(Report producer/author: Zhongtai Securities, Xie Nan)
Review 2021: Weak demand and supply limit, sector prosperity rise .1 The epidemic delays economic recovery, and weak demand leads crude oil to fluctuate
The global epidemic repeatedly drags down the pace of world economic recovery. Since late June, the global epidemic has been repeated due to the Delta mutant virus, and by mid-August, the daily number of new cases (7-day moving average) exceeded 600,000. Unlike the previous round of new cases, which mainly came from developing economies such as India, , Brazil, , this round of epidemic mainly broke out in developed economies such as Europe, America, Japan and South Korea. The highest daily new cases (7-day moving average) in the United States and the United Kingdom reached 160,000 and 40,000 respectively. As November approaches, the spread of new Omicron strains once again hinders the recovery process of the world economy. IMF forecasts the global GDP growth rate in 2021 by 5.9%, down 0.1pct from the July forecast. The IMF said that due to the worsening global epidemic, factors such as disturbances on the supply side of developed economies and poor shipping have disturbed the economic recovery, and the Delta virus is spreading rapidly, making it more difficult for the authorities to make policy choices, and the room for maneuver is limited, so the momentum of economic recovery has weakened again.
2021 global PMI index overall showed an inverse "V" trend. According to PMI JPMorgan Chase Global Comprehensive PMI, the global manufacturing and service industry PMI index fell slowly in the second half of the year after reaching highs of 56% and 59.6% respectively in May. In December, the global manufacturing PMI index fell to 58.0%, the service industry PMI index fell to 53.8% in December, and slightly rebounded to 55.6% in November. In terms of manufacturing, due to global energy shortage, commodity surge, global supply chain delays, and the sharp rebound in the epidemic has led to insufficient production capacity and labor shortage, the growth rate of the US manufacturing PMI index has slowed down; Japan's manufacturing PMI index has been fluctuating near the boom and bust line; the eurozone manufacturing PMI index continues to decline, falling from 50.9% in June to 50.1% in December. Among them, due to Germany's strong dependence on the automobile manufacturing industry, the manufacturing PMI index fell sharply, falling from a high of 63.4% in June to 58.0% in December. In terms of the service industry, as the epidemic worsened in the third quarter, residents' consumption willingness in various countries was sluggish, and global market demand recovery was hindered. The US service industry PMI index fell significantly, from 70.4% in May to 54.9% in September, and then recovered to 57.5% in December. After the eurozone service industry PMI index experienced a significant growth in the first half of the year, the growth rate in the second half of the year slowed significantly.
.2 The dual control of energy consumption is strengthened, and the supply limit supports high price
The global energy supply is tightening overall. Global coal supply is concentrated in the Asia-Pacific region, among which my country's coal production accounts for more than 50% of the global proportion. Under the "double limit" policy, domestic coal production capacity has declined since Q2; while major coal exporters are facing the dilemma of coal mine resource depletion and production shrinkage. In 2020, the growth rate of domestic and international production in Indonesia , Russia and other countries was significantly lower than in 2019. South Africa has no room for production capacity growth for a long time, and coal supply lacks elasticity; the tightening pattern of domestic and foreign coal supply has prompted global coal prices to remain high.
energy consumption dual control supports coal chemical industry . The "Barometer of the completion of energy consumption dual control targets in various regions in the first half of 2021" released by the National Development and Reform Commission in August showed that 7 provinces had the energy consumption dual control targets in the first half of this year, and all the energy consumption dual control targets were red first-level warnings, and at least one of 19 provinces was an orange warning. Due to the significant expansion of production in the first half of the year, energy consumption in some regions exceeded the standard, and many provinces introduced power and production restrictions. Affected by this, the supply of high-energy consumption industries has been rapidly compressed, and the prices of upstream products continue to rise. Under the constraints of "dual carbon", coal prices have strong support and support the prices of coal chemical products to maintain a high level.
