As the price center of chemical products, the weakening of oil price has a negative impact on most chemical sub industries. But if we look at the downstream end, in the medium term, we can see that part of the demand is expected to be good or stable for the downstream sub industries, such as modified plastics, coatings, additives, etc. The biggest downstream consumption of modified plastics is household appliances industry and automobile industry, and its profitability is sensitive to cost fluctuation. Since the beginning of the year, the prices of main raw materials have continued to fall, and the gross profit rate of modified materials has continued to rise.
The impact of oil price drop on various chemical sub industries is different
As the price center of chemicals, the weakening of oil price has a negative impact on most of the chemical sub industries, and the price of chemicals is short-term or under pressure. Huatai Securities research holds that in the medium term, some of the sub industries with favorable or stable demand expectation, such as modified plastics, coatings, additives, etc.
According to the sorting of public information, the statistics as of September 2019 show that, in general, the performance of each sub industry of basic chemical industry is different year on year. From the perspective of operating revenue, the operating revenue of chlor alkali, potash fertilizer, polyester, paint and paint plates has reached more than 10% growth, but the operating revenue of composite fertilizer plates has decreased by 24.27%; From the perspective of net profit of the parent company, potash and organosilicon increased by 67.05% and 56.54% respectively, while nitrogen fertilizer, plastic products and soda ash decreased by more than 50%.
Among them, the price of plastics (PP, PS, ABS, etc.), synthetic rubber and other products is at a historical low under the background of low oil price and a downward cycle of prosperity. The price drop at the cost end is good for improving the profitability of downstream modified plastics, tires and other industries. On the other hand, as rigid demand products, modified plastics and tires have relatively stable growth demand and maintain a high degree of prosperity.
Modified plastics are the intermediate products in the petrochemical industry chain, which are mainly made of five general plastics PE, PP, PS, ABS and five engineering plastics PC, PA, pet or PBT, PPO, POM. They are flame retardant, impact resistant, high toughness and easy to process. Modified plastics are typical industries benefiting from technological progress and consumption upgrading.
Modified materials belong to cost sensitive sub industry
The largest downstream consumption of modified plastics is home appliance industry and automobile industry. The total consumption of both accounts for more than 50% of the total consumption capacity of modified plastics. According to statistics, the average usage of modified plastics in color TV, air conditioner, refrigerator and washing machine is between 1.5kg-2.5kg.
In fact, the profitability of modified materials is more sensitive to cost fluctuations. Take Jinfa Technology (600143) as an example, modified plastic products are the company's main source of profit. Since the beginning of the year, the prices of its main raw materials, such as polyolefin resin, polystyrene resin, engineering resin, etc., have continued to fall, and the company's gross profit rate has continued to rise.
Compared with foreign enterprises, the advantages of domestic manufacturers lie in low cost, fast market response speed and excellent service; however, the disadvantages lie in low industry concentration, small scale of single enterprise, and the gap with advanced countries in product quality, R & D capability and management level. Therefore, domestic manufacturers will more from the perspective of demand customization, with its flexibility to make up for the competitive disadvantage of multinational companies in the automotive special materials market, penetrate and seize the opponent market.
In addition, the profitability of modified materials is also affected by downstream demand. For example, puliter (002324), the leader of automotive modified plastics, mainly produces modified PP, modified ABS, modified PC / ABS, modified PA and other modified composite materials, which are mainly used in the field of automotive materials. Although the prosperity of the automobile industry has declined, the fall of the upstream chemical raw material price has released the company's product cost pressure, and the gross profit rate has rebounded.
The development budget of oil service industry will increase this year
Different from the downstream modified materials, the performance of the upstream oil service industry in the petrochemical industry is relatively certain this year, and the capital expenditure of the industry depends on the change of "oil price - production cost". Guojin securities research point of view that if the mining cost falls faster, even if the oil price falls, and the profitability of oil service companies is still OK, oil service companies are still willing to increase capital expenditure. In recent years, with the development of technology, the cost of oil and gas exploitation has decreased. At present, the national high-level attaches great importance to ensuring the national energy security, and the impact of oil price fluctuation on China's oil and gas exploration and development and domestic oil service industry is expected to weaken.
Although Saudi Arabia's oil price war has led to a sharp drop in international oil prices, domestic investment in oil and gas development is driven by the national energy security strategy and has little to do with the fluctuation of international oil prices. 2020 is the second year of the seven-year action plan for domestic oil and gas. There is still a gap between domestic crude oil production and the red line of 200 million tons, and natural gas is also far from the target. CNOOC announced a budget of 66.3-74.1 billion yuan for exploration and development expenditures in 2020, an increase of 18% - 21% year on year. It is expected that capital expenditures of PetroChina and Sinopec will grow rapidly.
In addition, in the upstream of the oil industry, three barrels of oil began to increase exploration and production capital expenditure in response to national requirements in the second half of 2018. From the data of oil and gas production in 2019, it has achieved initial results. According to the statistics of YueKai securities, from January to November 2019, the cumulative crude oil output reached 175 million tons, a year-on-year increase of 1%, which is the first time that the crude oil output has turned into a positive growth in recent four years. In the past five years, the consumption of crude oil has maintained a steady growth, with a compound growth rate of 5.4%. There is still a large gap between the growth of crude oil production and the growth of consumption. It can be seen that after more than one year's continuous increase in input of three barrels of oil, the growth rate of output is still unlikely to catch up with the growth rate of consumption, and the dependence of crude oil on foreign countries will still rise. Among the A share listed companies, CNOOC (601808) and CNOOC Engineering (600583)
