Key investment points:
Market review. As of March 11, 2022, CITIC’s basic chemical industry fell by 3.34% this week, outperforming the CSI 300 index by 0.89 percentage points and ranking seventh among CITIC’s 30 industries; CITIC’s basic chemical industry has fallen 7.31% so far this month, 1.3 percentage points lower than the Shanghai and Shenzhen 300 index, ranking 24th among CITIC’s 30 industries.
Specific to the three-level sub industries of CITIC basic chemical industry, from the performance of the recent week, the top five sectors are phosphate fertilizer and phosphate chemical (+ 2.40%), polyester (+ 0.61%), electronic chemicals (- 0.35%), lithium chemicals (- 0.38%) and other chemical raw materials (- 0.58%); From the performance of the last week, the top five sectors of decline were modified plastics (- 7.71%), tires (- 7.19%), printing and dyeing chemicals (- 7.12%), potassium fertilizer (- 6.92%) and polyurethane (- 6.68%). Among the stocks with the highest gains this week, Yunnan Energy Investment Co.Ltd(002053) , Zhejiang Dayang Biotech Group Co.Ltd(003017) and Elion Clean Energy Company Limited(600277) performed best, with gains of 60.96%, 29.63% and 20.66% respectively. Among the stocks with the highest decline this week, Bluestar Adisseo Company(600299) , Aofu Environmental Technology Co.Ltd(688021) and Sanxiang Advanced Materials Co.Ltd(603663) performed the worst, with declines of – 17.96%, – 17.03% and – 16.75% respectively.
Rise and fall of chemical products: among the key monitored chemical products, the products with the top five price increases this week are acetic acid (+ 31.43%), dichloromethane (+ 18.14%), butadiene (+ 15.12%), PX (+ 11.76%), acetone (+ 10.48%), and the products with the top five price decreases are caustic soda (- 13.68%), yellow phosphorus (- 6.94%), refrigerant R22 (- 5.56%), glyphosate (- 4.12%) Pure MDI (- 40.3%).
Weekly view of basic chemical industry: affected by the changes in the situation in Russia and Ukraine and the high fluctuation of international oil prices, the trend of the sector fell first and then picked up this week, with sharp overall fluctuations. Most companies in the basic chemical industry use oil, natural gas and coal as raw materials to produce products. The rapid rise of raw materials or the inhibition of downstream demand has narrowed the price difference of chemical companies’ products and damaged their profits. At present, the situation in Russia and Ukraine and oil price are still important variables affecting the trend of the sector. It is suggested to pay attention to companies whose performance in the first quarter is expected to achieve rapid growth, Jiangsu Yangnong Chemical Co.Ltd(600486) ( Jiangsu Yangnong Chemical Co.Ltd(600486) ), Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) ( Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) ), Anhui Jinhe Industrial Co.Ltd(002597) ( Anhui Jinhe Industrial Co.Ltd(002597) ), Hoshine Silicon Industry Co.Ltd(603260) ( Hoshine Silicon Industry Co.Ltd(603260) ), etc. Meanwhile, the recent conflict between Russia and Ukraine has blocked the export of Russian chemical fertilizer. It is reported that Russia has suspended the export of chemical fertilizer, which will further boost the international price of chemical fertilizer. At present, the price difference of chemical fertilizer outside China is large. If China’s export is liberalized after spring ploughing, the price of chemical fertilizer in China may increase. It is suggested to pay attention to Hubei Xingfa Chemicals Group Co.Ltd(600141) ( Hubei Xingfa Chemicals Group Co.Ltd(600141) ), Hubei Yihua Chemical Industry Co.Ltd(000422) ( Hubei Yihua Chemical Industry Co.Ltd(000422) ), Yunnan Yuntianhua Co.Ltd(600096) ( Yunnan Yuntianhua Co.Ltd(600096) ), Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) ( Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) ), Qinghai Salt Lake Industry Co.Ltd(000792) ( Qinghai Salt Lake Industry Co.Ltd(000792) ), etc.
Risk warning: the fluctuation risk of energy price caused by the uncertainty of Russia Ukraine conflict; Risk of narrowing the price difference of chemical products due to sharp fluctuations in oil prices; Risk of limited export of some chemical fertilizers; If macroeconomic pressure leads to the risk that the downstream demand of chemical products is lower than expected; The risk of deterioration of supply and demand pattern due to the rapid release of new production capacity of some products; The risk of intensified industry competition; Natural and man-made disasters and other force majeure events.
