Key investment points:
In 2021, the chemical industry sector as a whole showed a volatile upward market, and the highs of the two waves of market appeared in February and September respectively. In the first half of the year, the industry was mainly affected by demand. Relying on China’s economic recovery and overseas exports, the overall profit of each sub sector reached a high point in the second quarter. In the second half of the year, the industry relied on the impact of the energy consumption double limit policy on the supply side, pushing up the prices and profits of some high-energy consumption products, of which the chlor alkali industry benefited significantly. However, after October, with the increasing debt pressure of downstream real estate enterprises, the accelerated decline of real estate sales and construction data, the long-term demand expectation of upstream materials turned pessimistic. At the same time, the national correction of “sports carbon reduction” led to the end of the chemical industry market.
In the future, the downstream demand of the chemical industry will still be affected by the pressure of economic growth outside China. In terms of exports, with the gradual recovery of overseas production capacity, China’s high export growth in recent years may be unsustainable. China’s demand is affected by the decline of real estate, and there are still many uncertainties in 2022. In 2021, under the grand strategy of carbon neutralization, the government raised the approval requirements for high-energy consumption industrial projects and strengthened the management of capacity replacement in high-energy consumption industries. In this context, the capacity construction of many petrochemical and basic chemical enterprises has been delayed, and the planned capacity of some enterprises is difficult to land, which has greatly slowed down the capacity construction of the chemical industry. For some industrial chain links with high energy consumption, the industry threshold is raised and the competition pattern is expected to improve.
Sub sectors have different conditions, and pay attention to the recovery of prosperity and supply side restrictions. Crude oil: as the global epidemic is gradually controlled, the recovery certainty of the crude oil demand side is higher than that of the supply side. On the premise of the continuation of the OPEC production reduction agreement, the international oil price center is expected to remain in the range of $70-80 / barrel. Polyester filament: the European and American economy has gradually entered the stage of steady recovery, and the shipping cost has decreased. The growth of garment export is expected to return to the growth range of about 5%, driving the boom recovery of polyester demand in the upper reaches of China. Due to the different speed of capacity expansion in each link of the polyester industry chain, the profits are expected to converge to the downstream. Soda ash: the high demand growth brought by new energy has a strong sustainability, raising the center of long-term demand growth of soda ash. In the context of carbon neutrality, the increase of industry threshold has limited the capital expenditure of the industry in recent years. In the case of industry supply and demand mismatch, the supply elasticity is limited, and the sustainability of the current round of industry boom is expected to exceed expectations.
Looking forward to 2022, we believe that investment opportunities are mainly sought from three aspects: 1. At present, the industry prosperity is in the bottom range. In the future, with the recovery of global economic growth, the industry prosperity is expected to continue to rise in the future; 2. China’s energy transformation trend determines that the proportion of clean energy will gradually increase. In this process, some chemical industries will benefit from the demand pull brought by energy transformation; 3. Under the background of carbon neutralization policy, the growth of real estate energy in some high-energy consuming industries is limited, and leading enterprises can reduce unit carbon emissions due to their scale advantages and take the lead in future competition. It is suggested that investors should pay attention to the polyester filament industry with recovery expectation of industry prosperity and the soda ash industry benefiting from the pull of new energy demand and the restriction of carbon neutralization on new production capacity. Relevant targets include: Tongkun Group Co.Ltd(601233) (601233. SH), Inner Mongoliayuan Xing Energy Company Limited(000683) (000683. SZ), Shandong Haihua Co.Ltd(000822) (000822. SZ).
Risk tip: the toughness of the real estate is less than expected, resulting in the decline of upstream material demand than expected; The demand in the new energy field is lower than expected, and the marginal new demand of soda ash is lower than expected; The slow recovery rate of overseas economy led to the recovery of the prosperity of the chemical line industry, which was lower than expected.
