2007 Chemical Market Analysis 2008 Market Forecast
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In 2007, the output of many chemical products increased by more than 10%. At the same time, the price of chemical products increased by 2/3 year-on-year, and the chemical industry benefited. From the perspective of the three sub-industries, the profitable oil and gas exploration industry has started to slow down and profits have been declining in recent years. Since the profitability of the oil refining industry began to grow at the end of last year, after more than half a year of rising profits, due to international oil prices Continuing to go higher and relapse into losses; the chemical industry has changed its decline over the past year, this year's performance was highly productive and the profit grew rapidly. In the first eight months, profits of RMB 102.65 billion were realized, a year-on-year increase of 56.5%.
The growth rate of crude oil and natural gas extraction industry has slowed down significantly; the oil refining industry suffers serious losses, and it is difficult to improve in the short term; the organic chemical industry as a whole is facing pressure for capacity expansion; prices for organic silicon, BDO, and TDI have dropped significantly; prices for inorganic chemical industry have been running smoothly. Phosphorus prices are prominent and worthy of attention. The overall situation of the fertilizer industry is relatively good. It is worth noting that in the chemical fiber industry, the prosperity of spandex has declined and the viscose industry is still worthy of attention. From the perspective of changes in the business climate, we believe that the business climate of several industries, such as glyphosate, yellow phosphorus, viscose fiber, and urea, deserves our attention.
Polyurethane industry: In 2007, the price of MDI was very stable. In 2008, there was a certain pressure on the price. The pressure depends on the production of Shanghai Lianheng.
The domestic TDI production technology has been basically digested. Gansu Yinguang, Cangzhou Dahua, Lanxing Cleaning, and Shandong Juli's four domestic TDI manufacturers have started large-scale capacity expansion. At the end of 2006, Gansu Yinguang expanded its original capacity of 25,000 tons to 50,000 tons, and plans to further expand production to 100,000 tons; Cangzhou Dahua will build a new 50,000-ton TDI plant, which is expected to be put into production in 2008; in addition, China’s weapons Liaoning will also build a 100,000-ton TDI plant in Jinxi, Liaoning. Bluestar Cleansing and Shandong Juli have carried out small-scale expansion and reconstruction projects.
In 2006 and 2007, China’s MDI imports exceeded 400,000 tons, and the self-sufficiency rate did not exceed 50%. However, with the completion of the expansion of the 240,000-ton capacity expansion project of the Wanhua Ningbo project and the normal operation of the Shanghai Lianheng 240,000-ton MDI project, we expect that the MDI market structure will be expected to change substantially by 2008: import volume is expected to appear At the turning point, there is a clear decline, and competition will continue to increase.
While domestic TDI manufacturers have expanded production, large international companies have also accelerated their pace of deployment. In June 2006, Shanghai Lianheng’s 160,000-ton TDI was put into production. In addition, Bayer’s 150,000-ton TDI project will also be put into production in 2009. And plans to further expand production to 300,000 tons.
In terms of prices, TDI prices have fluctuated sharply this year. In the third quarter, the price of TDI was affected by the explosion of the Dazhou Chemical Plant. The price has soared again, and the price has dropped rapidly in the fourth quarter. We believe that with the gradual increase of domestic TDI supply, there is still room for further decline in TDI prices.
The next three years will be the peak period for the expansion of China's MDI production capacity. By 2010, domestic MDI production capacity will be significantly surplus, and China will also shift from a net importer of MDI to a net exporter. At present, the proposed and newly constructed projects are: Wanhua Ningbo 240,000 tons expansion 300,000 tons is expected to be completed in 2009, while the company's new 300,000 tons project is expected to put into production in 2010; Shanghai Bayer 350,000 tons MDI project is expected to put into production in 2009; Shanghai Lianheng’s new 400,000-ton project is expected to be put into production in 2010; BASF’s first phase of a new 400,000-ton MDI project in Chongqing is expected to start production in 2010. By 2010, China's MDI production capacity will exceed 2 million tons, and the demand may be less than 1 million tons, then there may be a serious oversupply situation.
Nitrogen Fertilizer: From January to October of 2007, the domestic nitrogen fertilizer production was 350.36 million tons, an increase of 12.4% year-on-year, of which urea production reached 20.609 million tons, a year-on-year increase of 12.6%. At the same time of significant increase in output, domestic expansion of nitrogen fertilizer remains the same. In the first 10 months, investment in nitrogen fertilizer projects in the country has completed 22.49 billion yuan, a year-on-year increase of 26.59%. In the future, the nitrogen fertilizer industry will still face overcapacity pressure.
