The full-scale conflict between Russia and Ukraine broke out, crude oil prices rose sharply, fell somewhat, and bulk commodities generally rose. On the other hand, semiconductors and new energy materials are highly concerned.
Industry trends:
Among the 101 chemical varieties tracked this week, the prices of 31 varieties rose, 44 varieties fell and 26 varieties remained stable. The top five varieties were liquid chlorine, potassium chloride, yellow phosphorus, urea (Baltic Sea small grain bulk) and sulfuric acid; The top five varieties of decline were epichlorohydrin, bifenthrin, dichloromethane, acetic anhydride and acetic acid.
WTI crude oil closed at US $91.94/barrel this week, and the closing price rose by 1.92% this week; Brent crude oil closed at US $94.56/barrel, closing up 1.09% this week. The full-scale conflict between Russia and Ukraine broke out this week. The Russian army invaded Ukraine in the early morning of the 24th, and the crude oil price continued to fall after rising sharply. On the supply side, according to EIA data, as of the week of February 18, US crude oil storage increased by 4.514 million barrels, significantly higher than the expected 442000 barrels; However, the supply is expected to be affected by the sharp deterioration of Russia Ukraine geopolitics. After some Russian financial institutions are cut off from swift, Russia’s crude oil supply will be significantly affected; At the same time, attention should be paid to whether the Gazprom, which is responsible for the international payment and settlement of Russian energy import and export, is on the sanctions list. In terms of demand, the IEA monthly report raised its crude oil demand forecast for 2022, and it is expected that the global demand will increase by 3.2 million barrels / day this year. In addition, OPEC said that the negative impact of Omicron on the economy was not as big as the previous strain, and the overall demand for crude oil was better. In the future, we need to pay close attention to the trend of the war between Russia and Ukraine. With the continuous promotion of Russian troops in the capital Kiev, Kharkov and Donbas, as well as the increase of economic sanctions against Russia by European and American countries, Russian oil and gas supply may decline sharply, and crude oil is expected to remain high in the near future.
The price of potassium chloride rose sharply this week. According to the data of Baichuan Yingfu, the average market price of potassium chloride closed at 3866 yuan / ton, with a closing price increase of 11.25%. In terms of supply, due to the outbreak of the comprehensive conflict between Russia and Ukraine, Belarus assisted Russia in launching an attack on the Northern Line of Ukraine. It is expected that the international supply of potash fertilizer between Russia and Belarus will decline significantly under economic sanctions; According to the latest statistics released by the United States Geological Survey (USGS) in 2021, the recoverable potassium salt reserves (K2O) of Belarus and Russia are 750 million tons and 600 million tons respectively, accounting for 20% and 16% of the total global reserves respectively. In terms of demand, the demand for spring ploughing in the downstream is gradually advancing, and the demand for potassium fertilizer is strong, which is in short supply. In the future, with the further intensification of the comprehensive conflict between Russia and Ukraine, the signing of a large contract between Belarus and Russia and China may be delayed, and China’s potash import volume may be reduced. It is expected that the potash price will be strong at a high level in the near future.
The price of yellow phosphorus rose sharply this week. According to the data of Baichuan Yingfu, the average market price of yellow phosphorus closed at 36684 yuan / ton, up 20.00% from the closing of last week. In terms of supply, the output of yellow phosphorus this week (1.15-1.21) was 9691 tons, with a decrease of 23.12% on a weekly basis; The supply of Yunnan, Guizhou and Sichuan provinces has been greatly reduced. A mainstream enterprise in Mianyang, Sichuan has shut down for maintenance due to line failure, and a mainstream enterprise in Panzhihua has low load production due to equipment renewal; Due to the shortage of industrial power load due to cooling and heavy snow in Yunnan, the yellow phosphorus enterprises in Yuxi area shut down the boiler, and a mainstream enterprise in Honghe area shut down the line fault device due to heavy snow; Roads in Guizhou are frozen due to heavy snow, making transportation difficult; As of February 24, the operating rates of the three provinces were only 26.22%, 59.86% and 43.17% respectively. From the demand side, due to the rapid rise of yellow phosphorus, manufacturers have a strong wait-and-see mood. At present, it is still dominated by the consumption of yellow phosphorus inventory in the early stage. In terms of raw materials, the price of phosphate rock remains high; As of February 25, the average market price of phosphorus ore is 659 yuan / ton. It is expected that the price of phosphorus ore will continue to rise slightly in the later stage. The price of yellow phosphorus may be in a shock upward trend for a long time due to the support of cost side and the impact of electricity price reform in Yunnan and Sichuan.
Investment suggestions:
This week’s view
Cyclical industries: crude oil hit new highs, and more than half of chemical products returned to the rising trend: as of February 20, 2022, the monthly average price of 52% of the tracked products rose month on month; The average monthly price of 37% of products fell month on month; In addition, the price of 11% products was flat. As of February 20, 2022, WTI crude oil price rose by 14.1% month on month, and Brent crude oil price rose by 12.7% month on month. Industry data: the PPI index of the chemical industry in January 2022 was 113.6, down 1.56% from December 2021. In terms of policy, the 14th five year plan for the pesticide industry was released, pointing out the need to optimize the layout of pesticide production, improve industrial concentration and adjust product structure; China’s potassium fertilizer contract was implemented. The import price of standard potassium chloride in 2022 was US $cfr590 / ton, with a year-on-year increase of 139%. The high price of upstream raw materials, high production costs such as power coal, and price transmission and profit differentiation of midstream products. Long term optimistic about the development of leading companies in the context of carbon neutrality.
Growth companies: the prices of lithium carbonate and silicone continued to rise: as of February 24, 2022, the price of battery grade lithium carbonate had reached 460000 yuan / ton, an increase of about 24.3% over the previous month; Organosilicon DMC closed at 32500 yuan / ton, with an average monthly price increase of 16.8%. In terms of semiconductor materials, Ukraine is an important global supplier of neon gas, and the geopolitical situation may cause tension in the supply of some kinds of electronic gas. Benefiting from the rapid development of downstream new energy vehicles, photovoltaic, semiconductor and other industries, the supply of some new materials in the upstream is tight or will become the norm.
Investment suggestion: looking forward to March, under the geopolitical tension, the prices of bulk chemicals have been strongly supported, and the prices of some chemicals may return to the upward trend. From the perspective of sub industry prosperity, upstream petrochemical refining, Shenzhen Agricultural Products Group Co.Ltd(000061) related agrochemicals, infrastructure related chemicals, semiconductor materials and new energy materials are expected to maintain a high prosperity. From the perspective of valuation, after full adjustment, the valuation of private refining, industry leaders, new materials and other related chemical enterprises has returned to a low level again. In the medium and long term, with the sustainability of profits exceeding expectations, high-quality chemical assets are expected to usher in value revaluation. Recommended shares: followinga series of shares to recommend a series of shares: followinga Wanhua Chemical Group Co.Ltd(600309) \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ Crystal Clear Electronic Material Co.Ltd(300655) , Valiant Co.Ltd(002643) , Sobute New Materials Co.Ltd(603916) , Shandong Sinocera Functional Material Co.Ltd(300285) , etc.
February gold shares: Crystal Clear Electronic Material Co.Ltd(300655)
Risk Tips 1) the change of geopolitical factors causes the sharp fluctuation of oil price; 2) The global epidemic situation has changed
