Under the background of double carbon and steady economic growth, the value of refining and chemical assets increased
According to the data of the Ministry of Commerce, in 2020, China’s primary crude oil processing capacity reached 890 million tons, crude oil processing capacity reached 670 million tons, and the capacity utilization rate was 75.8%. The action plan for carbon peak before 2030 issued by the State Council clearly states that by 2025, China’s primary crude oil processing capacity will be controlled within 1 billion tons, and the capacity utilization rate of main products will be increased to more than 80%. This means that there is only 12.4% growth space in refining energy in the next five years, and more capacity will be expanded through oil conversion or capacity replacement in the future. But at the same time, the growth of downstream demand for various chemicals will not stop; The central economic work conference set the theme of steady economic growth in 2022 and proposed “moderately ahead of infrastructure investment”. Therefore, we judge that the chemicals in the downstream of refining and chemical industry are expected to be in a tight balance between supply and demand in the future, and the value of existing private refining and chemical assets is expected to be revalued.
The prosperity of refining and chemical industry is at a low level in the cycle, and the profits of 2021q4 aviation coal, PX, polypropylene and other products are relatively low
By reviewing the history of private refining and petrochemical price difference, we find that the prosperity of refining and petrochemical projects is not high. The 2021q4 price difference index is the historical 29% – 50% quantile. The prosperity of refining and petrochemical industry is about the middle and low of the historical cycle. The prosperity of refined oil, aromatics and olefins is at the historical low level, among which the price difference of gasoline / Diesel / aviation coal is at the historical 72% / 73% / 36% quantile of the past 10 years respectively, PX / ethylene glycol / polypropylene is in the 20% / 23% / 29% quantile. We have observed that diesel has seen a large rebound in profitability in 2021q4. It is expected that after the overseas epidemic gradually recovers, aviation kerosene profits will also usher in a reversal. At present, PX’s profit is low, but we observe that the PX short process capacity in Asia is not operating smoothly and is gradually cleared, and the profits of subsequent industries are expected to improve. At present, the price difference of PTA industry is low, in the historical 2% quantile, and the medium and high cost production capacity is at a loss. With the improvement of the competition pattern, the price difference also has the opportunity to rebound. Polyester filament is ushering in a new round of business cycle. Although the price difference in 2021q3 has narrowed slightly due to the rise of raw material prices, the supply and demand pattern of the industry is healthy. The price difference in 2021q4 has begun to be repaired, and the high boom is expected to continue.
Rapid expansion in the future
In the future, energy consumption indicators will become increasingly tense. We expect that the government will give priority to enterprises that can maximize energy consumption indicators, while private refining enterprises have five advantages: high energy efficiency, sufficient land reserves, abundant cash flow, strong R & D strength and pioneering and innovative entrepreneurship, This will help private refining to gain greater competitiveness in subsequent projects and energy consumption indicators. The industrial chain of private refining and chemical enterprises extends downstream and has a layout in photovoltaic materials and new energy materials. According to our calculation, at present, Hengli Petrochemical Co.Ltd(600346) disclosed project revenue accounts for 68.3% of the company’s revenue in 2020, Rongsheng Petro Chemical Co.Ltd(002493) accounts for 130.2%, Jiangsu Eastern Shenghong Co.Ltd(000301) accounts for 527.8% and Hengyi Petrochemical Co.Ltd(000703) accounts for 96.5%, with strong growth certainty.
