Performance of the sector this week: the market composite index rebounded upward this week (February 14-february 18, the same below). The Shanghai Composite Index closed at 3490.76, up 0.80% this week, the Shenzhen Component Index rose 1.78% this week, and the chemical sector (Shenwan) rose 3.16%. Performance of individual chemical stocks this week: the chemical sector rose broadly this week, with a stronger increase than the market. The top gainers are Aba Chemicals Corporation(300261) , Henan Qingshuiyuan Technology Co.Ltd(300437) , Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) , Poly Developments And Holdings Group Co.Ltd(600048) , Yunnan Yuntianhua Co.Ltd(600096) , Hubei Zhenhua Chemical Co.Ltd(603067) , Jiangxi Selon Industrial Co.Ltd(002748) , Guangzhou Sanfu New Materials Technology Co.Ltd(688359) , Shenzhen Dynanonic Co.Ltd(300769) , Ningbo Ronbay New Energy Technology Co.Ltd(688005) . On February 11, covid-19 oral drug of Pfizer was urgently approved by China. This week Aba Chemicals Corporation(300261) increased by 66.73%, leading the chemical sector. The company has a production capacity of 500 tons / year of Kalon anhydride intermediate. This week Yunnan Yuntianhua Co.Ltd(600096) announced the signing of the cooperation framework agreement, the establishment of a cooperation company and the construction of supporting projects such as batteries, Isolation Membranes and battery anode and cathode materials. On February 14, Shenzhen Dynanonic Co.Ltd(300769) issued a directional issuance raising instruction, which will be used for the production base project of new phosphate cathode materials with an annual output of 110000 tons.
Crude oil market dynamics this week: EIA crude oil inventory increased, US Iran negotiations were in the final stage, and international crude oil prices fell. Ice oil distribution closed at US $93.54/barrel (mom -0.95%); WTI crude oil closed at US $91.07/barrel (Mom – 2.18%). Tracking of key chemicals: among the chemicals we are concerned about this week, natural gas (+ 19.69%), ethylene oxide (+ 13.89%), industrial grade lithium carbonate (+ 13.32%), battery grade lithium carbonate (+ 12.66%) and butadiene (+ 12.16%) led the price increase. With the improvement of natural gas terminal demand, import prices continued to rise. The cost of ethylene oxide increased, the market supply decreased, the downstream demand increased, and the price continued to rise. The lithium carbonate market has less supply, and the price rises under the outbreak of downstream demand. The spot supply of butadiene in the field was tight, but the recovery of downstream construction was slow, and the market price rose and fell.
Main lines of Chemical Investment: (1) cyclical 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 historic 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.
