Metallurgy / Chemicals / Rubber & Plastics

Huacheng Import and Export Data Observation reported that due to the impact of the epidemic and the international situation, the prices of crude oil, natural gas, coal and other bulk energy materials in the international market rose sharply, and the refined oil market also fluctuated widely. In the context of the three pressures of shrinking domestic economic demand, supply shocks and weakening expectations, the operation of the domestic refined oil market is facing greater challenges.

Recently, the China Petroleum and Chemical Industry Federation held the 2022 National Petroleum and Chemical Industry Economic Situation Analysis Meeting to analyze the situation, current situation and development trends faced by the industry, actively seek new development opportunities in the refined oil market, and promote the healthy development of the refined oil market.

At present, the century-old changes and the epidemic of the century are superimposing and evolving. "Black swan" and "grey rhino" events are emerging one after another, and the downside risk of the global economy is intensifying. Since the beginning of this year, due to the impact of the epidemic and the international situation, the prices of crude oil, natural gas, coal and other bulk energy materials in the international market have risen sharply, which has had a great impact on my country's economic development and industry operation. Domestic economic demand has contracted, supply has been impacted, and expectations have weakened. The pressure has intensified significantly. Domestic refined oil prices have been raised several times in a row, transportation costs have increased significantly, and downstream raw material procurement costs have increased significantly. According to statistics from the China Petroleum and Chemical Industry Federation, the operating costs of enterprises above designated size in the entire industry rose by more than 20% year-on-year in the first five months.

Excessive refining capacity continues to increase refined oil production

Import and export data show that in the first half of this year, my country's crude oil and refined oil production maintained growth. The national crude oil production increased by 4% year-on-year, and the refined oil production increased by 1.7% year-on-year, of which gasoline production increased by 0.2% year-on-year, and diesel output increased by 15.6% year-on-year.

At present, my country's refining capacity is at the highest level in the world. According to import and export data, in 2021, my country will become the world's largest oil refining country for the first time, with a refining capacity of 910 million tons, accounting for 18% of the global refining capacity, surpassing the United States' 907 million tons. However, in the first half of this year, the capacity utilization rate of my country's oil refining units was only about 71%, far below the global average of 90%. Compared with the domestic refined oil market, my country's oil refining capacity is in a state of structural excess, which is an objective fact that cannot be ignored. The data shows that the refining capacity that has been built in my country has not yet fully utilized. At the same time, my country's refined oil exports are gradually reducing export quotas under the background of the "dual carbon" policy.

Since the beginning of this year, the demand for refined oil in the international market has been strong, and the prices of the three major refined oil markets in the United States, Western Europe and Singapore have reached new highs. After the epidemic has eased, Europe and the United States ushered in the peak of travel, and the demand for refined oil products in Asia is also strong. However, due to the transformation and upgrading of refineries and the reduction of supply from major refining countries in the past few years, the supply and demand of the global refined oil market has tightened. The shortage of supply has kept the international price of refined oil high. With the gradual recovery of the economy, the operating rate of overseas refineries is basically at the stage of rebounding to a high level, and the refining units in the United States, India and other countries are running at full capacity.

The lack of effective demand in the domestic market is the main contradiction in the current economic operation. The Central Economic Work Conference held at the end of last year pointed out that my country's economic development is facing triple pressures of shrinking demand, supply shocks, and weakening expectations, and the petroleum and petrochemical industry is also facing the problem of shrinking consumption. According to statistics from the China Petroleum and Chemical Industry Federation, my country's apparent consumption of oil and gas from January to June fell by 1.4% year-on-year, and the apparent consumption of basic chemical raw materials and synthetic materials fell by 0.3% and 6.7% year-on-year respectively; real estate, automobiles, textiles, The downstream growth of the industrial chain of petroleum and chemical industries such as building materials and light industry has slowed down, which has weakened the supporting role of consumer demand in the petroleum and petrochemical industries. At present, developing the international trade market and expanding effective demand are the primary tasks facing the entire industry.

In the long run, under the background of overcapacity in domestic refining, the petroleum and petrochemical industry should raise the market access threshold, strictly control the approval of new refining projects, and adhere to the integrated development of refining and chemical industry and innovation-driven development under the condition that supply and demand are basically balanced. High-end and differentiated development paths can fundamentally improve the overall competitiveness and efficiency of the industry.

