Performance of the sector this week: the market composite index fluctuated downward this week (December 20-december 24, the same below). The Shanghai Composite Index closed at 3618.05, down 0.39% this week, the Shenzhen Component Index fell 1.06% this week, and the chemical sector (Shenwan) fell 2.96%.
Performance of individual chemical stocks this week: the chemical sector fell broadly this week, weaker than the market. Some stocks rose against the market, and the top gainers were Aba Chemicals Corporation(300261) , Hy Energy Group Co.Ltd(600387) , Sichuan Lutianhua Company Limited(000912) , Sinopec Shandong Taishan Pectroleum Co.Ltd(000554) , Guangzhou Jet Bio-Filtration Co.Ltd(688026) , Shanghai Huide Science & Technology Co.Ltd(603192) , Yueyang Xingchang Petro-Chemical Co.Ltd(000819) , Yingtai Biology (delisting), Xilong Scientific Co.Ltd(002584) , Zhejiang Xinnong Chemical Co.Ltd(002942) . On December 22, Pfizer announced that the US FDA had approved the emergency authorization application for its new covid-19 oral antiviral candidate drug. This week, the target of pharmaceutical intermediate Aba Chemicals Corporation(300261) increased by 80.35% this week, leading the chemical sector and winning the letter of concern. The company now produces 20 tons of pharmaceutical intermediate carbonic anhydride per month. On December 23, Sinopec Shandong Taishan Pectroleum Co.Ltd(000554) announced that it had signed the strategic cooperation agreement with Shandong Dongyuan enterprise development group, Shandong Ningyang Economic Development Zone Park and other enterprises to lay out the new energy industry, with a cumulative increase of 18.64% this week.
This week’s crude oil market dynamics: this week’s EIA inventory fell more than expected, superimposed with the easing of epidemic concerns, and the crude oil price fluctuated upward. Ice oil distribution closed at USD 76.14/barrel (3.56% MoM); WTI crude oil closed at USD 73.09/barrel (3.15% MoM).
Tracking of key chemicals: among the chemicals we are concerned about this week, liquid caustic soda (+ 9.87%), octanol (+ 6.68%), DOP (+ 5.16%), n-butanol (+ 4.65%) and solid caustic soda (+ 4.10%) ranked first in price increase. This week, some units of liquid caustic soda were shut down or reduced, and new enterprises in the downstream were put into operation. The price of liquid caustic soda rose sharply this week. This week, the inventory of octanol enterprises was low, and the auction price of octanol rose for two consecutive days, driving the market spot price upward. The downstream demand of DOP market was average this week, but the DOP price stopped falling and rebounded this week, boosted by the cost side octanol price. This week, octanol, the raw material of n-butanol, rose continuously, the decline in downstream demand slowed down, and the price trend of n-butanol rose. The inventory of solid caustic soda was low this week, the market supply was tight, the downstream enterprises were positive in picking up goods, and the price of solid caustic soda increased slightly.
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 historical highs. With the mismatch between supply and demand moving towards balance and superimposing the downward pressure of the economy, China’s chemical product price index (CCPI) fell from the highest 6467 on October 19, 2021 to 5219 on December 3 (- 19.44%), the traditional chemical cycle stocks made a sharp correction. In the correction process, we think we should focus on the industry leaders with continuous production expansion capacity in the 14th five year plan, supplement the price with volume, especially embrace changes and look for high-quality companies with the second growth curve, and the medium and long term is expected to cross the cycle. 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, key recommendations: 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; Risk of significant exchange rate fluctuations.
