Although a large number of tens of millions of tons of petrochemical enterprises such as Yunnan Petrochemical Company, Hengli Petrochemical Company and Zhejiang Petrochemical Company have been put into operation one after another, the market competition of petrochemical products may become white-hot. However, due to the accelerated growth of energy consumption, better import and export than expected, and the continuous optimization and upgrading of economic structure, the petrochemical industry has shown a trend of rapid growth in efficiency and a rebound in investment. Although the future of petrochemical industry is full of dangers, the investment in chemical raw materials and chemicals industry is turning from negative to positive by 6.0% in 2018, benefiting from the rebound of main profits and the strength of profit focus terminal. A few days ago, Fu Xiangsheng, vice president of China Petroleum and Chemical Industry Federation, introduced at the economic operation conference of the petrochemical industry in 2019 that the petrochemical industry is getting better and has a promising future.
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Zhu Fang, Director of Information and Market Department of the Federation of Petrochemical Industry, pointed out that in recent years, China’s petroleum and chemical market fluctuated greatly and differentiated greatly, but overall, it was still better, prices kept rising, supply and demand growth structure improved, industry efficiency innovated high. In 2018, market demand increased steadily, main profits rebounded, profit focus terminal power and Industry investment rebounded. However, the current economic operation of the industry is still facing problems and challenges such as complex external environment, severe market shocks, weak demand growth and insufficient investment motivation. The report points out that in 2019, the world economy is still facing great uncertainty, downward pressure is high, and growth may slow down. China’s petroleum and chemical markets are facing greater challenges. Especially in the first half of this year, the contradiction between supply and demand in some markets has intensified, and prices may be low and volatile. It is estimated that the total price level of oil and gas exploitation industry will decrease by about 10% and that of chemical industry by about 3%.
There are changes in stability and worries about “double growth” in change.
In 2018, the petrochemical industry has achieved a “double growth” of its main revenue and total profits, and the overall situation continues to be stable and positive. However, there are still some worries about the healthy and sustainable development of the whole industry in the future through in-depth and detailed analysis.
In addition to the increasing downward pressure, the market competition is becoming increasingly fierce. Influenced by the continuous rise in petrochemical product prices in the past two years (8% increase in oil and gas prices in 2017, 3.5% increase in chemical products, 26.3% increase in oil and gas in 2018, and 6.8% increase in chemical products over the same period last year), petrochemical production capacity has been continuously increasing, such as the integrated refining unit. After the launch of PetroChina Yunnan Petrochemical Corporation (13 million tons/year) and CNOOC Huizhou Phase II (10 million tons/year), Dalian Hengli 1 Phase I (20 million tons/year) will be put into production on December 15, 2018, and Phase I (20 million tons/year) of Zhejiang Petrochemical Company will be put into operation in the first half of this year. These new integrated refining and petrochemical plants have been put into operation one after another, and their products with high external dependence on olefins and aromatics can partly meet the domestic market; however, the domestic product oil market has become saturated, especially the annual apparent consumption of diesel oil has dropped by another 3.3%. Another factor that will become more intense in the domestic market competition is that the crude oil refining industry has achieved a target of 200 million tons in 2019, and the product mix of local refining units has been achieved. The structure is mainly refined oil. There are also some impulses to expand the production of traditional basic chemicals, and some new materials such as PC are under construction and planned to be built on an amazing scale.
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Overall, safety in production, strict environmental protection, trade frictions, crude oil prices, green development, supply reform and other external factors highlight the shortcomings of the industry, shortage of energy resources, low-end homogeneity of products, insufficient investment in environmental protection, and adjustment of production capacity structure, all become concerns affecting the development of the industry. It is worth noting that the chemical industry sector, which has been regarded as the direction of future transformation of the industry, is more worried. The price of chemical products fluctuates greatly. When the price of chemical products went downward in November last year, it became more evident. With the decrease of the main business income of the chemical sector, the number of regulated enterprises and their benefits changed more. The number of regulated enterprises decreased by 1381. The total profit decreased by 104.4 billion yuan compared with the previous year. The growth rate of profits decreased from 40.2% in the previous year to 16.3%, and the proportion of total profits in the whole industry decreased by 71.5% from the previous year. To 60%. After the fourth quarter of last year, investment in chemical raw materials and chemicals manufacturing industry resumed growth trend, but in 2018, the annual growth rate was only 6.0%, still below the average growth rate of 6.5% of the national industrial investment.
