From the industrial, logistics, investment and other aspects, talk about the impact of the epidemic on the petrochemical supply chain?

Although China's current petrochemical supply chain is more perfect, but product production and marketing and the main business is mostly concentrated in the domestic, international trade, cross-border investment and financing, such as the proportion of relatively small, and China's petrochemical products are still relatively low-end, overcapacity, homogenization competition, higher production costs, profit space decreased year by year and other phenomena normal. The new crown epidemic has brought new challenges to China's chemical industry, but it has also brought new opportunities for solving inherent problems.
The new crown epidemic in 2020 is the most serious public health emergency facing human society, the spread of the epidemic is fast, widespread infection, difficult to prevent and control, has brought great challenges to all countries in the world, public health, socio-economic, human governance, international exchanges and policies and regulations have had a far-reaching impactPetrochemical industry as the basic industry of the national economy has also been greatly affected.
2019, the value added of China's petroleum and chemical industries increased by 4.8% YoY, operating income was 12.27 trillion yuan, up 1.3% YoY, and total profit was 668.37 billion yuan, down 1% YoY1 4.9%; Total imports and exports were US$722.21 billion, down 2.8% YoY; total crude oil and natural gas production was 347 million tons (oil equivalent), up 4.7% YoY; and total production of major chemicals was up about 4.6% YoY.
the growth of Sinopec industry can not be separated from the support of the mature supply chain system behind. Logistics chain, information flow chain, capital flow chain have been modernized, raw material suppliers, manufacturers, logistics and warehousing, distribution, channels, terminal consumption and other stakeholders and links have a smooth operation mechanism.
although China's petrochemical supply chain is relatively perfect, but petrochemical products production and marketing mainly concentrated in the domestic, the proportion of international trade is relatively small, overseas oil and gas field reserves are small, multinational investment and financing projects are not many, international mergers and acquisitions and restructuring projects lack, most of the business areas, geographical distribution is still mainly domestic. Moreover, China's petrochemical products are still relatively low-end, traditional, the industry is generally overcapacity, homogenization of competition, higher production costs, profit space decreased year by year and other normal phenomenon.
new crown epidemic has brought new challenges to China's chemical industry, but it has also brought new opportunities for solving inherent problems.
logistics
logistics industry has a strong professionalism, loads are basically dangerous chemicals, with flammable and explosive, toxic and harmful characteristics. Under normal circumstances, the control of logistics in the petrochemical industry is very strict. China's petrochemical industry logistics mainly private enterprises, accounting for about 80% of the total number of logistics enterprises, enterprises generally small in size, the main business income of less than 100 million yuan accounted for about 80%, enterprises are mainly distributed in East China and along the Yangtze River (affected by the outbreak of large areas), the outbreak on the region's business impact is very large.
international logistics, affected by the new crown outbreak, resulting in a certain degree of disruption. Air transport is one of the key modes of transport for fragile, perishable or high-value goods, and disruptions in air navigation will greatly affect the transport and supply of chemicals and medicines.
the chemical industry has never been more severely limited, resulting in high overall inventory of industry enterprises. At present, liquid storage is on the verge of full tank, solid product storage is also more than online, in this context, the overall logistics situation is still not optimistic, in the short term recovery is more difficult.
perspective of
the enterprise capital week changes slowly, cash flow pressure increases, accounts receivable increase, sales are blocked.
capital turnover is mainly due to limited mobility, logistical transport disruption, increased difficulty in product sales, increased capital costs and other factors. The blocked movement of people makes it impossible for enterprises to carry out production and business activities normally, the obstruction of logistics makes it difficult for enterprises to obtain raw materials and complete product sales, the decline in overall social demand leads to a decrease in the demand for goods produced by some enterprises, resulting in inventory hoarding, which has a particularly large impact on products with a service life, and the increase in capital costs may be due to the enterprise's own loans, accounts payable and personnel wages, various taxes and fees and other administrative expenses.
same time, because enterprises are difficult to obtain operating income, difficult to recover payment, return funds, the impact on the cash flow of enterprises will be very large, or in serious cases may lead to the break of the enterprise capital chain or even bankruptcy.
of industrial layout
petrochemical industry as the basic industry of the national economy, if there are other industries in the situation of industrial transfer or re-layout, the petrochemical industry will also be very directly affected.
production stopped, commodity logistics blocked, personnel control and border control of various countries caused by the epidemic have caused great interference to the production and operation of enterprises. Under such circumstances, the confidence of multinationals in the stability of China's industrial chain will be reduced, the principle of "not putting eggs in the same basket" or one of the main factors considered by many multinationals in the future.
