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The petrochemical industry is under pressure in the first half of the year and is expected to turn around in the second half of the year
2023/8/25
In the first half of the year, we encountered difficulties such as a simultaneous decline in raw material and product prices, as well as weak demand in the international and domestic markets. The entire petrochemical industry and a large number of petrochemical enterprises are working together in terms of technological and management innovation, reducing inventory and reducing costs to increase efficiency, and actively responding to the severe business situation. "Fu Xiangsheng, Vice President of the China Petroleum and Chemical Industry Federation, pointed out at the recently held 2023 National Petroleum and Chemical Industry Economic Situation Analysis Conference.
It is understood that under the impact of multiple factors such as the lower than expected recovery of downstream demand for products, the operating conditions of the petrochemical industry continued to be under pressure in the first half of this year.
Both revenue and profit have decreased
According to data from the National Bureau of Statistics, the petrochemical industry achieved a revenue of 7.6 trillion yuan in the first half of the year, a year-on-year decrease of 4.4%; The total profit of the entire industry was 431.09 billion yuan, a year-on-year decrease of 41.3%.
The majority of years in the petrochemical industry have seen revenue and profits increase or decrease, especially in the three major sectors of oil and gas exploration, refining, and chemical industry, which belong to the upstream and downstream of the industry chain. The benefits of upstream raw materials and downstream products are mutually causal, and generally the rise and fall are reversed. However, in the first half of this year, the operating revenue and profits of the entire petrochemical industry and the oil and gas chemical industry have both decreased simultaneously, and the decline is significant, "Fu Xiangsheng said.
This is also reflected in the semi annual reports released by listed petrochemical companies.
The latest "2023 Half Year Report" released by Wanhua Chemical shows that in the first half of this year, it achieved operating revenue of 87.6 billion yuan, a year-on-year decrease of 1.67%, and the net profit attributable to shareholders of listed companies was 8.568 billion yuan, a year-on-year decrease of 17.48%.
Wanhua Chemical pointed out: "Due to the recovery of downstream demand, prices have decreased year-on-year, resulting in a decrease in the group's operating revenue. The year-on-year decrease in raw material prices is limited, but the increase in sales has led to an increase in the group's costs and a decrease in profits
The performance of Rongsheng Petrochemical, an integrated refining and chemical giant, has been even worse. The expected net profit attributable to shareholders of the listed company is a loss of 1.1-12 billion yuan, a decrease of 120.50% -122.36% compared to the same period last year.
Rongsheng Petrochemical stated that the main reason was that during the reporting period, downstream demand recovered relatively slowly, and the price difference of the company's main products narrowed, resulting in a decrease in gross profit margin.
It is revealed that in the first half of the year, the factory prices of oil and natural gas decreased by 13.5% year-on-year, while the factory prices of chemicals decreased by 9.4% year-on-year; In June, 44 out of the 48 key monitored inorganic chemicals had a year-on-year decrease in market average prices, accounting for 91.7%; The average market prices of 72 major organic chemicals under key monitoring decreased by 68, accounting for 94.4% compared to the same period last year.
The decline in product prices was the most significant change in the economic operation of the industry in the first half of this year, and it was also the strongest feeling among entrepreneurs in research and discussions, "Fu Xiangsheng pointed out.
Supply growth combined with weak demand
Behind the sluggish performance, it is closely related to the intensifying supply-demand contradiction in China's petrochemical industry. On the one hand, with the centralized construction and production of a batch of large-scale integrated refining and chemical plants and petrochemical bases, the supply side capacity continues to be released, exacerbating the situation of surplus basic chemical products in the industry; On the other hand, the continued weakness of downstream demand has also brought impacts to the industry.
