Key investment points
Performance of the sector this week: this week (January 10-january 14, the same below), the market composite index fell broadly. The Shanghai Composite Index closed at 3521.26, down 1.63% this week, the Shenzhen Component Index fell 1.35% this week, and the chemical sector (Shenwan) fell 0.05%. Performance of individual chemical stocks this week: the chemical sector fell with the shock of the market this week, and some stocks still rose against the market. The top gainers are Aba Chemicals Corporation(300261) , Xilong Scientific Co.Ltd(002584) , Phichem Corporation(300398) , Shandongsino-Agriunitedbiotechnologyco.Ltd(003042) , Great Chinasoft Technology Co.Ltd(002453) , Shandong Weifang Rainbow Chemical Co.Ltd(301035) , Shenzhen Dynanonic Co.Ltd(300769) , Zhejiang Benli Technology Co.Ltd(301065) , Jiangsu Aoyang Health Industry Co.Ltd(002172) , Zhejiang Unifull Industrial Fibre Co.Ltd(002427) . The pesticide sector rebounded and rose sharply this week, Aba Chemicals Corporation(300261) , Shandongsino-Agriunitedbiotechnologyco.Ltd(003042) and Shandong Weifang Rainbow Chemical Co.Ltd(301035) rose 81.53%, 24.17% and 21.57% respectively, of which Aba Chemicals Corporation(300261) led the chemical sector. Shenzhen Dynanonic Co.Ltd(300769) on January 12 this week, it announced the issuance of shares to specific objects and listing on the gem, with a cumulative increase of 20.98% this week.
Crude oil market dynamics this week: EIA crude oil inventory continued to decline, resulting in tight supply and overall rise in crude oil prices. Ice oil distribution closed at US $86.06/barrel (5.27% MoM); WTI crude oil closed at US $83.82/barrel (6.24% MoM). Tracking of key chemicals: among the chemicals we are concerned about this week, liquid chlorine (+ 17.41%), butyl acrylate (+ 5.26%), phthalic anhydride (+ 3.98%), dimethyl ether (+ 3.89%), hydrogen peroxide (+ 3.52%). This week, some units of liquid chlorine were shut down for maintenance, and the downstream enterprises resumed external production. The market trading situation improved slightly, and the price fell first and then rose. This week, the maintenance of butyl acrylate manufacturers increased, the supply decreased slightly, and the price rose slowly. This week, the price of phthalic anhydride raw materials has increased for many times, the supply of parking maintenance is in short supply, and the price has increased. Hydrogen peroxide manufacturers had low inventories in many places this week, but affected by the epidemic in Henan, the traffic was blocked and the price rose again.
Thanks to the increase of downstream material output and capacity expansion, the demand for antioxidants has further increased: antioxidants can be divided into main antioxidants and auxiliary antioxidants. The main antioxidants have compounds such as aromatic amines and hindered phenols and can remove free radicals. Auxiliary antioxidants can decompose hydroperoxides and contain organic compounds containing phosphorus and sulfur. In terms of demand, the output of synthetic rubber and chemical fiber increased steadily, with a compound growth rate of 7.7% and 8.1% from 2017 to 2020, which strongly supported the demand for antioxidants, while the production capacity of plastic products expanded rapidly, with a compound growth rate of 5.9% and 4.9% from 2016 to 2019, further catalyzing the demand for antioxidants.
Main lines of Chemical Investment: (1) periodic growth stocks are expected to improve marginally: since the turning point of Q2 chemical boom in 2020, the prices of some chemicals have risen to historical highs. With the imbalance of supply and demand and the superposition of economic downward pressure, traditional chemical cyclical stocks made a sharp correction. We believe that we should focus on the industry leaders with continuous production expansion capacity in the 14th five year plan, supplement the price with quantity, especially the high-quality companies that embrace change and look for the second growth curve, which are expected to cross the cycle in the medium and long term. Key recommendations: Wanhua Chemical Group Co.Ltd(600309) , Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , satellite chemistry, China National Chemical Engineering Co.Ltd(601117) , Ningxia Baofeng Energy Group Co.Ltd(600989) , lithium iron phosphate industrial chain and soda ash industrial chain. (2) Focus on high-end manufacturing and supporting materials for high-tech industries, including biosynthesis, electronic materials, degradability, tail gas treatment, carbon fiber, etc. Key recommendations: Haohua Chemical Science & Technology Corp.Ltd(600378) , Valiant Co.Ltd(002643) . (3) For the pesticide industry chain entering the business cycle, the key recommendations are: Jiangsu Yangnong Chemical Co.Ltd(600486) , Anhui Guangxin Agrochemical Co.Ltd(603599) .
Risk warning: crude oil supply fluctuates sharply; The situation of trade war worsened; Risk of significant exchange rate fluctuations.