The current chemical price and price difference level are still at the middle and high levels in history. Since Q3 2020, the domestic epidemic has basically been effectively controlled, overseas epidemics have repeated, coupled with the emergence of force majeure factors in overseas devices, industry supply and demand contradictions have emerged, and the rise in energy prices such as international natural gas has further raised the prices of chemical products; entering Q3 2021, under the industry's power and production restrictions, the peak season of demand has arrived, and the industry's cost side has quickly transmitted chemical products. After the "Golden September and Silver October", the margin of power and production restrictions has weakened, demand has cooled down, and product prices have fallen, but overall it is at a historical medium and high level.
.3 The profits of chemical companies have improved, and the overall prosperity of the sector has been upward
In 2021, affected by carbon neutrality and the upward global energy prices, the upward price of chemicals has led to a significant increase in industry revenue and net profit year-on-year. SW Chemical Index (excluding Sinopec ) achieved operating income of 4139.8 billion yuan in the first three quarters of 2021, a year-on-year increase of 38.4%; and achieved a total net profit of 551.7 billion yuan, a year-on-year increase of 147.2%. The growth rate between quarters has slowed down. The net profit of Q1-Q3 increased by 233%, 159% and 124% year-on-year respectively, while the net profit of Q2 and Q3 increased by 139% and 49% month-on-month, respectively, and the growth rate on the previous month declined. The chemical sector has the highest growth rate. From the beginning of the year to the present (2021/1/1-2021/12/29), the Shenwan Chemical Index rose by 33.09%, the Shanghai and Shenzhen 300 fell by -7.29%, and the chemical sector led the market 0.38%.
Bulk to the right: Traditional demand provides flexibility, new demand open space .1 Low inventory and freight downward, we are optimistic about the upstream weaving industry chain
The overall prosperity of the weaving industry in 2021 has improved
grey fabric recovery is lower than expected. Although the overall COVID-19 epidemic has entered a normal recovery period this year, terminal demand has recovered less than expected, and the transaction volume of Textile City cloth has improved better than last year, but it is still lower than the level in 2019. In the first three quarters, the transaction volume of the Textile City was far lower than the same period in 2019, and the transaction volume did not recover until October. Overall, the total transaction volume of fabric in Light Textile City this year was about 2.94 billion meters, an increase of 20% compared with the same period last year. It still shrank by 12.8% compared with the same period before the epidemic in 2019.
export sector improved. From the perspective of clothing exports, foreign demand shrank significantly in 2021, but under the will of the epidemic in India and other places, some demand has shifted to China. According to CCFEI data, the growth rate of my country's clothing and clothing accessories exports from January to November 2021 was 24.9%. However, the demand for epidemic prevention supplies such as masks and protective clothing has cooled down, and the export volume of textiles has shrunk, with an annual growth rate of -7.6%. Overall, the total export volume of textiles and clothing from January to November 2021 was US$285.28 billion, a year-on-year increase of 7.6%.
's apparent consumption increased by 9.2% year-on-year, leading the GDP growth rate. Although clothing companies have been affected by the 2020 epidemic, such as the bankruptcy liquidation of Zhenweis, brands such as Esprit, Old Navy, and Earth Music&Ecology have withdrawn from the Chinese market, many brands' physical stores have also shrunk significantly, and the business environment of the clothing industry has entered a freezing point. Against this background, most of them have developed to online e-commerce and established a new marketing structure, and most sales have rebounded significantly in 2021. From January to October 2021, the retail sales of enterprises above the limit were 1086.13 billion yuan, with a cumulative growth rate of 17.4%. It is also higher than the same period in 2019 before the epidemic.
polyester filaments: Price fluctuates and rises, and the industry pattern continues to improve
grey fabric is expected to enter the replenishment cycle. The total transaction volume of fabric in the Light Textile City this year is about 2.94 billion meters, which is still reduced by 12.8% compared with the same period in 2019 before the epidemic. The current industry inventory is only 30 days, which is at a historical low, and grey cloth is expected to enter the restocking cycle.
