In September 2020, China announced the carbon peak and carbon neutralization schedule. We will strive to reach the peak of carbon dioxide emissions by 2030 and strive to achieve carbon neutralization by 2060. The predicted peak of carbon peak is about 10.6 billion tons. In 2020, the total carbon emission of petrochemical and chemical industry will be 1.378 billion tons, accounting for 13% of the total carbon emission in China, which is second only to the metallurgical industry. In October 2021, China promulgated the action plan for strict energy efficiency constraints and promoting energy conservation and carbon reduction in key petrochemical industries (2021-2025), promoting supply side reform, eliminating inefficient production capacity and encouraging the development of functional high value-added products.
The impact of carbon neutralization and supply side reform on the chemical industry is mainly reflected in the following two aspects: 1) the periodicity of chemical stocks is weakening; 2) The growth attribute of the chemical industry has been enhanced. In this context, we sorted out six sub areas that still have great development space in the future:
Phosphorus chemical industry: cut into the track of long-term high growth of new energy. Since this year, the price of phosphorus chemical raw materials has continued to rise from phosphorus ore to phosphoric acid. The new capacity under the “three phosphorus” regulation is limited. As a new track of phosphorus chemical industry, lithium iron phosphate continues to grow in demand for new energy, bringing new opportunities for investment in phosphorus chemical industry.
Fluorine chemical industry: eliminate backward production capacity and enter lithium electrolyte. In 2019, environmental governance raised the access threshold of fluorochemical industry, and the new production capacity was limited. As the demand for power battery and electrochemical energy storage is still on the upward channel, the future demand for lithium hexafluorophosphate as lithium battery electrolyte will also rise. Driven by lithium hexafluorophosphate, fluorochemical industry has obvious growth.
Soda ash chemical industry: new opportunities appear driven by photovoltaic. Due to the further growth of photovoltaic power generation under the carbon neutralization policy, the demand for photovoltaic glass will rise, which has played a positive role in the rise of soda ash price. With the current low inventory operation, we expect that soda ash price may remain high. The industry has ushered in the rapid growth of performance level, while the valuation is still low, and the investment is at the right time.
Carbon fiber: driven by wind power, domestic substitution is accelerated. Under carbon neutralization, the increase of wind power installed capacity drives the significant growth of carbon fiber demand. The layout replaces imported high-performance carbon fiber, and Chinese enterprises are expected to continue to improve their performance and valuation.
Shanghai Chlor-Alkali Chemical Co.Ltd(600618) : production capacity is limited, and new opportunities are bred in adjustment. In recent years, the supply side reform has gradually reduced the production capacity of caustic soda, calcium carbide and PVC. Since the beginning of this year, the volume and price of calcium carbide, PVC and other products have risen simultaneously, the rise of industry profits can be expected, and the valuation is at a low level.
Titanium dioxide: the boom continues and the industry continues to upgrade. Replacement and upgrading of new and old processes, iron phosphate helps the development of titanium dioxide enterprises and ushers in new opportunities.
Risk tips: global intellectual property disputes, Global trade disputes, the risk of sharp decline in oil prices, changes in environmental protection policies, etc.
