The volatility of oil and gas market intensifies, and the prices of potassium fertilizer and phosphorus fertilizer continue to rise; 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, 40 varieties fell and 26 varieties remained stable. The top five varieties were potassium sulfate, methyl ethyl ketone, WTI crude oil, butadiene and liquid ammonia; The top five varieties of decline were glyphosate, methylcyclosiloxane, glyphosate, bisphenol A and p-xylene.
WTI crude oil closed at US $112.60/barrel this week, and the closing price rose by 9.22% this week; Brent crude oil closed at US $116.83/barrel, closing up 11.19% this week. Affected by the armed attack on Saudi Aramco facilities by Hussein in Yemen, the interruption of CPC pipeline, no progress in Russia Ukraine negotiations, and Russia’s request for “unfriendly” countries to settle Russian natural gas in rubles, oil prices rose sharply this week. According to EIA data, EIA crude oil inventory decreased by 2.508 million barrels and is expected to increase by 114000 barrels as of the week of March 18. As investors realized that the conflict between Russia and Ukraine could not be ended in the short term, and the United States and its allies may impose further sanctions on Russia after the NATO summit on Thursday, concerns on the crude oil supply side increased. At the same time, the world’s crude oil export growth is expected to be reduced to 3.1 million barrels in February / 2024, which will be significantly affected by the IEA sanctions. At the same time, it is expected that the world’s crude oil export growth will be reduced from 2.1 million barrels in February / 2024. In the future, the results of the nuclear negotiations between Russia, Ukraine and Iran are still uncertain. The CPC pipeline maintenance work will continue from January to February. The CPI of European and American countries has increased sharply. It is expected to continue to raise interest rates during the year, and the oil price is expected to remain high and volatile.
The price of yellow phosphorus rose this week. According to the data of Baichuan Yingfu, the average market price of yellow phosphorus closed at 36085 yuan / ton, up 10.74% from the closing of last week. In terms of supply, the output of yellow phosphorus this week (3.19-3.25) was 11560 tons, with a decrease of 5.63% on a weekly basis. The main supply reduction comes from Guizhou. Affected by safety inspection, most yellow phosphorus manufacturers produce at low load in Kaiyang, Guizhou, and a manufacturer in Weng’an area stops for maintenance, resulting in a decline in supply; The supply in Sichuan and Yunnan decreased slightly, and the output of some manufacturers decreased slightly due to the decline of phosphorus ore grade. As of March 24, the operating rates of the three provinces were only 50.59%, 29.19% and 55.18% respectively. From the demand side, manufacturers replenish goods on demand and inquire orders more actively. In terms of raw materials, the price of phosphate rock rose slightly. As of March 25, the average market price of phosphate rock was 687 yuan / ton. It is expected that the price of phosphate rock will continue to rise slightly in the later stage. The price of yellow phosphorus may be in a shock upward trend in the longer term due to the support of cost side and the impact of electricity price reform in Yunnan and Sichuan.
The price of butadiene continued to rise this week. According to the data of Baichuan Yingfu, the average market price of butadiene closed at 10900 yuan / ton, and the closing price increased by 4.31% this week. This round of butadiene has been rising since the beginning of January, and the current market price has risen by 164.24% from the low point. 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 and the loss of the cost side of naphtha cracking unit, China began more shutdown and maintenance or low load production at the end of March, and the supply of cracking C4 is insufficient. In addition, most cracking units in South Korea reduced their load to 80% in April, and the supply is expected to be greatly reduced. In terms of units, the restart of Keiyo’s unit in Chiba (90000 T / a) in Japan was delayed due to the earthquake, and the No. 4 cracking unit of Sinopec in Taiwan was restarted on the 9th. At present, it is operating at 70% load; Nanjing Chengzhi extraction unit (100000 t / a) is under shutdown and maintenance. In terms of demand, the terminal demand is relatively low. During the shutdown and maintenance of Fuxiang chemical and Baling Petrochemical high CIS polybutadiene rubber, Zhenhua high CIS polybutadiene rubber plant reduced the load and Zibo Qixiang Tengda Chemical Co.Ltd(002408) CIS polybutadiene rubber returned to full load. The downstream transaction is light, the price inquiry just needs to be pressed, the trading focus continues to move down, and the wait-and-see mood is strong. 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.
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 March 27, 2022, the monthly average price of 62% of the tracked products has increased month on month; The average monthly price of 30% of products fell month on month; In addition, the price of 8% products was flat. As of March 27, 2022, WTI crude oil price rose by 22.47% month on month, and Brent crude oil price rose by 23.55% month on month. Industry data: the PPI index of the chemical industry in February 2022 was 112.6, down 0.88% from January 2022. 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: lithium carbonate prices continue to rise: as of March 27, 2022, according to the data of Shanghai Nonferrous Metals network, the average price of battery grade lithium carbonate closed at 503000 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: 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.