Since April 2007, the market price of urea in China has continued to fall. Even in the peak season for fertilizer use in June and July, the urea market price has not risen yet, and it has dropped to 1,500 to 1600 yuan per ton. The urea prices in some regions even In August, it fell to 1,400 yuan/ton, the lowest since 2003. The main reason for the continued decline in urea prices is that domestic production capacity grows too fast and exceeds demand growth. However, as international urea prices rose sharply in the second half of the year, and the export tariff for urea was lowered to 15% in the fourth quarter, the export advantage will become apparent. From January to October, the total domestic urea exports were 2,811,800 tons, an increase of 250% year-on-year, accounting for the current domestic period. 13.6% of production.
The natural gas price adjustment policy has made it clear that the price of natural gas for chemical fertilizers will not increase. Therefore, we expect that the urea preferential policies will not be cancelled in 2008. The gas-headed urea enterprises will benefit from this, and coal urea enterprises will increase their costs due to the increase in coal prices. Domestic urea prices will be affected by both the expansion of production capacity and exports, and urea prices are expected to remain stable.
Ethylene: It is a leading product in the petroleum and chemical industry. In 2007, China’s ethylene production exceeded 10 million tons, reaching 10.5 million tons, which was an increase of over 11% over the previous year. On December 18, 2007, the Wuhan 800,000-ton/year ethylene project was started. At this point, China has a total of 7 large-scale ethylene plants and 6.2 million tons of production capacity are under construction at the same time, which is very rare in the international community. The seven large-scale ethylene plants under construction belong to the four sets of Sinopec and belong to the three sets of PetroChina. After the completion of the seven major ethylene, China's ethylene production capacity will reach 18 million tons/year in 2010.
Propylene: It is an important organic chemical material after ethylene. It is mainly used for the production of PP (polypropylene), phenol, acetone, acrylonitrile, propylene oxide, and acrylic acid. China's propylene is mainly derived from ethylene cracking and catalytic cracking units. In recent years, due to the rapid development of propylene downstream products, the demand for propylene has increased rapidly. In 2006, China’s imports of propylene were relatively small, some 321,000 tons, due to insufficient production of propylene in Asia. With the expansion of cracking capacity in South Korea, Japan and China's Taiwan region, the import volume of propylene has increased dramatically. From January to July 2007, the import volume reached 347,000 tons, and it is expected to reach 900,000-1,15 million tons throughout the year.
Soda Ash: From January to October this year, the output of flat glass, alumina, and synthetic detergents in the major downstream industries of soda ash in China increased rapidly, with year-on-year growth of 14.6%, 49.7%, and 11.5%, respectively, while cumulative production of soda ash was 14,319,000 tons, an increase of only 11% year-on-year. %, lower than the main downstream output growth. At the same time, due to rising energy prices, soda ash maintains its economy under the dual role of downstream demand and rising costs.
In addition, about 10% of China's soda ash is used for export, which is affected by the strong demand in the international market, the combined increase in the price of crude oil and natural gas, and the production cost and freight cost of US natural alkaloids (22.20, -0.10, -0.45%, stocks). With the increase, the cost of exports to Asia has increased, while China's soda ash exports have obvious advantages and the export situation is good. This is confirmed by the fact that China's monthly export of soda ash and the average export price of this year can be verified: Since July 1, the country's export tax rebate for soda ash has been reduced from 13% to 0, and the monthly export volume has continued to rise after falling in July. And export prices have also continued to rise, showing strong cost transferability.
In the future, the downstream production of soda ash will continue to grow at a faster rate: For alumina, according to CICC researchers, China’s alumina production in 2008 was 27.6 million tons, a growth rate of 29.5%; for glass, there are currently more than 40 The production capacity of the under construction and proposed production lines can be increased by approximately 120 million weights after full production. Although the state has issued the “Conditions for the Admission of Flat Glass Industry†and proposed to eliminate 30 million weight boxes of glass production capacity before 2010, However, the phase-out amount only accounted for about 6% of the production capacity at the end of 2006, and the impact on supply was small. It is expected that the production capacity will continue to grow rapidly. As for soda ash, due to higher industry concentration and stronger self-discipline, and due to the increasingly stringent impact of high-energy-consuming industries and environmental protection requirements imposed by state policies, the expansion of production capacity in the industry has slowed down, and its new production capacity has been mainly concentrated in 2009. Released, the new production in 2008 was limited, about 1 million tons, and the growth rate was about 6%, which was lower than the growth rate of the main downstream production. In addition, the increase in the price of raw elements such as salt, electricity, and coal will also increase the production cost of soda ash, which will play a certain role in supporting the price of soda ash. In summary, we believe that the soda ash industry is expected to continue into the economy by the end of 2008.
