The fluctuation of oil and gas market intensifies; 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 35 varieties rose, 43 varieties fell and 23 varieties remained stable. The top five varieties were sulfuric acid, acetic acid, butadiene, dichloromethane and sulfur; The top five varieties of decline were glyphosate, naphtha, WTI crude oil, yellow phosphorus and pure benzene.
WTI crude oil closed at US $102.98/barrel this week, with the weekly average price down 9.9%; Brent crude oil closed at US $106.64/barrel, with the weekly average price down 9.4%. This week, the Federal Reserve raised interest rates by 25bps, Russia and Ukraine promoted ceasefire negotiations, the global epidemic repeatedly affected demand expectations, and crude oil prices fell significantly. In terms of supply, according to OPEC’s monthly crude oil market report in March, the total output increase of OPEC member states in February 2022 was about 440000 barrels / day, which was in line with expectations. According to EIA data, as of the week of March 11, the EIA crude oil inventory actually increased by 4.345 million barrels and is expected to decrease by 1.6 million barrels. As investors realized that Europe would not immediately stop Russia’s crude oil supply, concerns on the overall crude oil supply side eased. In terms of demand, the weekly epidemiological report released by the World Health Organization pointed out that there were more than 11 million newly confirmed covid-19 cases worldwide from March 7 to March 13, an increase of 8% over the previous week. The rebound of the global epidemic affected the expectation of crude oil demand. In the future, the nuclear negotiations between Russia, Ukraine and Iran are still advancing, the US CPI index is high, and it is expected to continue to raise interest rates during the year, but there is no significant increase in global crude oil supply, and the oil price is expected to remain high and volatile.
The price of urea rose this week. Urea (Baltic Sea small grain package) closed at US $680.0/ton, and the weekly average price increased by 12.5%; Urea ( Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) small particles) closed at 2890.0 yuan / ton, with the weekly average price rising by 2.6%. According to the data of Baichuan Yingfu, on March 17, China’s daily urea production was 154500 tons, a year-on-year decrease of 16100 tons, with an operating rate of 72.13%, a month on month decrease of 4.08%, a coal head operating rate of 71.70%, a month on month decrease of 1.91%, a gas head operating rate of 71.41%, and a month on month decrease of 10.53%. The new parking reduction enterprises this week include Boyuan in Inner Mongolia, Tianrun in Inner Mongolia, Jinkai in Henan (reduction production), some units of Ruixing in Shandong, Haoyuan in Anhui and Kuitun in Xinjiang. The total daily affected output is about 12000 tons, and the urea supply end is tight. In terms of demand, it is now in the peak season of fertilizer preparation and use in spring. The demand for agricultural urea has entered the peak season, and the demand for industrial urea is mainly to supplement the reservoir. In the future, the national development and Reform Commission announced on March 14 that the first batch of more than 3 million tons of spring ploughing fertilizer reserves in 2022 have been put on the market, and the shortage of urea supply may be alleviated; On the demand side, the epidemic situation may have an impact on the shipment of enterprises. Under the peak demand season, the price of urea is expected to remain high.
The price of calcium carbide rose this week. Calcium carbide (East China) closed at 4858.0 yuan / ton, and the weekly average price rose by 4.5%. In terms of PVC, the prices of calcium carbide PVC and ethylene PVC differentiated. PVC (East China calcium carbide method) closed at 8988.0 yuan / ton, with a weekly average price decrease of 0.5%; PVC (East China ethylene method) closed at 100500 yuan / ton, with a weekly average price increase of 1.1%. Affected by the rebound of the epidemic, the arrival volume of downstream enterprises of calcium carbide in Shandong continues to decline, and some enterprises have begun to consume calcium carbide inventory, driving the rise of calcium carbide price. In terms of cost, the price of blue carbon is significantly supported by upstream power coal, the price continues to rise, and the cost of calcium carbide has increased. Affected by transportation factors in the downstream of PVC, enterprises are not willing to take goods. The cost of crude oil is gradually transmitted to ethylene PVC, and the overall price is differentiated. In the future, the increment of calcium carbide supply side is limited, and the demand for PVC may gradually improve. It is expected that there is still room for the price of calcium carbide to rise.
Investment suggestions:
This week’s view
Cyclical industries: crude oil runs at a high level, and more than half of chemical products return to the rising trend: as of February 20, 2022, the monthly average price of 52% of the tracked products has increased 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 20, 2022, the average price of WTI crude oil rose by 14.54% month on month, and the price of Brent crude oil rose by 16.14% 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.
The average price of lithium carbonate continued to rise by 200000 tons as of February 2023, according to the data of Shanghai Nonferrous carbonate company. 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: under the tense geopolitical situation, the prices of bulk chemicals are 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.
Gold shares in March: Wanhua Chemical Group Co.Ltd(600309)
Risk tips
1) large fluctuations in oil prices caused by changes in geopolitical factors; 2) The global epidemic situation has changed.