Taking polypropylene as an example, Jin Lianchuang analyst Bao Fangfang pointed out to a reporter from China Energy News: In the first half of this year, the Chinese polypropylene market rebounded after a decline, followed by a weak performance. Taking the East China market as an example, the highest price for wire drawing appeared at the end of January, at 8100 yuan/ton; the lowest price appeared in early June, at 6950 yuan/ton, with an amplitude of 1150 yuan/ton. In the first half of this year, the market faced pressure from new supply, and merchants had a difficult and optimistic mentality. In addition, downstream demand recovery was slow, and terminal factories did not follow up smoothly with new orders, causing market prices to enter a downward trend On the trading channel, China's domestic economic stability policy boosted futures in, and spot prices followed the upward trend; However, downstream resistance to high prices and cautious trading of high-end goods sources. “
Jin Lianchuang Polyethylene analyst Yan Min also told China Energy News: "The market demand side support is less than expected, coupled with the production of new devices, the market supply and demand contradiction is prominent. After the Spring Festival, the market continued to oscillate weakly, until June, when domestic policies were continuously adjusted to release stable growth signals, committed to boosting consumer and investment confidence. In addition, the spot end device maintenance is more concentrated, the overall market volatility is upward, and prices are gradually repairing upward
It is reported that in the first half of the year, new units such as Hainan Ethylene, Guangdong Petrochemical, Zhonghua Hongrun, and Jingbo Polyolefin were successively put into operation, with an additional production capacity of 1.85 million tons and an increase of 950000 tons in production. Polyethylene has added 2.2 million tons of production capacity, eliminated 100000 tons of production capacity, and overall production capacity has increased by 2.1 million tons, with a year-on-year increase of 980000 tons in production.
Expected improvement in the second half of the year
In the eyes of many industry insiders, although the pressure on the petrochemical industry in the second half of this year is still significant, it is expected to be better than in the first half of the year.
The fundamentals of macroeconomic stability and improvement in China have not changed in the second half of this year, and there have been many positive changes in domestic market demand, especially the further adjustment and improvement of macroeconomic regulation policies, which have created favorable conditions for the entire industry to boost confidence and stabilize and improve. "Li Shousheng, President of the Petrochemical Federation, pointed out that there have been some positive changes in the downstream economic operation of the industry. With the recovery of real estate, automobiles, home appliances, textiles and other markets, many bulk petrochemical product prices have started to rise, and the industry's proactive destocking is expected to come to an end, and the industry's prosperity will quickly rebound.
In the second quarter, the central bank continued to support the recovery of demand through policy operations such as lowering reserve requirements and interest rates. In the third quarter, it is expected that more proactive macroeconomic policy measures will be introduced, which will be beneficial for the economy, futures, stock market, and commodities. Confidence in the domestic polyethylene market will be restored, "Yan Min said.
Fu Xiangsheng also said, "In research and discussions, many companies have talked about a pullback in product prices in June, and the operating situation in the second quarter is also improving month by month. However, the improvement is not significant, and the economic data for the first six months of the industry is basically the same. Since late July, Brent oil prices have returned to above $80 per barrel, and the second half of this year will be better than the first half
It is understood that under the impact of multiple factors such as the lower than expected recovery of downstream demand for products, the operating conditions of the petrochemical industry continued to be under pressure in the first half of this year.
Both revenue and profit have decreased
According to data from the National Bureau of Statistics, the petrochemical industry achieved a revenue of 7.6 trillion yuan in the first half of the year, a year-on-year decrease of 4.4%; The total profit of the entire industry was 431.09 billion yuan, a year-on-year decrease of 41.3%.
The majority of years in the petrochemical industry have seen revenue and profits increase or decrease, especially in the three major sectors of oil and gas exploration, refining, and chemical industry, which belong to the upstream and downstream of the industry chain. The benefits of upstream raw materials and downstream products are mutually causal, and generally the rise and fall are reversed. However, in the first half of this year, the operating revenue and profits of the entire petrochemical industry and the oil and gas chemical industry have both decreased simultaneously, and the decline is significant, "Fu Xiangsheng said.
This is also reflected in the semi annual reports released by listed petrochemical companies.
The latest "2023 Half Year Report" released by Wanhua Chemical shows that in the first half of this year, it achieved operating revenue of 87.6 billion yuan, a year-on-year decrease of 1.67%, and the net profit attributable to shareholders of listed companies was 8.568 billion yuan, a year-on-year decrease of 17.48%.
Wanhua Chemical pointed out: "Due to the recovery of downstream demand, prices have decreased year-on-year, resulting in a decrease in the group's operating revenue. The year-on-year decrease in raw material prices is limited, but the increase in sales has led to an increase in the group's costs and a decrease in profits
The performance of Rongsheng Petrochemical, an integrated refining and chemical giant, has been even worse. The expected net profit attributable to shareholders of the listed company is a loss of 1.1-12 billion yuan, a decrease of 120.50% -122.36% compared to the same period last year.
Rongsheng Petrochemical stated that the main reason was that during the reporting period, downstream demand recovered relatively slowly, and the price difference of the company's main products narrowed, resulting in a decrease in gross profit margin.
