In the first half of 2022, under the guidance of policies to stabilize the economy, the petroleum and chemical industry generally showed a stabilizing and rebounding trend. According to Wind statistics, in the first half of the year, there were 47 A-share petroleum and chemical companies, with a total operating income of 4.1 trillion yuan, a year-on-year increase of 33%, and a net profit of 229 billion yuan, a year-on-year increase of 45%. Judging from the performance announced by 47 listed companies, 24 increased year-on-year and 23 declined year-on-year.
In the view of most institutions, the impact of the current geopolitical conflict is still there, international energy prices will still fluctuate at high levels, and the upstream petrochemical industry will maintain high prosperity in the second half of the year, but the downstream terminal links are still worrying.
Refining and chemical products benefited from high oil prices, while chemicals suffered losses
In the first half of the year, benefiting from the sharp rise in crude oil prices, some companies in the A-share petrochemical sector performed well, with net profits from oil and gas exploration, refining, etc. increasing significantly. Due to the significant increase in raw material costs, downstream companies’ profit margins were squeezed and operating rates declined. The gross profit of some chemical products fell year-on-year. The interim reports of listed companies also showed that the refining and chemical end was more profitable and chemical products suffered serious losses.
PetroChina’s interim report shows that in the first half of 2022, the operating income of the refining and chemical segment increased by 27.1% compared with the same period last year, of which the operating income of the refining business increased by 29.1% compared with the same period of the previous year, and the operating income of the chemical business increased by 20.6% compared with the same period of the previous year. The operating profit was 24.061 billion yuan, an increase of 8.5% over the same period of the previous year. The operating profit of the refining business increased by 78.2% over the same period of the previous year, and the operating profit of the chemical business decreased by 8.641 billion yuan compared with the same period of the previous year.
It is worth mentioning that in the 2022 A-share petrochemical sector semi-annual report, the “Petrochemical +” integrated development strategy has become a highlight, with “globalization, high-end, park-based, integrated, large-scale, green” large-scale The competitiveness of chemical companies has been further enhanced. It can be seen from the interim report that many listed companies have given full play to the advantages of integrated operations and have been able to maintain stable profits and cash flow even when industry spreads have narrowed or even become negative.
During the reporting period, as one of the world’s leading integrated leaders in the “refining-chemical-chemical fiber” industrial chain, Hengyi Petrochemical’s unique “one drop of oil, two threads” industrial layout continued to improve. The company continues to extend the petrochemical industry chain, effectively consolidate the core competitiveness of its main business, improve product profitability, and enhance its ability to withstand market risks. It also uses a variety of tools to improve product operation capabilities, explores the complementary advantages of raw material procurement and product sales, and actively leverages the industrial chain The advantages of integration lock in product price differences.
Tongkun Investment, through its wholly-owned subsidiary Tongkun Investment, holds a 20% stake in Zhejiang Petrochemical’s “40 million tons/year refining and chemical integration project”. The overall output has increased steadily, contributing 1.708 billion yuan to the company’s profit during the reporting period. income.
In this regard, Chen Sheng, an analyst at Guomao Futures, explained that due to the impact of the epidemic in the first half of the year, gasoline and diesel consumption was periodically weak, travel and transportation demand declined, terminal demand performed poorly, and the prices of real estate-related chemical products fell sharply. “The profits of the petrochemical industry are captured by the upstream. Refining and chemical integrated companies benefited from the upstream price increases and performed better in profits. However, companies that mainly focus on finished products are subject to weak domestic demand and declining export orders, resulting in serious profit compression.”
“Judging from the overall performance of listed companies, companies with a low degree of integration and incomplete industrial chain support have greater operating pressure in the first half of the year, while companies with a layout in the refining process have stronger ability to resist risks.” Zhou Ao, an analyst at Everbright Futures, said .
“From the development trend, the trend of upstream and downstream supporting is becoming more and more obvious, and the ability to resist risks is getting stronger and stronger. Rongsheng Petrochemical and Hengli Petrochemical took the lead in upstream and downstream supporting, becoming the ‘leader’ in the industry.” Xinfeng Zhang Sixi, assistant to the president of Ming Group, said.
Upstream and downstream profits are likely to continue to diverge in the second half of the year
It can be seen from the interim report that most companies are still relatively optimistic about the trend of oil prices in the second half of the year. PetroChina’s mid-term report shows that the international crude oil market will generally maintain a tight balance, and international crude oil prices will oscillate at a high level. Consumption in the domestic refined oil market is gradually recovering, but as supply continues to increase, market competition will become more intense.
Zhou Ao believes that the upstream link of the petrochemical industry chain can maintain high prosperity in the second half of the year, but the downstream demand link is still relatively weak, and there is little room for expansion of terminal product profits.
However, with the profits of petrochemical products remaining at a low level for a long time, the operating rate of enterprises has declined significantly. The reduction in the supply side will help to achieve the rebalancing of petrochemical products. At the same time, the domestic stabilizing growth policy continues to exert force, and some companies have been in a state of low valuation for a long time. Variety is expected to achieve some degree of profit repair.
Liu Siqi believes that the overseas interest rate hike cycle in the second half of the year may further suppress overseas demand. Squeezed by costs and demand, downstream chemicals will still face the pressure of high inventory and low profits.
“To be specific, the demand for aromatics for oil blending increased in the first half of the year, and aromatic products continued to be stronger than olefin products. In the second half of the year, the supply of olefin products continued to be low and profits improved, and prices recovered slightly. In the fourth quarter, we need to pay attention to the return of supply after price recovery. “Liu Siqi introduced. In the third quarter, the supply of overseas aromatics was tight, the demand for oil adjustment was maintained, and prices were relatively strong. In the fourth quarter, with the decline in gasoline demand in winter, new production capacity was put into production, the supply of aromatic products was released, inventory pressure rebounded, and profits faced the risk of deterioration.
In Chen Sheng’s view, the profit distribution of the petrochemical sector in the second half of the year will beAn adjustment occurs. “Due to the sharp decline in finished product profits in the first half of the year, domestic and foreign production equipment have begun centralized maintenance, industrial profit distribution will shift from the upstream to the mid-downstream, and the profits of downstream products will expand in stages.” Chen Sheng said that aromatic products will benefit from the demand for gasoline and diesel. Better performance, while the weak pattern of olefins will continue to be maintained.
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