On January 18, Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) approached the daily limit in the morning. The day before, the company announced that it had successfully developed electronic grade methyl ethyl carbonate (EMC) and diethyl carbonate (DEC) products recently.
The company’s 300000 tons of dimethyl carbonate (DMC) has been put into operation in October 2021 and ranks first in China’s DMC capacity.
Among them, battery grade DMC can be directly used as electrolyte solvent of lithium iron phosphate battery, and industrial grade DMC is the main raw material of EMC.
So far, Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) has the production capacity of three electrolyte solvents. In terms of product electrolyte solvent, it is second only to Shandong Shida Shenghua Chemical Group Company Limite(603026) and Shandong Haike, which collect five solvent products.
“EMC plans to have a production capacity of 300000 tons. The company also plans to build a 300000 ton DMC supporting project to provide raw materials. At present, the project is in the filing stage of the national development and Reform Commission.” A person from the Securities Department responded on the 18th.
According to the data provided by Baichuan Yingfu, the current EMC price is 28000 yuan / ton. Based on this simple estimation, the above EMC capacity will bring more than 8 billion yuan of revenue increment after it reaches its capacity.
from “Red Sea” to “blue sea”
At present, the common organic solvents in electrolyte include dimethyl carbonate (DMC), diethyl carbonate (DEC), methyl ethyl carbonate (EMC), vinyl carbonate (EC) and propylene carbonate (PC).
DMC is the most concerned and well-known in the capital market in 2021. The share price of star company Shandong Shida Shenghua Chemical Group Company Limite(603026) soared nearly three times last year.
As the leader of the collection of the above five solvent products, Shandong Shida Shenghua Chemical Group Company Limite(603026) previously chose to change production.
On the evening of December 27, 2021, the company issued a number of investment and production announcements, terminated the original 50000 ton DMC project and replaced it with a new 100000 ton EMC project.
“EMC is the downstream of industrial grade DMC. In 2020 and 2021, there will be a lot of new capacity of industrial grade DMC, and the industry is facing the problem of overcapacity.” Baichuan Yingfu, an analyst in charge of electrolyte solvent field, pointed out.
In this way, Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) has become the most important variable in the balance of supply and demand in the industry. In October of the same year, the 300000 t / a DMC technical transformation project of the company was completed, which greatly increased China’s DMC production capacity.
According to the latest data of Baichuan Yingfu, as of January 18, the production capacity of dimethyl carbonate in China totaled 1.256 million tons, of which the top ones were Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) (300000 tons), Zhejiang Petrochemical (200000 tons), Shandong Shida Shenghua Chemical Group Company Limite(603026) (125000 tons) and China Salt Anhui hongsifang (100000 tons). For DMC products only, Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) is equivalent to “the peak is the beginning”.
With the increase of new projects put into operation in China, DMC prices also fell significantly after a sharp rise in the second half of 2021.
At the beginning of 2021, China’s DMC price was about 7000 yuan / ton, which began to rise in July of the same year, rose to a high of 14010 yuan / ton on October 20, and then fell significantly. So far, the price has remained around 9720 yuan / ton.
Under the above background, the competition in DMC market is obviously intensified. Companies in the industry begin to look for a new blue ocean, and extending to downstream EMC products has become the choice of many enterprises.
“With the rapid increase of production capacity, many industrial DMC manufacturers began to plan to extend to downstream EMC, but the specific projects have not yet been implemented.” The above Baichuan Yingfu people said.
According to her introduction, although EMC’s production process also needs some other auxiliary materials, its profit margin is significantly higher than DMC according to the current price.
The action of Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) is undoubtedly the fastest.
According to the company’s announcement on the evening of the 17th, “through analysis and detection, the test device has opened up the process flow, and the product quality has reached the electronic level standard”, “methyl ethyl carbonate and diethyl carbonate are the company’s pilot test products, and the pilot test system is still under further optimization…”
In other words, the successful development of the company’s Dec products does not rule out copying the previous cases of seizing the DMC market.
revenue growth multipolar force
It is understood that the high-end solvent project of Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) will be planned to be built in Dezhou canal Hengsheng Chemical Industrial Park, using catalytic decarbonylation technology to build 600000 T / a DMC unit, and using transesterification reaction technology to build 300000 t / a EMC unit and return to 50000 T / a Dec.
The construction period of the unit is 2021-2023. After completion and operation, it can produce 300000 tons of DMC, 300000 tons of EMC and 50000 tons of Dec per year.
If the above projects can be implemented, Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) will add 300000 tons of EMC capacity. If compared with the current industry capacity data, 300000 tons is equivalent to the existence of “Big Mac”.
According to the above data given by Baichuan Yingfu, the current Shandong Shida Shenghua Chemical Group Company Limite(603026) emc capacity is 60000 tons, Shandong Haike capacity is 30000 to 40000 tons, and the total capacity of other small and medium-sized enterprises in Northeast China is between 150000 and 170000 tons.
Compared with DMC, EMC’s current price is also relatively strong.
At the beginning of 2021, the price of EMC in China was 21000 yuan / ton. After bottoming to 19000 yuan / ton in July of the same year, it rose to 30000 yuan / ton in early November. At present, the price is still as high as 28000 yuan / ton.
This alone, 300000 tons of EMC capacity corresponds to a value of 8.4 billion yuan. The 300000 tons of DMC capacity put into operation in October last year can also bring a revenue increment of nearly 3 billion yuan after conversion according to the market price.
Of course, the above estimates are only based on the current product price. DMC and EMC will change due to the release of capacity in the future, which will lead to changes in the profit trend of relevant businesses.
It should be noted that the expansion of Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) is not entirely concentrated in the field of electrolyte and solvent, but also includes many aspects such as new chemical materials.
For example, 300000 t / a caprolactam and supporting devices can produce 300000 t / a caprolactam and 480000 T / a ammonium sulfate after reaching the production capacity. The project is expected to be put into operation in the first half of 2022.
Nylon 66 high-end new material project. The construction period of the unit is from 2021 to 2023. After completion and operation, the unit will produce 80000 tons of nylon 66 high-end new material products, 148000 tons of adipic acid, 180000 tons of nitric acid and 13500 tons of by-product dicarboxylic acid.
It can be seen that Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) has entered the intensive production expansion cycle since 2021, and the implementation of the above electrolyte solvent and new material projects will bring a relatively determined revenue increment to the company.
Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) when formulating the performance evaluation standard of equity incentive, the probability has taken the above factors into account.
At the end of last year, when Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) launched equity incentive, the performance evaluation standard was based on the revenue of RMB 13.1 billion in 2020, and the revenue growth rate in 2022 / 2023 / 2024 was no less than 80% / 85% / 160%, corresponding to the target revenue of RMB 34.1 billion in 2024.
