Performance of the sector this week: this week (January 24 to January 28, the same below), the market composite index fell broadly. The Shanghai Composite Index closed at 3361.44, down 4.57% this week, the Shenzhen Component Index fell 5.00% this week, and the chemical sector (Shenwan) fell 3.26%. Performance of individual chemical stocks this week: this week, the chemical sector went down with the broad market. Some stocks still rose against the market, with Poly Union Chemical Holding Group Co.Ltd(002037) , Guizhou Redstar Developing Co.Ltd(600367) , Anhui Huaheng Biotechnology Co.Ltd(688639) among the top gainers. This week Poly Union Chemical Holding Group Co.Ltd(002037) rose by 32.94% in total, leading the chemical sector. After Guizhou Redstar Developing Co.Ltd(600367) released the performance forecast, the net profit attributable to the parent company in 2021 is expected to be 21 million yuan to 300 million yuan, up 27.29% in total this week. Anhui Huaheng Biotechnology Co.Ltd(688639) this week announced the granting results of class I restricted shares of the restricted stock incentive plan in 2021, with a cumulative increase of 17.21%.
This week’s crude oil market dynamics: geopolitical tensions superimposed on the International Energy Agency raised its oil demand forecast, and crude oil prices rose in an all-round way. Ice oil distribution closed at US $87.89/barrel (2.13% MoM); WTI crude oil closed at US $85.14/barrel (1.57% MoM). Tracking of key chemicals: trichloroethylene (+ 25.19%), styrene (+ 8.51%), butadiene (+ 8.33%), naphtha (+ 8.20%) and natural gas (+ 6.95%) are among the chemicals we focus on this week. This week, trichloroethylene manufacturers produced at low load, and the price of trichloroethylene rose broadly. This week, the prices of petroleum and pure benzene at the raw material end of styrene rose, some styrene units were shut down, and the price of styrene rose again. The cost of butadiene was supported this week. A plant stopped due to failure, and the price of butadiene continued to rise. This week, the operating rate of naphtha downstream refineries rose, the cost was supported by international oil prices, and the price trend of naphtha rose. This week, China’s natural gas shutdown manufacturers increased, terminal demand decreased, and natural gas prices rose and fell.
The demand growth trend of “zero carbon fuel” biodiesel is obvious: with the adjustment and implementation of global carbon emission regulations and the superposition of China’s carbon neutralization policy, biodiesel products will be in short supply in the global market with its carbon dioxide emission capacity far lower than that of fossil fuels under the same combustion efficiency, China’s biodiesel enterprises represented by Longyan Zhuoyue New Energy Co.Ltd(688196) actively expand their production to meet the growing demand for “zero carbon” and “low carbon” fuels in overseas markets such as the European Union and China’s energy market.
Main lines of Chemical Investment: (1) periodic growth stocks are expected to improve marginally: since the turning point of Q2 chemical boom in 2020, the prices of some chemicals have risen to historical highs. As the mismatch between supply and demand moves towards balance and superimposes the downward pressure of the economy, the traditional chemical cyclical stocks have made a sharp correction. We believe that we should focus on the industry leaders with continuous production expansion capacity in the 14th five year plan, supplement the price with quantity, especially the high-quality companies that embrace change and look for the second growth curve, which are expected to cross the cycle in the medium and long term. Key recommendations: Wanhua Chemical Group Co.Ltd(600309) , Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , satellite chemistry, China National Chemical Engineering Co.Ltd(601117) , Ningxia Baofeng Energy Group Co.Ltd(600989) , lithium iron phosphate industrial chain and soda ash industrial chain. (2) Focus on high-end manufacturing and supporting materials for high-tech industries, including biosynthesis, electronic materials, degradability, tail gas treatment, carbon fiber, etc. Key recommendations: Haohua Chemical Science & Technology Corp.Ltd(600378) , Valiant Co.Ltd(002643) . (3) For the pesticide industry chain entering the business cycle, the key recommendations are: Jiangsu Yangnong Chemical Co.Ltd(600486) , Anhui Guangxin Agrochemical Co.Ltd(603599) .
Risk warning: crude oil supply fluctuates sharply; The situation of trade war worsened; The risk of large exchange rate fluctuations.