sea freight inflection point has emerged, and exports are expected to be restored. Due to the influence of domestic dual energy consumption control policies, a large number of enterprises have begun to limit power and production, resulting in a decline in demand for export containers. At the same time, coupled with the arrival of the off-season, the shipping prices of some routes have begun to decline. As of December 24, 2021, the China export container freight index was 3300.19, with a year-on-year growth rate of 109.24%, and the growth rate continued to slow down. Filters are expected to benefit as chemical products with high export proportion and low single-box cargo value.
industry chain profits are transmitted to filaments, and the filaments industry pattern continues to improve. PX and PTA upstream of the industrial chain are still in the stage of capacity release, and production capacity continues to be overcapacity. We expect fierce competition in the upstream link and profits are expected to be transmitted to the filament link with more differentiated and consumer product attributes downstream. The capacity concentration of the filament industry continues to increase, and the industry CR6 increased to 57% in 2020. According to the currently disclosed capacity plan, it is expected to increase to 68% in the long term. The industry oligopoly pattern has intensified, and the negotiating power of leading enterprises will continue to strengthen. (Report source: Future Think Tank)
.2 Supply demand is resonating, and we are optimistic that the agrochemical industry will continue to maintain the prosperity of
demand will increase.The continued spread of the epidemic has impacted the global food supply chain and industrial chain, and grain prices have risen rapidly, reaching a high in the past decade. The latest report jointly released by the Food and Agriculture Organization of the United Nations, World Food Program and other international organizations shows that in 2020, a total of 720 to 811 million people worldwide suffered from hunger. Taking into account the resurgence of the epidemic and cost pressure, grain prices may continue to operate at high levels; after the rise in grain prices, farmers will be stimulated to expand their planting area the following year, increase investment in pesticides and fertilizers, thereby increasing the demand for agricultural products.
supply is gradually optimized. Although the production of pesticides and fertilizers is accompanied by high energy consumption and high pollution, we expect that policies will regulate the necessary materials to ensure grain production in a gradual process. Fertilizers, under the "dual control of energy consumption" and "carbon neutrality" policies, backward production capacity higher than the industry's energy consumption level will be gradually eliminated, and leading enterprises are expected to benefit fully; pesticides have a large number of categories, a single product is relatively concentrated, and the overall competitive landscape is scattered; under the policies of environmental protection and " carbon neutrality ", high-toxic pesticides continue to be eliminated, and low-end production capacity continues to be cleared.
Pesticides: Prices run at a high level, and the prosperity is expected to continue
Prices show a downward trend, and the average price in 2022 is expected to be higher than the average in 2021. In August 2021, due to the dual energy consumption control restrictions on supply and cost support, pesticide prices continued to rise and hit a new high in the past five years; with the orderly energy consumption control policies and the ease of supply pressure, pesticide prices fell slightly at a high level. Looking ahead to 2022, considering supply constraints, cost pressure and increased demand, we expect pesticide prices to be generally higher than in 2021.
glyphosate enters the high profit stage. On the supply side, after years of reshuffle, the industry concentration has been highly concentrated (according to Zhuochuang , CR5 is 75%). Judging from the operating rate, as of December 23, 2021, the operating rate was 65.95%, approaching the high point. The Winter Olympics is approaching, and supply may shrink. On the demand side, due to the high grain prices and the growth of genetically modified planting area, glyphosate has strong demand. On the inventory side, glyphosate social inventory is at a low level. Therefore, we judge that the price of grass glyphosate is expected to run at a high level; and with the price of raw materials such as yellow phosphorus falling, the price difference continues to widen, and the industry enters a high profit stage.
