The full-scale conflict between Russia and Ukraine broke out, crude oil prices fluctuated sharply and rose, 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 by the average price this week, the prices of 70 varieties rose, 16 varieties fell and 15 varieties remained stable. The top five varieties were sulfuric acid, dimethyl ether, WTI crude oil, naphtha and toluene; The top five varieties of decline were glufosinate, Do-Fluoride New Materials Co.Ltd(002407) aluminum fluoride, yellow phosphorus, raw salt and EDC.
WTI crude oil closed at US $109.09/barrel this week, with the closing price falling by 5.70% this week; Brent crude oil closed at US $112.12/barrel, closing down 5.07% this week. Due to different opinions on increasing production within OPEC +, the meeting of foreign ministers of Russia and Ukraine alleviated the geopolitical situation and the EU’s refusal to impose sanctions on Russian oil and gas exports, the concerns of the energy supply side were alleviated, and the oil price fell sharply after opening sharply this week. According to EIA data, crude oil inventories decreased by 1.863 million barrels and are expected to decrease by 657000 barrels as of the week of March 4. With the sharp rise in crude oil prices at the beginning of this week, OPEC + member UAE called for accelerating production increase. At the same time, the United States and Europe have increased sanctions against Russia. The United States has banned energy imports from Russia and cancelled Russia’s MFN treatment. The European Union has banned the import of steel products from Russia; Although Germany, Hungary and other countries strongly oppose the expansion of sanctions against Russia to the energy field, Russian crude oil exports may be blocked due to the obstruction of Russian oil ship transportation and the confusion of Ural crude oil transaction settlement. In the future, the progress of Russia Ukraine negotiations and Iran nuclear talks may continue to dominate the trend of crude oil. Under the situation that Russia’s crude oil export volume decreases and OPEC does not change its production increase plan, crude oil may continue to rise.
The price of butadiene continued to rise this week. According to the data of Baichuan Yingfu, the average market price of butadiene closed at 10275 yuan / ton, and the closing price increased by 17.23% this week. This round of butadiene has been rising since early January, and the current market price has risen sharply by 149.09%. The reason for the rise of butadiene price this week mainly comes from the cost and supply side. Due to the sharp rise of crude oil, the high cost of cracking unit, more shutdown and maintenance or low load production, and the insufficient supply of cracking C4. In addition, the supply is expected to be narrowed due to the expectation of intensive maintenance of suppliers in April. In terms of units, Taiwan’s Sinopec No. 4 cracking unit was restarted on the 9th, and currently operates at 70% load; Yangzi Petrochemical Plant (120000 T / a) is planned to be overhauled in mid March; Nanjing Chengzhi extraction unit (100000 t / a) is under shutdown and maintenance. In terms of demand, downstream polybutadiene rubber rose this week, and the on-site quotation continued to rise, but the trading was relatively light, and the buyer was in a strong wait-and-see mood. In the future, under the influence of high crude oil, the operating rate of olefin cracking unit is low, and the shortage of C4 supply may support the continuous rise of butadiene price in the short term.
Metal silicon prices continued to rise this week. According to the data of Baichuan Yingfu, metal silicon 3303 (Yunnan) closed at 24300 yuan / ton, with a closing price increase of 2.97%. Organosilicon DMC (East China) closed at 39000 yuan / ton, with a closing price increase of 4.00%. The construction started in Xinjiang this week was generally upward, and some enterprises produced under low load due to environmental protection inspection; Due to the reduction of electricity price in Hunan, the furnace has been basically opened to resume production. In terms of cost, the prices of silica coal and silica increased significantly this week, with weekly increases of 7.91% and 10.00% respectively, and other costs changed slightly. In terms of demand, the rise in the price of downstream silicone is good for metal silicon. Polysilicon starts at a high level, and the demand is relatively stable. The operating rate of aluminum processing industry has increased significantly this week, and the demand for metal silicon has increased significantly. In the future, under the general rise of raw materials, the production cost of metal silicon may continue to rise to support the price, and the downstream demand is strong. It is expected that the price will rise steadily.
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 March 4, 2022, the average price of WTI crude oil rose by 12.25% month on month, and the price of Brent crude oil rose by 12.07% 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 price of lithium carbonate continues to rise: as of March 4, 2022, the quotation of battery grade lithium carbonate has exceeded 500000 yuan / ton. 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.
March: 6009
Risk tips
1) large fluctuations in oil prices caused by changes in geopolitical factors; 2) The global epidemic situation has changed