It is revealed that in the first half of the year, the factory prices of oil and natural gas decreased by 13.5% year-on-year, while the factory prices of chemicals decreased by 9.4% year-on-year; In June, 44 out of the 48 key monitored inorganic chemicals had a year-on-year decrease in market average prices, accounting for 91.7%; The average market prices of 72 major organic chemicals under key monitoring decreased by 68, accounting for 94.4% compared to the same period last year.
The decline in product prices was the most significant change in the economic operation of the industry in the first half of this year, and it was also the strongest feeling among entrepreneurs in research and discussions, "Fu Xiangsheng pointed out.
Supply growth combined with weak demand
Behind the sluggish performance, it is closely related to the intensifying supply-demand contradiction in China's petrochemical industry. On the one hand, with the centralized construction and production of a batch of large-scale integrated refining and chemical plants and petrochemical bases, the supply side capacity continues to be released, exacerbating the situation of surplus basic chemical products in the industry; On the other hand, the continued weakness of downstream demand has also brought impacts to the industry.
Taking polypropylene as an example, Jin Lianchuang analyst Bao Fangfang pointed out to a reporter from China Energy News: In the first half of this year, the Chinese polypropylene market rebounded after a decline, followed by a weak performance. Taking the East China market as an example, the highest price for wire drawing appeared at the end of January, at 8100 yuan/ton; the lowest price appeared in early June, at 6950 yuan/ton, with an amplitude of 1150 yuan/ton. In the first half of this year, the market faced pressure from new supply, and merchants had a difficult and optimistic mentality. In addition, downstream demand recovery was slow, and terminal factories did not follow up smoothly with new orders, causing market prices to enter a downward trend On the trading channel, China's domestic economic stability policy boosted futures in, and spot prices followed the upward trend; However, downstream resistance to high prices and cautious trading of high-end goods sources. “
Jin Lianchuang Polyethylene analyst Yan Min also told China Energy News: "The market demand side support is less than expected, coupled with the production of new devices, the market supply and demand contradiction is prominent. After the Spring Festival, the market continued to oscillate weakly, until June, when domestic policies were continuously adjusted to release stable growth signals, committed to boosting consumer and investment confidence. In addition, the spot end device maintenance is more concentrated, the overall market volatility is upward, and prices are gradually repairing upward
It is reported that in the first half of the year, new units such as Hainan Ethylene, Guangdong Petrochemical, Zhonghua Hongrun, and Jingbo Polyolefin were successively put into operation, with an additional production capacity of 1.85 million tons and an increase of 950000 tons in production. Polyethylene has added 2.2 million tons of production capacity, eliminated 100000 tons of production capacity, and overall production capacity has increased by 2.1 million tons, with a year-on-year increase of 980000 tons in production.
Expected improvement in the second half of the year
In the eyes of many industry insiders, although the pressure on the petrochemical industry in the second half of this year is still significant, it is expected to be better than in the first half of the year.
The fundamentals of macroeconomic stability and improvement in China have not changed in the second half of this year, and there have been many positive changes in domestic market demand, especially the further adjustment and improvement of macroeconomic regulation policies, which have created favorable conditions for the entire industry to boost confidence and stabilize and improve. "Li Shousheng, President of the Petrochemical Federation, pointed out that there have been some positive changes in the downstream economic operation of the industry. With the recovery of real estate, automobiles, home appliances, textiles and other markets, many bulk petrochemical product prices have started to rise, and the industry's proactive destocking is expected to come to an end, and the industry's prosperity will quickly rebound.
In the second quarter, the central bank continued to support the recovery of demand through policy operations such as lowering reserve requirements and interest rates. In the third quarter, it is expected that more proactive macroeconomic policy measures will be introduced, which will be beneficial for the economy, futures, stock market, and commodities. Confidence in the domestic polyethylene market will be restored, "Yan Min said.
Fu Xiangsheng also said, "In research and discussions, many companies have talked about a pullback in product prices in June, and the operating situation in the second quarter is also improving month by month. However, the improvement is not significant, and the economic data for the first six months of the industry is basically the same. Since late July, Brent oil prices have returned to above $80 per barrel, and the second half of this year will be better than the first half
In addition, Fu Xiangsheng emphasized that transformation and upgrading are important measures to address difficulties. For the petrochemical industry, we should adhere to promoting the transformation and upgrading of traditional industries and not simply exit as a "low-end industry". While promoting high-end, refined, ultra pure, pure, and specialized products, we will also promote the transformation towards digitization, green and low-carbon, bio transformation of raw materials and products, lightweight raw materials, and "oil reduction and increase".
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