Oil and natural gas: prices are lower than international prices, lower oil and gas prices are not conducive to the realization of national energy-saving emission reduction targets, but also not conducive to technological innovation in downstream industries such as transportation and natural gas chemical industry. At the same time, lower oil and gas prices have promoted downstream consumer demand, curbed upstream production, led to many imbalances in the supply and demand of domestic refined oil products, and the “oil shortage†that appeared many times this year in China reflected the contradiction between supply and demand of domestic refined oil. This year, the international oil price has risen from more than 50 US dollars/barrel at the beginning of the year to more than 80 US dollars/barrel at present, and the rate of increase has reached 60%. However, this year, refined oil prices have only been adjusted twice, and one of them is the reduction of diesel price by 200 yuan/ton. The other time, on November 1 this year, the National Development and Reform Commission raised the price of gasoline and diesel by RMB 500/ton. Although the price was raised, the difference between domestic and foreign refined oil prices has further increased.
On November 8 this year, the National Development and Reform Commission issued a notice to increase the price of natural gas. Domestic industrial use (excluding fertilizer production, residential gas, and independent heating companies) will increase the base price of natural gas by 400 yuan per 1,000 cubic meters. Afterwards, domestic natural gas prices for industrial use have generally reached 1.2-1.6 yuan/cubic meter, which is still lower than the US natural gas price of 2.6 yuan/cubic meter. Natural gas prices still have room to increase.
We believe that domestic prices of oil and gas resources that are significantly lower than international prices stimulate downstream consumer demand and are not conducive to the realization of national energy-saving emission reduction targets. Therefore, in order to better achieve energy-saving and emission reduction targets, domestic product oil and natural gas price reform can no longer be implemented. dragged. At the same time, under the expectation that the average price of crude oil will rise to US$78/bbl next year, it is expected that the domestic refined oil price will continue to increase.
Coal Chemical Industry: Coal chemical industry is divided into traditional coal chemical industry and modern coal chemical industry. Among them, coal coking, coal calcium carbide, and coal synthetic ammonia are traditional coal chemical; coal to methanol, coal to oil, and coal to olefin are modern coal chemical. Most of the traditional coal chemical industry has low technological content, high resource consumption and large pollution. Under the background of energy conservation and emission reduction, the state will introduce policies to seek restrictions, but due to its prominent cost advantage, it can continue to develop in the short term.
Compared to the traditional coal chemical industry subject to national policy restrictions, we are cautiously optimistic about coal-to-methanol, coal-to-oil, coal to olefins and other modern coal chemical projects, the main reason is that from the perspective of domestic resource reserves, China is more coal, lack of oil, less gas At a time when oil prices are high and China’s dependence on imported crude oil is gradually deepening, from the perspective of energy security, we believe that the development of domestic coal-based oil products will be supported by the state’s policies.
After the announcement of “DME for town gasâ€, DME has gained national support as an alternative fuel for liquefied petroleum gas, and we can look forward to the development prospects of alcohol ether fuel in the long term. However, currently there are many domestic methanol project plans. Due to the incomplete statistics of the specific capacity data under construction, we have also increased our expectations for the future market of methanol. However, taking into account the application prospect of methanol blended gasoline, we are still optimistic about the methanol market outlook. Since the cost of dimethyl ether is mainly limited by the price of methanol, and the selling price is mainly limited by the price of liquefied petroleum gas, we are optimistic about coal chemical companies with the advantages of coal-methanol-dimethyl ether integrated industrial chain.
The new energy utilization policy was promulgated, and the value of coal chemical industry was highlighted. In August, the state successively issued the “Urban Dimethyl Ether Industry Standard†and “Natural Gas Utilization Policyâ€. Among them, the "industrial dimethyl ether industrial standard" is expected to be implemented on January 1, 2008, "Natural Gas Utilization Policy" was officially promulgated and implemented on August 30, 2007.