in full quantity. China's paper industry leader Nine Dragons announced to increase the prices of various industrial papers in 2020, which has also driven Taiwan's carton industry to follow up the increase. 

Why did Taiwan need to import waste paper? One is to make up for the insufficient amount of manufacturing, and the other is because the waste paper in Taiwan has been recycled and reused many times. The physical properties of the paper are insufficient, that's the reason why imported waste paper. The fiber strength of paper (especially American waste paper) is used to make up for the strength of the carton that needs. At present, the price of domestic waste paper in Taiwan will fluctuate with the price of industrial paper and imported waste paper. When the international market for imported waste paper drops and the demand for industrial paper begins to decrease, the purchase price of industrial paper mills will also decrease accordingly.

 

 

 

All in all, it can be seen that novel coronavirus has uniquely produced a great impact on different raw materials. The increase in raw materials and lack of materials have also caused the price increase of many related products and the chaos of rushing for materials and goods in the market. This situation is expected to stabilize and return to the previous level after the epidemic is relieved in the future.
 

 

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