How Can Yantai Wander And Move?

Yantai Wanhua Pu Limited by Share Ltd office building, which is not far from the development zone of the city of Yantai, has not been air-conditioned for two days. The reason is that the 45 day technical renovation is underway and the chilled water plant is being overhauled.

Although weather and indoor temperature are somewhat high, they do not affect the mood of executive vice president and Dong Kuo Kou Guang Wu.

When it comes to crazy oil prices, his first words are: "the surge in oil prices has a great impact on the entire chemical industry."

Overall rise in raw material prices

As the first joint stock company to be restructured and listed in Shandong, Wanhua's sales revenue last year was 7 billion 804 million yuan and its net profit was 1 billion 481 million yuan. The products of research, development, production and sales of MDI (isocyanate), aromatic polyamine series and thermoplastic polyurethane elastomers were its main product lines, and it is also the largest MDI manufacturing enterprise in the Asia Pacific region at present.

According to the industry chain, the most important product of Yantai Wanhua's products is oil.

Its technological route is that crude oil is cracked into naphtha, then processed into pure benzene, and pure benzene is reacted with nitric acid and sulfuric acid to form aniline and produce MDI.

"As oil prices continue to rise, the cost of raw materials and energy continues to rise. This is a global problem. It is impossible for Yantai Wanhua to stay out of it."

Kou Guangwu admits.

Direct impact is not only upstream price, but also downstream customers.

Crude oil prices have risen by more than 40% since the beginning of this year. "It has led to almost simultaneous rise in prices of petroleum derivatives."

For example, aniline, as a result of many new projects, the supply price of aniline has been declining since last June. But from March this year, the price of aniline supply has a turning point, especially after entering June, the price of aniline has risen sharply. At present, the supply price of aniline in domestic market has reached 15000 yuan / ton, which has reached a record high, rising 40% compared with the low point of January this year.

The main factor leading to the soaring price of aniline is the rise in oil prices. In addition, the price of nitric acid and sulfuric acid, the two other raw materials for producing aniline, is also soaring.

Now we can see that oil prices continue to rise.

At the beginning of July, Sinopec raised the price of naphtha again.

"A little better is that Yantai Wanhua implements strategic procurement in the procurement of raw materials. We will not follow the market price, but the impact on the enterprise is still very large."

Kou Guangwu explained that the company is carrying out the global procurement mode, and will not be restricted or trapped in any supplier. "For example, suppliers of aniline, they also need some long-term stable customers. Compared to the 300 thousand tons / year of aniline procurement in Yantai Wanhua, aniline suppliers will not ignore Yantai Wanhua."

Secondly, Yantai Wanhua made a long list in the past, such as aniline, which is based on the average price of benzene at present, plus a fixed cost profit absolute amount, forming the purchasing price of the company.

"In this case, the price of benzene has not increased substantially this year, this mode has stabilized the cost of comprehensive consumption of aniline used by the company."

"Through these measures, Yantai Wanhua's strategic purchasing role is very obvious, and our bargaining power has played a role. Under the situation that the price of petrochemical industry has risen substantially, although the impact of raw materials is very large, it has not yet struck a fatal blow."

Product prices have not risen.

Another test for Yantai Wanhua is that the price of crude oil is too high, which has caused the shrinkage of downstream industries.

Yantai Wanhua's products are mainly divided into two kinds: MDI and MDI.

Some of the former customers are manufacturers of freezers and refrigerators. Some of the latter customers are clothing and shoemaking enterprises.

"The refrigerator and refrigerator industry has not changed much, but the clothing and shoemaking industry has encountered great difficulties this year, especially some low-end clothing and shoemaking enterprises."

Kou Guangwu said that due to multiple factors such as the subprime mortgage crisis, the reduction of export rebates and the appreciation of RMB, the demand for shoemaking and clothing has been greatly reduced overseas.

"For example, in Wenzhou, Zhejiang, many enterprises have at least reduced production.

From this perspective, their pressure this year is greater than that of Yantai Wanhua.

In the MDI manufacturing business, the operation of several installations of multinational corporations has also brought down the price of the whole industry.

At present, BASF and other joint ventures in Shanghai Chemical Industrial Zone put into operation 240 thousand tons of equipment, Japan NPU20 million tons of equipment and Bayer company's devices are entering or will soon enter the operation stage.

These make the supply of MDI relatively adequate throughout the country, while the same period last year was tight.

Kou Guangwu said that before foreign investment had not yet entered China, Yantai Wanhua was the only MDI manufacturer.

"In 2005 and 2006, MDI was fired to 40 thousand or even 50 thousand yuan per ton, and the factory price of Yantai Wanhua was 25 thousand to 27 thousand yuan.

Yantai Wanhua's consideration at that time was that if the factory price was raised to 40 thousand yuan, although the company would increase profits in a certain period, it would surely cause a fatal injury to the domestic polyurethane industry. The downstream industry will shrink and the downstream customers will be reduced, which will eventually lead to Yantai Wanhua itself losing the market.

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