The ship fuel market is in short supply, and low-sulfur ship fuel is hot

Since the implementation of the "Sulfur Restriction Order" by the International Maritime Organization in 2020, the global marine fuel market has been in short supply as a whole, and the regional markets have tended to be polarized. On July 29, statistics from China Petroleum Circulation Association showed that Sinopec Fuel Oil Company’s bunkering operation scale in 2021 will expand by 25% over the previous year, ranking first in the world’s top ten bunkering companies in growth rate and becoming the world’s fifth largest bunkering company. , low-sulfur marine fuel is one of its main business products. At present, the company supplies Sinopec's self-produced low-sulfur fuel for ships accounting for 60% of the national low-sulfur fuel output, and the domestic bonded ship bunkering market share continues to increase, ranking first in China.

In recent years, my country's low-sulfur marine fuel production has been the most concerned by the global market. Compared with Singapore, under the guidance of the domestic and foreign dual-cycle economic policy, the domestic low-sulfur marine fuel resources have effectively maintained the stable supply of the market and guaranteed the oil demand of my country's foreign trade ships. The main suppliers of my country's marine fuel oil market are mainly companies such as Sinopec Fuel Oil, China Ship Fuel Oil, China Shipping Fuel Supply, PetroChina Fuel Oil, and Zhongchang Fuel, with a market share of more than 93%.

my country's marine fuel supply market has great growth potential, and the advantages of low-sulfur marine fuel quality are gradually emerging: the viscosity of domestic resources is stable, which is convenient for temperature control when ships are used; the sulfur content control standard is better than the requirements of the International Maritime Organization, which can effectively avoid quality fluctuations. The resulting compliance risks; strong stability and compatibility, which can optimize customer product selection strategies; excellent blending components, no risk of chemical contamination. Shipowners generally report that the low-sulfur bunker fuel produced by Chinese refineries has good stability, safe and reliable performance, and reliable product quality.

The localization of low-sulfur marine fuel resources has a very significant impact on my country's marine fuel supply market: First, it ensures the stability of the global shipping supply chain. The release of China's refinery capacity has provided more supply guarantees for ships sailing around the world during the epidemic, effectively ensuring the stability of the global shipping market. The second is to promote the development of foreign trade. As an export-oriented product, the bonded low-sulfur marine fuel produced by Chinese refineries has effectively contributed to the development of my country's foreign trade. The third is to promote the significant increase in the global influence of my country's ports. The development of low-sulfur fuel for ships has driven the development of the entire domestic industrial chain, promoted the continuous expansion of the scale of ship fuel supply, and actively integrated into the development of coastal free trade zones, accelerating the construction and development of China's port economy. The fourth is to promote the specialization and standardization of ship fuel supply to a new level. In an environment where the market is gradually liberalized, the industry leadership has been strengthened, and the global influence of Chinese companies' marine fuel supply brands has continued to increase.

At present, some domestic refineries have taken low-sulfur bunker fuel as one of the main refining products. On the basis of strict bench and ship tests in the early development process, companies such as Sinopec have incorporated low-sulfur marine fuel into the company's overall quality management system to ensure product quality, which is of great significance to ensuring shipping safety.

The lubricating oil industry urgently needs to move towards high-end and large-scale

Lubricating oil is the "blood" of industrial equipment. Innovative development of industrial lubrication technology is one of the important ways to help industrial enterprises achieve the goal of "dual carbon". In recent years, the replacement of fossil energy such as petroleum by renewable energy is the general trend, and the demand for most refined oil products in the end-use energy industry has further declined, but the rigid demand for lubricants in construction machinery, automobile and other industries still exists. According to import and export data, in recent years, my country has developed into the world's largest lubricating oil market, with an annual output of about 8 million tons. At present, the domestic lubricating oil market includes many international brands as well as gradually developed and mature private enterprises.

What cannot be ignored is that the domestic lubricant industry still has problems such as low localization rate, weak brand awareness and influence. In particular, the internationalization process of private lubricant companies is slow and their innovation capabilities are generally weak. The whole industry urgently needs to change the development mode, from low-price and low-quality to seize the market gradually to high-quality competition.

First of all, optimizing the product structure and eliminating outdated production capacity are the first problems that the market must solve. Secondly, the lubricating oil industry should increase investment in scientific research, effectively enhance the ability of independent innovation, strive to create new kinetic energy for collaborative innovation and coordinated development of the entire industry chain, and promote the efficient transformation of scientific research results. Finally, promote the standardization construction of my country's base oil industry. At present, my country has not promulgated national standards for the lubricating base oil industry. Central SOEs such as PetroChina, Sinopec, and CNOOC implement integrated operations, each formulating lubricant base oil standards and implementing them in branch companies and refineries; Shell and manufacturers closely linked to foreign companies use API (American Petroleum Institute) basis Oil classification standard "API-1509"; other manufacturers formulate standards suitable for their own enterprises according to their own patented technology and production process characteristics. The implementation of standardization can promote the integration of social resources, improve social efficiency, reduce transaction costs, and promote independent innovation and open innovation.