Addition, the outbreak has seen the world potential suppliers in or around the region without a supply of Chinese goods, and China's exports will be greatly weakened if the U.S. takes the opportunity to push for counter-globalization.
But overall, while some companies are interested in moving production lines to India, Thailand, Vietnam or neighbouring countries, the supply chain systems they can support are too far from China's due to their relatively small body mass and low industrialization. At the same time, companies moving to these countries will find it difficult to get rid of china's manufacturing supply chain completely if they still have high demand upstream and downstream from China.
of energy consumption
petrochemical industry is a major energy consumption, but also a direct supplier of energy. Once downstream energy consumption is reduced to a large extent, it will directly affect the petrochemical industry.
most serious are the country's work stoppages, restrictions on the movement of people, school suspensions and other conditions, people significantly reduce the frequency of travel and use of cars, directly leading to february domestic consumption of refined oil plummeted by at least 80%. The decline in refined oil consumption will affect the overall efficiency of upstream refineries, resulting in enterprise products can not be sold, price pressure, inventory costs, etc. , cash flow pressure increased, some enterprises will face difficulties in production and operation. Even if demand recovers in the future, the recovery process for refined oil consumption will be long.
The overall decline in consumer services such as catering, cultural and entertainment, transportation and clothing resulted in a year-on-year decline of more than 40% in gasoline consumption, more than 30% year-on-year decline in diesel fuel consumption, more than 50% year-on-year decline in aviation kerosene consumption and a 10.2% year-on-year decline in natural gas consumption. In areas with lighter outbreaks, people's lives-related just-needed energy industries, such as pharmaceutical manufacturing and food processing industries, are less affected, but other energy demand sectors, such as textiles, rubber products, plastics and polyester, are relatively affected.
Since mid-March, however, the domestic epidemic has been largely under control, with the resumption of work and production gradually resumed, the order of people's lives beginning to return, and the total amount of social energy used has begun to recover. In the long run, with the gradual improvement of the epidemic and the lifting of restrictions on social production and life, the overall trend of the epidemic in China's energy consumption will not change fundamentally.
supply of raw materials, import angle
since mid-to-late March, China's petrochemical enterprises have reached about 96.8 percent of the resumption rate. From the point of view of natural gas and crude oil supply, China's crude oil imports about 500 million tons per year, an average of 10 million barrels per day. Oil prices are expected to remain low this year, so China's demand for crude oil imports can be basically resolved. Natural gas is mainly composed of pipeline gas and LNG gas, china's current natural gas consumption of more than 300 billion cubic meters, the new crown epidemic on natural gas consumption will have a certain degree of reduced impact, coupled with China's natural gas import sources are relatively rich, channels are relatively stable, so the supply is not difficult.
Second, the petrochemical industry is largely based on natural gas, crude oil as raw materials, the outbreak from refineries of pneumoche oil, liquefied petroleum gas, restructuring oil (benzene, toluene and mixed xylene) supply will be reduced, which is necessary for the petrochemical industry raw materials.
same time, in some petrochemical industry sub-sectors, China's external dependence is high, the outbreak may cause a period of time these products import difficult to increase, and thus affect the development of related industries. For example, China's import dependence on polycarbonate is as high as 70%, which is widely used in automotive parts, consumer electronics, household appliances, medical equipment and other fields of materials; , and polymer external dependence is also more than 40%, in addition to polypropylene, aramid, acrylic cyanide, LCP, new high-grade Teflon and fluoroelas rubber, polyfluoroethylene and other new fluoropolymers, mixed alkyl benzene and mixed alkyl propylene and other high-end chemicals, fine chemicals and chemical new materials rely on imports from abroad. There are also catalysts, reaction reagents, cultures, antifreeze preparations, hydraulic brake fluid and other products also need to be imported. The stability of these raw material sources will directly affect the production of related petrochemical products in China.
of exports of
, organic chemicals and petroleum, petroleum products and related raw materials are the largest exports in terms of scale. In terms of specific products, according to the Federation data, in 2019 exports accounted for more than 30% of the products mainly include rubber additives, titanium dioxide, polyurethane, dyes, phosphorus chemicals, fertilizers and so on. In particular, promoters, anti-age agents, ammonium sulfate, diammonium phosphate, polymer MDI and other exports accounted for a relatively high, reaching more than 50%. From the enterprise point of view, according to the 2018 annual report, a total of 30 listed companies accounted for more than 50% of overseas income, 116 chemical listed companies accounted for more than 20% of overseas income, covering pesticides, tires, chemical fiber, polyurethane and other sub-industries.
china's exports accounted for a high proportion of products
the current global supply chain is still around the developed economies of the division of labor system, China's chemical export direction is no exception. China's exports to the European Union, the United States and its components, textiles, furniture and sports goods together account for 66.3% of total exports to the two major economies. As the real economy weakens, the negative impact on China's manufacturing sector continues to deepen.