Although the petrochemical industry is also facing many uncertainties, such as Sino-US economic and trade friction, downward pressure of global economy, fluctuation of international crude oil prices, etc., Zhejiang Petrochemical Company is still in the second phase and planning three phases of projects. First-class multinational companies such as Basf and ExxonMobil have increased their investment in China, especially these companies have taken part in the chemical industry in depth in the face of the adverse situation of the large southern projects with sole technological ownership. Business, the intense competition of chemical products market in the future can be seen.
Pillar role of petrochemical industry highlights the role of key enterprises as stabilizer ballast
Petrochemical industry, as the pillar industry of national economy, not only plays an important role in high-yield and high-yield agriculture, but also provides an important guarantee for high-end manufacturing and strategic emerging industries such as automobile, high-speed railway, information energy, aerospace, defense and military industry. It also makes an important contribution to the steady growth of national economy. In 2018, the proportion of the total industrial economy has been raised again, and the main business income was from the previous year. 11.8% increased to 12.1%, and the total profit increased to 12.7% from 11.3% in the previous year. The status and importance of the petrochemical industry are more prominent. At the economic operation analysis meeting of the six major enterprise groups held at the end of last year, six major groups, such as PetroChina, Sinopec, CNOOC and Sinochem, had good production, marketing and economic operation of their main products in 2018. Crude oil and natural gas production accounted for almost 100%, crude oil processing volume accounted for about 80%, main business income accounted for about 60% of the whole industry, and total profit accounted for about 40% of the whole industry. In recent years, they have been large-scale. By building world-class enterprises with global competitiveness and pushing forward the structural reform of supply side, the leading industries of backbone enterprise groups have become more prominent and their core competitiveness has been strengthened. The role of stabilizer and ballast stone in the development of the industry has become more and more obvious. A number of innovative enterprises such as Yantai Wanhua, Jin Zhengda, Huafeng and Fuhua have strong industry leading role and leading products. The global competitiveness is becoming stronger and stronger; Rongsheng, Hengli, Shenghong and other enterprises with strong market competitiveness are marching into the petrochemical field with brand-new mechanism and rich experience accumulated through years of market struggle, and will make important contributions to the scale effect of China’s petrochemical industry, the extension of industrial chain and the promotion of overall competitiveness. Especially after the recent private economy symposium, the policy effects of tax reduction and fee reduction will appear this year. The vitality and development potential of private economy will be released centrally, which will inject new vitality into the high-quality development of petrochemical industry.
The optimization and upgrading of petrochemical industry structure and the new technology have great potential to stir up the market
The structural contradiction of “excess capacity at low end and insufficient supply at high end” in the petrochemical industry has not been fundamentally reversed. New chemical materials such as high-end polyolefins, special resins, special engineering plastics, high-end membrane materials, special chemicals such as functional materials, medical chemical materials, high-end electronic chemicals and some special chemicals such as catalysts and special additives (additives) used in the petrochemical process have not yet been fundamentally reversed. The domestic market has been in a state of insufficient supply for a long time, and some even rely heavily on imports. These are the realistic market demand for the transformation and upgrading of the petrochemical industry and structural optimization, and also the opportunities for the future high-quality development of the petrochemical industry.
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The Central Committee of the Party and the State Council attach great importance to the high-quality development of the petrochemical industry. General Secretary Xi Jinping has inspected Qinghai Salt Lake, Ningxia Coal-to-Oil, Daqing Petrochemical, Hubei Xingfa, Yantai Wanhua and Liaoyang Petrochemical in recent years. Premier Li Keqiang emphasized in the State Council executive meeting that the petrochemical industry is an important pillar industry of the national economy, aiming at the current lagging development of high-end petrochemical industry. Some products rely too much on imports and other prominent problems. We should strengthen overall planning, scientific demonstration and rational layout, promote the transformation and upgrading of the petrochemical industry, and enhance domestic security capacity. Basf, ExxonMobil and other multinational companies continue to increase their investment in China, which proves the importance of Sinopec market and promising future development opportunities.
Under the background of tens of millions of tons of large-scale projects being put into production intensively and the transportation field seeking to replace oil, how to solve the problem of excess oil production capacity? Fu Xiangsheng told reporters that Exxon Mobil’s exploration of direct olefin production technology from crude oil without gasoline and diesel oil has been established in Southeast Asia, although on a small scale, but may soon be transferred to China’s solely-owned Guangdong project. From this point of view, in the future, innovation and breakthroughs driven by the impact of some key factors from inside and outside may lead to a change in the world petrochemical industry. Especially under the guidance of some subversive new technologies, a technological change in the field of petrochemical process may be coming that leaps over refining to chemical industry. At that time, the Chinese market will dominate half of the global petrochemical market.
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