Policy oil prices two bottoms petrochemical industry is expected to "overturn" in the second half

At the end of August, the A-share listed company's mid-year report disclosed that it had entered the “closed” stage. The two giants of the petrochemical industry invariably chose to hand over the first-half performance report to investors in the last week. On Monday, Sinopec’s financial report was the first to be released. Under the background of the continuous high international oil prices in the first half of the year, the huge losses of the two major petrochemical giants' refining businesses are well known. During this period, the news that the company’s profits were only worth 1 billion yuan in January 2008, the market is almost unanimously bearish. The agency predicts that Sinopec’s performance will be below 0.1 yuan in the first half of the year, but this late “answer” slightly boosted the market’s confidence.
“Operating income from January to June 2008 was 734.8 billion yuan, up 35.6% year-on-year, and net profit attributable to parent company was 9.339 billion yuan, a year-on-year decrease of 73%. Earnings per share was 0.11 yuan, slightly higher than 0.08 yuan. Expected.” The well-known securities firm Shenyin Wanguo said in his report on Sinopec on August 25th. On the same day, Sinopec closed at a red-hot closing price of 10.13 yuan, a slight increase of 1.4%.
“In the context of the reform of the energy price reform and the expected fluctuations in the price of crude oil, the operating conditions of the petrochemical industry companies will improve in the second half of the year. The worst time has passed,” said one brokerage analyst in his report. .
The business climate Yangyao Petrochemical Shuangxiong was the worst time in the petrochemical industry in the first half of the year. International crude oil prices soared almost equal to US$150/barrel. The country was subject to high CPI inflation and structural inflation, and the two major petrochemical giants assumed “policy Loss of responsibility. Wang Weigang, senior petrochemical industry analyst at Northeast Securities, estimates that the mid-2007 petrochemical industry performance growth is in the middle of the A-share market sector, with the overall growth rate between 50% and 60%. In the first half of 2008, the overall industry performance fell sharply. “According to the existing mid-year report data of China Petroleum and China Shipping Oil Services, after the refined oil price was regulated, there was a large-scale loss in the refining business of the industry. Now, in all industries of the A-shares, the performance growth of the petrochemical industry should be ranked in the bottom. The top 5, I estimate it is only 5-6 percentage points year-on-year growth."
According to Sinopec's medium-term report, the company processed 81.64 million tons of crude oil in the first half of 2008, an increase of 7.8% over the same period of last year, and the average cost of processing crude oil was 5,171 yuan/ton, an increase of 54.7% year-on-year. However, due to the continued inversion of domestic refined oil prices in the first half of the year, Although the refined oil price was raised by 1,500 yuan/ton in June, the company's gross profit for refining was still a loss of 752 yuan/ton, resulting in a loss of 73.9 billion yuan in operating profit from the refining business in the first half of 2008.
A market researcher who declined to be named said that the combined revenue of PetroChina and Sinopec’s two giants can account for 8% to 10% of China’s total GDP, which is an absolute monopoly in the industry. Other petrochemical companies are mainly For these two leading services, production or sales of some corner products. Therefore, the degree of prosperity of the petrochemical industry is largely a reflection of the operating status of petrochemical companies.
The above-mentioned persons who have compared the listed company's data of the listed mid-year report indicate that although there is only a large-scale loss in the entire industry in the oil refining business, the exploration sector has been levied in the first half of the year due to the special income tax. The growth rate of operating profit was limited; the operating profit of the sales segment decreased slightly due to the increase in mining; the chemical segment was also affected by the increase in raw materials, and operating profit decreased year-on-year. "It can be seen from the performance of Sinopec that the first half of the year the industry faced great pressure under high oil prices."
In the second half of the year, we will usher in an “overturned” opportunity. Despite the unpredictable performance in the first half of the year and the huge operating pressure, petrochemical companies will have an opportunity to “turnaround” in the second half of the year. In the past, international speculators have been using speculative demand from emerging markets, geopolitics, and even climate to push up national oil prices. However, as global economic growth slows down, oil demand declines, coupled with the appreciation of the US dollar and other negative factors Together, it finally forced the international oil price to break down and entered the range of $110/bbl to $130/bbl.
Xing Lei Securities industry analyst Fang Lei believes that, according to the current trend of crude oil price fluctuations, the average price of oil in the international market is expected to be lower than the average price in the first half of the second half, and the average price in the first half of the year is about 112 US dollars/barrel. Crude oil average price is about 105 US dollars / barrel.
Under the background of the drop in oil prices, the operating pressure of petrochemical operators may be reduced in the second half of the year. CITIC Securities released a research report saying that the profitability of the two giant petrochemical giants is still surviving. However, under the pressure of high oil prices, as a public welfare company, they have assumed more social responsibilities and paid for rising CPI.
Orient Securities also believes that, in the context of domestic product oil price controls, the recent fall in crude oil prices has been very favorable for the normal return of petrochemical industry companies' performance, which is good for the company. Judging from Sinopec’s operating conditions, the operating performance was the best in the second half of 2006 and the first half of 2007. Compared with the trend of crude oil prices, the international oil price was falling during this period. It is also worth noting that although 2007 was 1 The price of refined oil products in China had a rare downward adjustment, but Sinopec’s performance still performed well.
Therefore, some analysts suggested that in the second half of the year, CPI is expected to fall, and two favorable downward stimuli for international oil prices, the domestic and foreign refined oil price gap has narrowed, and the government can use this pattern to gradually market prices of refined oil, not only domestically but also domestically. It is beneficial to control inflation and it is also beneficial to improving energy efficiency.
However, with this or another problem, the decline in crude oil prices and shrinking refining industry losses, will the government's subsidy to the company still be maintained? If it reduces subsidies, will it once again increase the price of refined oil products?
“This is actually the weight of the two “Porters” who are considering the industry.” The aforementioned marketers who did not wish to be named stated that these two “Porters” represent two major uncertainties that affect the industry’s prosperity. - International oil price and domestic refined oil price policy. "If the oil price is expected to continue to fluctuate or fall within a market-bearable range, the momentum of the government's formulation of favorable policies may weaken."
According to sources, the ratio of the two giants of state financial subsidies to import crude oil will be adjusted from the current 75% to 40%. At the press briefing held in Hong Kong on the 26th of this month, Dai Houliang, the financial controller of China Petrochemical, confirmed on the side that the company’s oil import VAT refund subsidy is still enjoying, while the import crude oil loss subsidy will continue, but the extent of enjoyment is positive. It will be lower than the second quarter.
According to Zhongyuan Securities, management's reduction of financial subsidies and increase of refined oil prices should be considered in an integrated manner. If the subsidies are too tight for the ambassadors, the possibility of raising the ex-factory price of refined oil once again will increase.
However, the reporter learned that in order to improve the operating conditions in the second half of the year, petrochemical companies have begun to take precautions. Su Shulin, chairman of Sinopec, publicly stated that the company's financial difficulties have affected the implementation of its main business, so in July the company has invested in 2008. The plan is to reduce the expenditure by 8.5 billion yuan, of which capital expenditures will be reduced by 8.2 billion yuan. In addition to the previous plan to reduce non-productive expenditures and plan to lay off 80,000 people, PetroChina also passed a plan to issue 60 billion corporate bonds earlier this month.
"This is to prepare for the second half of the operation, reduce the scope of uncertainty." The market researcher said, but it can be determined that the second half of the company's performance will be better than the first half.

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