Metallurgy / Chemicals / Rubber & Plastics

The A-share 2021 semi-annual report is being disclosed one after another. As of press time, among more than 400 semi-annual reports that have been issued, about 80% of the company's performance is "good news." Among them, the performance of the chemical raw materials and chemical products manufacturing industry is particularly outstanding. Among the 46 companies that have disclosed semi-annual reports, 39 have achieved positive growth in net profits attributable to their parents, and 22 of them have doubled.

Previously, the National Bureau of Statistics released data showing that under the combined effect of factors such as economic improvement, expanding demand, rising prices, and a low base in the same period last year, the profit of the chemical industry in the first half of the year increased by 1.77 times year-on-year.

Product demand is strong and prices are heating up

The semi-annual reports of a number of chemical companies show that the downstream demand is strong, which drives the business situation of the main business to improve. Affected by practical factors such as supply and demand, the price of chemical raw materials required by some enterprises has increased, which has increased the profitability of chemical raw materials and chemical products manufacturing.

Take polyurethane as an example. It is called "the fifth largest plastic" and is mainly used in industries such as light industry, chemicals, electronics, textiles, medical treatment and even aerospace. Cold chain and other businesses are also increasing the demand for polyurethane. Recently popular Hongxing Erke, some of its products also use polyurethane synthetic leather and composite materials.

Profitability of some listed companies in the manufacturing of chemical raw materials and chemical products (data source: company semi-annual report/Wind)

In the second half of 2020, polyurethane has experienced a period of tight supply, and the support brought by the rising demand for terminal consumer goods has led the market to accelerate the rise. Zhuo Chuang Information Polyurethane Price Index (polymerized MDI) shows that in the first half of 2021, the price of polymerized MDI has soared, and it has risen to a higher level after falling back.

As one of the three main businesses of Wanhua Chemical, the company's polyurethane series achieved revenue of 28.419 billion yuan, a year-on-year increase of 111.78%. MDI is an important raw material for the production of polyurethane. At present, the global MDI production capacity is close to 10 million tons. Wanhua Chemical’s MDI production capacity is 2.6 million tons, accounting for nearly 30% of the global market share, and is the world's largest MDI producer.

"The'dual carbon' goal has brought unprecedented opportunities to the polyurethane industry, and the next year will be the fastest growing year for the polyurethane industry." Pan Lumin, president of the global chemical giant Huntsman Polyurethane Asia Pacific, previously told the media Express.

Beginning in August 2021, the listing price of Wanhua Chemical Group Co., Ltd. in the Chinese regional polymer MDI distribution market is 20,600 yuan/ton (up from July price by 1,000 yuan/ton), and the direct market listing price is 20,600 yuan/ton (compared to July price) Increased by 1,000 yuan/ton); the listing price of pure MDI was 23,800 yuan/ton (up by 2,000 yuan/ton from the price in July).

In the first half of 2021, Wanhua Chemical completed the technical renovation and expansion of the Yantai MDI plant from 600,000 tons/year to 1.1 million tons/year, further expanding its global market share. The company stated that product technologies such as MDI have been optimized and upgraded, the response efficiency has been greatly improved, and the energy consumption per unit of product has decreased, and the future competitive advantage is expected to expand.

The industrial chain is gradually widening and still has potential

The reporter found that in the first half of the year, chemical companies are still actively deploying, including expanding existing production capacity, adding advantageous production capacity, and complementing the industrial chain. Some listed companies are expected to continue to maintain a good growth momentum in the second half of the year and 2022.

In terms of industry chain broadening, taking Satellite Petrochemical as an example, the company's rapid growth in the first half of the year benefited from the dual-line development of C3 and C2 products. In the first half of 2021, satellite petrochemical operating income was 10.77 billion yuan, close to 99.97% of the full year of 2020, of which C2 bulk chemicals contributed 14%. The company's layout in the C2 industry chain is filling the domestic gap.

In May 2021, the first phase of the joint production plant project with an annual output of 1.35 million tons of PE, 2.19 million tons of EOE, and 260,000 tons of ACN at the Satellite Petrochemical Lianyungang base was successfully started up, and accumulated experience in the construction and start-up of new projects. The company said that the second phase of the project has entered the installation phase and strives to be completed by the middle of 2022.

Industrial Securities believes that the satellite petrochemical industry chain has a high degree of integration, and it is a leading company in the domestic acrylic and ester industry. It has a layout in the upstream PDH of the C3 industry chain and downstream acrylic, acrylate, hydrogen peroxide and other products. The Lianyungang Petrochemical Olefin Comprehensive Utilization Project marks the official expansion of its products to the C2 industrial chain.

In terms of product application, taking Luxi Chemical Industry as an example, the company has a wide-ranging layout in the new material chemical industry and takes it as the main direction of attack. The company also produces polycarbonate, caprolactam, nylon 6, n-butanol and octanol. Luxi Chemical's revenue from new materials accounted for 68.42% of its total revenue in the first half of the year. Judging from the company's operating conditions in the past five years, revenue from new materials has gradually increased, replacing chemical fertilizers.

Industry insiders believe that the new chemical materials industry should focus on the needs of high-end chemical new materials in industries such as aerospace, electronic information, and new energy, and give priority to products that are urgently needed for industrial safety, have a good research and development foundation, and have greater market potential as the focus of research.

As a high-end chemical fiber, nylon 6 is soft, light, wear-resistant, and has good resilience. It can be used in the textile and clothing market as well as in the fields of automobiles, electronics, railways, and packaging materials. Nylon 6 is a variety that maintains a growth rate among chemical fiber-related varieties. The future demand growth rate is expected to remain at 5%-10%. The current domestic market demand is higher than its output.

According to Soochow Securities' analysis, Luxi Chemical's many projects under construction show its growth potential. Previously, the company announced plans to invest in the construction of the 600,000 tons/year caprolactam·nylon 6 project, the 1.2 million tons/year bisphenol A project, and the 240,000 tons/year ethylene downstream integration project. In the first half of 2021, Luxi Chemical's investment in construction projects reached 3.007 billion yuan.