This week’s Chemical Market Overview
The market was under pressure this week, of which Shenwan chemical rose 0.53%. In terms of targets, covid-19 vaccine industry chain + potassium fertilizer + iron phosphate industry chain performed well, and some targets with excessive inflation in the early stage were under pressure. Following last week’s rebound, the market entered a sideways consolidation state. Investors are concerned about what to think of the follow-up? We believe that the current market is still in a chaotic state. The good thing is that the most pessimistic time may have passed. At the same time, we also see the marginal improvement trend of some main contradictions, such as the gradual digestion of the market for interest rate hikes; In addition, many subject valuations have entered below the historical central valuation. However, it should be noted that it is still a very complex market and may be disturbed from time to time, such as inflation, interest rate hike, geopolitics and demand. To sum up, we believe that the medium-term strategy still needs to focus on defense. Finally, let’s talk about our understanding of the layout opportunities of growth stocks. We believe that although the short-term style will still be suppressed, from the medium-term perspective, bargain hunting can be considered.
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)
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
Subsequently, we believe that under the background of limited incremental funds and unclear main line, the probability of differentiation after rebound is high. In terms of investment, we suggest to focus on two directions: one is 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.
Risk tips
The epidemic affects demand outside China, crude oil prices fluctuate violently, and changes in international policies affect industrial layout
