Core view
Reasons for oil distribution exceeding 95 US dollars / barrel: the price of crude oil has risen sharply recently, and oil distribution exceeds 95 US dollars / barrel. We believe that the rise in oil prices is mainly due to the supply side. The OPEC monthly report said that OPEC crude oil production increased by 64000 barrels / day in January, which is far lower than the increase limit of 250000 barrels / day promised in the OPEC + agreement. The monthly report also pointed out that the supply of non OPEC countries increased by about 610000 barrels per day in 21 years, 63000 barrels per day lower than the expected value. The rise in oil prices reflects concerns about the supply potential of crude oil.
Impact of high oil price on the profit of large-scale refining and chemical industry: in the investment market of large-scale refining and chemical industry in the past few years, the market has established a concept of oil price comfort zone, that is, it is generally believed that the profit of large-scale refining and chemical industry is better when the crude oil price is 40-80 US dollars / barrel. Therefore, after the oil price exceeded $80 / barrel, the market began to worry that high oil prices would erode the profits of large refining and chemical. Looking back on history, in terms of refined oil products, 13 years ago, due to the insufficient marketization of China’s refined oil pricing mechanism, the profitability of refined oil products has been very poor. With the promotion of market-oriented reform, the profitability of refined oil has been greatly improved. In addition, due to the existence of “ceiling price” and “floor price” in China’s refined oil pricing mechanism, as long as the oil price does not rise and fall sharply, there is a high probability that there will be a reasonable profit range for refined oil in the future. In terms of chemicals, take polyethylene with the largest downstream demand for ethylene as an example. The impact of high oil prices is reflected in stifling demand when costs are transmitted downstream. However, even in the period of high oil prices, the demand for polyethylene is still growing. On the supply side, in the past 10 years, the Middle East and North America have greatly expanded low-cost production capacity with the advantage of ethane resources, suppressing the price difference of polyethylene. The low boom of polyethylene in China is often accompanied by high import growth. High import growth means dumping to China after the expansion of overseas low-cost production capacity. Therefore, the impact of supply growth on the boom of chemical industry is actually greater.
Current position and future prospect of large refining and chemical industry: from the perspective of product oil, the current difference in product oil price is 919 yuan / ton, which is at the lower middle level after 13 years. From the perspective of chemicals, the current polyethylene price difference is only 3728 yuan / ton, close to the lowest level in history, and the pressure on the cost side has not been transmitted to the downstream in time. Looking forward to the future, from the perspective of supply and demand, due to carbon neutralization, insufficient capital expenditure of overseas refineries, stricter approval of ethylene refining and chemical projects in China, and supply constraints will continue in the future. Therefore, we believe that even if the high oil price continues, due to the constraints of the supply side, when the demand still increases, the rise of the cost side is likely to be transmitted to the downstream.
Investment proposal and investment object
The market is worried that after the oil price exceeds $80 / barrel, the profitability of large refining and chemical will be affected. In terms of refined oil, as China’s refined oil pricing mechanism is more market-oriented, in the range of 40-130 US dollars / barrel, as long as the oil price does not rise or fall sharply, there is a high probability that there will be a reasonable profit range for refined oil in the future. In terms of chemicals, due to the supply side constraints, the rise of the cost side is highly likely to be transmitted to the downstream, and the price difference of chemicals represented by polyethylene is at the bottom, with little downward space. It is recommended to pay attention to the investment opportunities of Rongsheng Petro Chemical Co.Ltd(002493) (002493, buy), Hengli Petrochemical Co.Ltd(600346) (600346, buy), Tongkun Group Co.Ltd(601233) (601233, buy).
Risk tips
The price difference between ethylene and oil price narrowed further; The demand for chemicals is less than expected; Crude oil prices fluctuated sharply.
