This week’s Chemical Market Overview
Shenwan chemical fell 2.83% this week, underperforming the Shanghai and Shenzhen 300 index by 1.88%. The three sub industries with the largest increase are civil explosive products (Shenwan) (1.59%), carbon black (Shenwan) (0.07%) and fluorochemical (Shenwan) (0.06%); The three sub industries with the largest decline were nitrogen fertilizer (Shenwan) (- 7.13%), phosphorus fertilizer and phosphorus chemical industry (Shenwan) (- 5.76%) and compound fertilizer (Shenwan) (- 5.72%).
Portfolio recommendation
\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 309 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) Jiangsu Yangnong Chemical Co.Ltd(600486) Jiangxi Black Cat Carbon Black Inc.Ltd(002068) Sichuan Em Technology Co.Ltd(601208)
Major events of this week
The national development and Reform Commission deployed to carry out special verification on the signing and performance of medium and long-term coal contracts to ensure coal supply. Recently, the national development and Reform Commission issued a notice and held a mobilization and deployment meeting to arrange for special verification of the signing and performance of medium and long-term coal contracts by local and central enterprises in 2022. The notice requires that the number of medium and long-term contracts signed by coal enterprises should reach more than 80% of their own resources, and the annual coal consumption of power generation and heating enterprises should achieve full coverage of medium and long-term supply and demand contracts. Each medium and long-term coal contract must specify the price level or implement the price mechanism within a reasonable range, and each contract should specify the contract quantity, quality, term, flow direction, transportation mode, liability for breach of contract and dispute resolution, All contracts signed shall be entered into the online platform of the national coal trading center for supervision, and the performance shall be submitted online every month. Flexibility, discount and fraud are not allowed. In the long run, through the signing of medium and long-term coal contracts, the raw material supply of many coal chemical enterprises and other enterprises related to coal demand can be guaranteed for a long time, and the reasonable profit space of products can be maintained.
The first batch of more than 3 million tons of spring ploughing fertilizer reserves in 2022 has begun to be put on the market. The national development and Reform Commission and the Ministry of Finance jointly arrange a certain scale of commercial reserves of chemical fertilizer every year, and put them in time to meet the fertilizer needs of the market. Since March this year, the first batch of spring ploughing fertilizer reserves of more than 3 million tons in 2022 has been put on the market. With the spring ploughing advancing from south to north, a large number of reserve chemical fertilizers will be put on the market in succession to ensure the fertilizer needs of agricultural production in key periods such as spring ploughing. Next, the national development and Reform Commission will pay close attention to the market situation of chemical fertilizer and continue to do a good job in ensuring supply and price stability, such as the release of reserve chemical fertilizer, together with relevant parties. Considering that the supply of chemical fertilizer for spring ploughing is related to ensuring farmers’ demand for fertilizer for grain planting and realizing the annual grain production goal, it is expected that the supply and price of follow-up products will remain relatively stable.
Investment advice
This year is a very complex market, because it will face many uncertainties, such as China US relations, epidemic situation, Russia Ukraine war, inflation and so on, which may also be the main reason for the continued pressure on the market since the beginning of the year; However, we believe that the most pessimistic time may have passed: on the one hand, the market stabilized and rebounded after accelerating to the bottom under the continuous resonance of multiple factors, and most of the bad news has been reflected in the stock price. On the other hand, we have also seen many positive signals, such as the dialogue between Chinese and American leaders, the decline of oil prices from a high level, the landing of the Fed’s interest rate increase, the meeting of the financial committee, etc. Resumption of trading this week, the market stabilized and rebounded after experiencing a rapid decline. On March 15, we held a teleconference leading the market to prompt opportunities. In the direction, energy-saving concept, covid-19 vaccine industry chain, semiconductor materials, new energy chemical materials and chemical white horse performed well. Under the inventory game, the market showed a trend of differentiation, the rise and fall of individual stocks were highly separated, and marginal funds became an important force affecting the market style, For example, after the funds from the North turned into inflows, the Mao index and low-level real estate all performed better. In terms of investment, it is suggested to focus on three directions: first, chemical white horse, for example: Wanhua Chemical Group Co.Ltd(600309) , the core logic is safety cushion, which is more suitable as the target of bottom warehouse; Second, some new energy chemical materials, such as conductive carbon black; Third, high-quality growth stocks with safety pads.
Risk tips
The epidemic affects demand outside China, crude oil prices fluctuate violently, and changes in international policies affect industrial layout
