The “abnormal” rise was fired by an auction trading of Lunan Chemical

Though the rise in CPL was supported by firming benzene cost and downstream speculative restock, it was still quite “abnormal”, since CPL supply had expanded, when Luxi and Lanhua had both restarted in end-Dec. Observing this round of increase, the abnormal post-holiday rise began with Lunan's auction last Wednesday (Jan 4, 2023).

On Jan 4 morning, there were still low-priced trades done at 11,300yuan/mt, delivered to Jiangsu. The changes happened at noon time, as continuous flow of players came to participate in CPL auction trade, and the final price was locked at 11,750-11,760yuan/mt, 6 months BA, ex-works, or 12,000yuan/mt 6 months BA, delivered. The trading volume was 1,000 tons. This high price had fired up the market, and elevated market expectation. CPL seller and buyer had been in a short bargain afterward, and the sell side won it due to limited CPL stocks. Coming into this week (Jan 9-15), spot price was nailed around 11,800yuan/mt, 6 months BA, delivered.

As far as the author was known, the auction trading on Jan 4 had indeed some unexpected factors, and the influence of this transaction has been over-interpreted and magnified by market players. But since it involves individual enterprises, we don't talk too much about it here. But in terms of the change in the composition of the bidders, this may cause some turbulence in CPL spot trading in 2023.