.3 The demand for new energy is developing rapidly, opening up the second growth curve of chemical products
Electric vehicle sales are growing rapidly, spontaneous demand is gradually forming, and market space is constantly opening up. According to the "New Energy Vehicle Industry Development Plan (2021-2035)" by General Office of the State Council , by 2025, the sales volume of new energy vehicles will reach about 20% of the total sales volume of new automobiles. With the improvement of user experience brought about by the technological advancement of new energy vehicles and the cost-effectiveness brought about by the decline in costs, the spontaneous consumption demand for new energy vehicles has gradually formed after the subsidies for new energy vehicles declined. According to Canalys, electric vehicle sales are expected to reach one-third of total sales by 2025, and the Chinese market will usher in a period of strong growth in electric vehicles. The photovoltaic industry is developing rapidly, and the installed capacity is expected to continue to exceed expectations. According to McKinsey Global Research Institute, China has gradually occupied the leading position in clean energy technology in the world, and the photovoltaic industry is in an absolute leading position. my country's photovoltaic industry has a full industrial chain system from upstream high-purity crystalline silicon production, midstream high-efficiency solar cell production, and terminal photovoltaic power station construction and operation. According to the forecast of China Business Industry Research Institute, the cumulative installed capacity in 2025 is expected to reach 581GW, and the average compound growth rate from 2021 to 2025 is expected to reach 18.9%.
supply and demand tightening pushes up industrial silicon prices hit a new high in recent years in the second half of 2021. The main industrial silicon production areas are in Xinjiang, Yunnan and Sichuan. In August 2021, the National Development and Reform Commission issued the "Barometer of the completion of dual energy consumption targets in various regions in the first half of 2021", listing Xinjiang and Yunnan as first-level warning provinces for energy consumption reduction; in September 2021, the National Development and Reform Commission of Yunnan Province issued a document requiring the average monthly output of industrial silicon enterprises from September to December to December shall not be higher than 10% of the output in August (that is, 90% of the output is reduced).The downstream silicone and polysilicon are on the rise. At the same time, the overseas economic recovery and the shrinking supply of industrial silicon have led to an increase in overseas orders, and the price of industrial silicon has risen rapidly under the tight supply and demand pattern. According to Wind, the price of industrial silicon 441 (Guizhou, Fujian, Yunnan) reached its annual highest point of 61,750 yuan/ton in September 2021, an increase of about 324% compared with the beginning of the year. The new production capacity of polycrystalline silicon and organic silicon in 2022 is considerable, which is expected to drive the sustained development of the industrial silicon market. Industrial silicon is mainly used in polysilicon, silicone and aluminum alloys. In 2021, the consumption of the three companies accounted for about 27.8%, 40.9% and 28.3% respectively. In 2022, downstream polysilicon and silicone will increase production expansion. According to Baichuan Yingfu, the annual plan will be about 200,000 tons and 500,000 tons respectively. The pressure on industrial silicon production restrictions remains, while downstream production expansion is imminent. We are optimistic that the prosperity will continue in 2022.
Growth upward: New materials are developing leapfrog, and domestic substitution is accelerating .1 Food additives: long slopes and thick snow, sucralose prosperity continues
health awareness is improved and superimposed cost advantages, "sugar-free" beverage track long slopes and thick snow. From the consumer side, with the increasing number of diabetes people and the increase in consumers' health awareness, more and more consumers tend to choose low-sugar and sugar-free products. From the cost side, artificial sweeteners have a lower price-to-sweet ratio and have cost advantages compared to natural sweeteners. Zhiyan Consulting Report shows that the sugar-free beverage market grew from 1.66 billion yuan in 2014 to 11.78 billion yuan in 2020, with an annual growth rate of 38.69%, far exceeding the total growth rate of the beverage industry. Driven by the dual wheels of improving health awareness and cost advantages, the sugar generation industry ushers in broad development space.
The high prosperity of sucralose is expected to continue. Since 2011, the price of sucralose has dropped sharply. The outbreak of the epidemic has accelerated the clearance of backward production capacity in the industry. Currently, only a few companies such as Jinhe Industrial and Kangbao Biochemical can produce stably. According to the latest documents of the General Office of the Ministry of Ecology and Environment, sucralose is a "two highs" industry. With the dual control of energy consumption and the advancement of environmental protection policies, the orderly supply of the industry in the future will be a high probability event; benefiting from the rapid penetration of sugar-free beverages and the iteration of sweetener product structure, the demand for high-quality sweetener sucralose has a good growth rate. According to the data of Customs and Baichuan Information , the export volume of sucralose in November was 1065.28 tons, a year-on-year increase of 52.87%, and a month-on-month increase of 19.99%; the total export volume of sucralose from January to November was 9489.51 tons, a year-on-year increase of 30.32%. According to Zhuochuang Information , as of December 25, 2021, the price of raw materials was high, with the DMF price being 16,487 yuan/ton, and the price of sulfoxide chloride being 4,350 yuan/ton. Therefore, the sucralose economy is expected to continue in the context of limited supply and positive demand.
