Chemical industry: where to go after the fall

In the third quarter, the chemical market was "booming".
Affected by the supply side disturbance and the resonance rise of raw materials such as oil and gas, the prices of chemical products surged rapidly, especially coal chemical industry
.
In the fourth quarter, the supply gradually recovered, and the raw material side retreated.
The chemical industry showed a trend of rising and falling, and the demand side was generally weak due to seasonal decline and risk aversion
.
Entering the final stage in 2021, after experiencing ups and downs, how will the chemical industry perform in the later stage?

In the third quarter, the chemical industry experienced the second wave of large increases in the year, and the support logic mainly lies in the disturbance of the policy on the supply side and the wide rise in the prices of raw materials such as oil and gas
.
After entering the fourth quarter, the price of coal has been rationally adjusted.
The European natural gas, which has achieved a multiple-level increase in the previous period, has also retreated significantly.
The upward trend of crude oil has also been curbed, and the production restrictions in various places have eased.
Therefore, the chemical products have risen sharply.
The downward trend (as shown in Figure 1), the coal chemical products that had a larger increase in the previous period once again played the role of "vanguard" in the pullback trend
.

The phenomenon of power outage is alleviated, and the supply side is gradually restored

The National Energy Administration held a press conference a few days ago.
The spokesperson of the National Energy Administration said that in August, due to the lack of water supply and high coal prices in the southern region, the peak capacity of thermal power units was insufficient.
Orderly use of electricity measures
.
Since September, the capacity of temporary maintenance units across the country has increased, the scope of orderly electricity consumption has been further expanded, and some areas have experienced power outages
.
In response to the above situation, the state has quickly introduced a series of policies and measures.
At present, the coal production capacity has been released at a faster pace, and significant results have been achieved in increasing production and supply.
No more power outages
.
In addition, the enterprises that carried out routine maintenance before the winter have gradually resumed operation, and the supply side of the current chemical market has gradually recovered
.
As shown in Figure 2, the average operating load rate of some major products in the first two weeks of November increased significantly compared with September.
Although there were also product operating decreases, the decline was small
.
In addition, judging from the change trend in the past three months, except for methanol, styrene, and ethylene glycol, the operating load rates of the remaining products have shown a bottoming out trend after October
.

After the resonance of basic raw materials rose, it showed a differentiated trend, and a pattern of strong oil and weak coal was formed.

From the perspective of raw materials, a pattern of strong oil and weak coal has recently formed
.
In order to effectively guarantee the demand for coal for power generation, heating and people's livelihood, the state has taken various measures simultaneously.
The coal supply guarantee policy has achieved remarkable results, and the release of high-quality coal production capacity has been accelerated.
In October, China's raw coal output reached 360 million tons, a year-on-year increase of 4%
.
In addition, the national coal import volume in October increased significantly by 96.
2% year-on-year, which formed a strong supplement to the domestic coal supply
.
In November, measures to ensure coal supply continued to advance, and coal output continued to grow
.
According to data released by the National Development and Reform Commission, on November 10, the daily output of coal dispatched reached 12.
05 million tons, a record high
.
In the later period, the continuity and stability of the national supply guarantee measures will drive coal production to further increase, and the coal spot price will return to a more rational and reasonable range
.

Unlike the significant correction of coal, crude oil is much more "proud", and international oil prices continue to be supported amid concerns that the increase in OPEC+ production cannot meet demand growth
.
At present, the reasons for supporting the rise of crude oil are sufficient, but the road to rise may not be smooth
.
OPEC+ maintains a production increase plan of 400,000 barrels per day, and the short-term gap between crude oil supply and demand is difficult to fully make up
.
Inventories in the Cushing area continued to decline, near operating lows and well below their seasonal averages
.
NOAA predicts that the probability of La Niña will rise to 87%, and the cold winter is expected to increase, which will continue to stimulate the demand for crude oil to replace heating and power generation
.
These conditions continue to constitute conditions that support oil prices
.
However, the U.
S.
inflation rate has hit a high in more than 30 years, and the U.
S.
is currently "doing everything possible" to try to suppress oil prices, including the release of strategic crude oil inventories
.
In the short and medium term, affected by the supply and demand pattern, crude oil is likely to fluctuate strongly, but with the fall in the prices of natural gas, coal and other energy sources, the further upward drive of oil prices will weaken
.
In addition, it is also necessary to pay attention to the periodic impact of policy factors on crude oil prices under the high inflation in the United States
.

At present, the market logic supported by the cost of coal chemical industry will gradually change to a market dominated by supply and demand, but we must pay attention to the leading role of petrochemical industry
.
The raw materials of Qitou Chemical (mainly refers to light hydrocarbon raw materials such as ethane and propane) are highly dependent on imports in China.
At present, the price of external disks is high.
Therefore, the logic of future cost support still exists, and the rising and falling market may not be sustainable
.
The petrochemical industry is weak and fluctuating at this stage, and some products have not been adjusted in place.
However, in the short and medium term, crude oil is expected to be supported by strong expectations and there may be a rebound in demand.
However, as the policy logic subsides, the supply has improved.
, and due to the weakening of seasonal demand, the rebound in the future is relatively limited
.