If the epidemic continues to ferment, the global supply chain break risk, China's chemical products and their dependence on the downstream products industry exports will be greatly reduced, so that factory orders, idle labor, enterprise labor costs and debt-servicing burden pressure increased, which will lead to insufficient production capacity of enterprises to increase the risk of default, will bring life-and-death challenges to China's export-oriented enterprises.
of investment trends
can be divided into domestic investment and overseas investment.
from the perspective of overseas investment, three barrels of oil, ChemChina, China Chemical, China Chemical and other state-owned enterprises have long started overseas investment, mergers and acquisitions, engineering EPC contracting and other activities. China's petrochemical private enterprises in recent years overseas investment projects are also very many.
With the widespread spread of the new crown epidemic overseas, various countries have introduced various measures to limit the spread of the virus, so that cross-border investment activities have been significantly inhibited or delayed, investment efficiency has been greatly reduced, in the short term these measures on China's petrochemical enterprises to further expand overseas investment has a great impact, in the long run, Sinopec enterprises may be slow to go out, but will not stop completely.
perspective of domestic investment, fixed asset investment in chemical raw materials and chemicals manufacturing grew 4.2% year-on-year in 2019, down 0.4 percentage points from the previous 11 months, according to the National Bureau of Statistics. Over the same period, China's industrial investment grew by 4.3% YoY, 0.6 percentage points faster than in the previous 11 months, surpassing the growth rate of investment in the chemical industry for the first time this year. The chemical industry operates with low efficiency. As of the end of December 2019, the total profit for the full year was 397.84 billion yuan, down 13.9% YoY, accounting for 59.5% of the total profits of the petroleum and chemical industries.
entered the new century, the chemical industry has a total of three profit decline, the largest decline this time. In terms of major sectors, profits from specialty chemicals, coating (pigment) manufacturing and rubber products continued to grow, with yoY growth rates of 1.4%, 8.1% and 9.7%, respectively; 30.5%, synthetic materials manufacturing profit decreased by 7.0% YoY, fertilizer manufacturing and chemical mining profit decreased by 38.0% and 22.5% YoY, respectively, and coal chemical products manufacturing profit decreased the most year-on-year, by 136.5%.
with the domestic epidemic relief, petrochemical enterprises to resume full-scale production, the biggest problem before the enterprise is how to ensure the overall benefits of this year. Investment, as a key factor driving China's economic growth, stable employment and increasing enterprise income, is expected to usher in relatively large-scale growth from the second half of the year, especially in the petrochemical industry products in the field of high external dependence, scientific and technological innovation, intelligent field, automation field, special equipment and equipment field, new materials field and special chemicals field.
response measures and policy recommendations are . 1. Stabilizing emotions, focusing on breaking
in the face of sudden black swan events, stabilizing confidence and restoring production is one of the most important work at present. Internally, in view of the weak links in the supply chain exposed by the epidemic, more scientific research resources and strength should be integrated to support upstream and downstream enterprises to strengthen industrial synergy and technical cooperation, enhance the resilience of the industrial chain, enhance the level of the industrial chain, and form more innovative and higher value-added positive measures in open cooperation. Externally, stabilize the headquarters, research and development and design of multinational companies and foreign-funded high-tech enterprises, and stabilize the core enterprises related to the safety of the industrial chain. Provide appropriate support to prevent these enterprises from leaving our country.
2. To encourage diversified sources of procurement
since China's accession to the WTO, China's petrochemical industry has formed a very perfect petrochemical supply chain system. However, through this outbreak of new crown pneumonia, we should be aware of the weakness, passivity and criticality of certain links in the supply chain. The principle of "don't put eggs in the same basket" should be something that the petrochemical supply chain must start to pay attention to.
outbreak could be a way for some companies to re-evaluate their supply chains, or to reduce the cost to businesses in the event of an emergency by building more resilient supply chains that find more suppliers for the same products. But the global supply chain is a complex system, its formation and change is a long-term process, today's global supply chain pattern is difficult to be subverted by an outbreak. The fragmentation of supply chains around the world is unlikely to be reversed completely, at the same time.