.2 PI film: Domestic substitution accelerates, with a broad market space
Super engineering polymer materials have excellent PI performance. The PI film is made by PAA solution, which is made by imidizing. The PI film is amber color, with excellent mechanical properties, dielectric properties, , chemical stability, and high resistance to radiation, corrosion resistance, high and low temperature resistance. It is one of the best super engineering polymer materials at present. It is known as the "gold film". Its application fields include flexible circuit board , consumer electronics, high-speed rail transit, wind power generation , electrical insulation, 5G communication, flexible display, aerospace , etc. The high-performance PI film industry is highly concentrated, and its production capacity is concentrated in international giants. The global research and development and manufacturing technology of high-performance PI films is mainly mastered by American, Japanese and Korean companies. Manufacturers such as Ube Hitomoto, Japan's Joker Chemistry and South Korea's SKPI account for more than 80% of the global market share. The overall technical level of the domestic industry is far from that of foreign giants and is generally small in scale, and their market share in the field of high-performance PI films is relatively low.
PI film is widely used downstream. According to the application category, it is divided into electrical PI films, electronic PI films, thermal control PI films, aerospace PI films, and CPI films for flexible displays.Electrical PI films are mainly used in the field of electrical insulation, electronic PI films are mainly used in the field of electronic substrates, thermal control PI films are mainly used in the field of electrical heat pipe control systems, aerospace PI films are used in the thermal control and protective materials of space aircraft, and flexible display CPI films are mainly used as OLED screen covers, touch sensor panels, etc. Corona resistant PI film is a key material for insulating systems of high-power electric locomotives. Global railways have entered a new stage of development. (Report source: Future Think Tank)
.3 Synthetic Biology: Carbon Neutralization The Next Blue Ocean
Bio-based Materials will lead the trillion-dollar market. In the increasingly competitive energy market, using biological waste as raw materials to replace traditional fossil fuels to produce bulk or fine chemicals not only has an advantage in economic costs, but also responds to the global call for building an environmentally friendly society . The Organization for Global Economic Cooperation and Development (OECD) predicts that by 2030, about 35% of chemicals and other industrial products worldwide will come from biomanufacturing, and bio-based materials usher in historic development opportunities.
Bio-based materials company financing has entered a accelerated stage. According to China Bioengineering Magazine , 116 financing events of 85 biomaterials /chemical companies that were raised from 2019 to the first half of 2021, the accumulated financing amount was approximately US$6.613 billion, of which US$2.674 billion was raised in 2020, a decrease of 18.08% from US$3.264 billion in 2019. The financing in this field obviously does not match its development potential. Under the guidance of governments such as Europe and the United States, the global capital market is increasingly favoring the biomanufacturing field, and the transaction amounts of venture capital, listing financing, mergers and acquisitions and restructuring hit a new high this year. In recent years, internationally renowned companies including , Microsoft , Japan SoftBank, etc. have continued to invest in overseas pioneering biomanufacturing companies. 2021 became a record year for the venture capital gains of synthetic biology. According to Synbiobeta, the startups in Synbiobeta attracted a total of US$6.1 billion in investment in Q3 2021, +33% month-on-month. A total of US$15 billion has been absorbed so far this year, and the total amount for the whole year is expected to exceed the total cumulative amount in the past decade. Against the background of carbon neutrality, my country is expected to accelerate breakthroughs in synthetic biology. From a regional perspective, the financing amount of biomaterials/chemicals in the United States, China and European countries accounted for 32.18%, 25.36% and 20.81% respectively, and the financing situation of global bio-based industry development is relatively balanced.
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(This article is for reference only and does not represent any of our investment advice. For information about use, please refer to the original report. )
selected report source: [Future Think Tank]. Future Think Tank - Official Website
