A variety of chemical raw materials prices fall terminal products profit is expected to thicken

Since the beginning of this year, the prosperity of the chemical industry has continued to decline, and a variety of chemical products have experienced substantial shocks during the year. Recently, under the influence of multiple factors such as low crude oil prices and downstream maintenance, the weak cost support has led to a significant decline in chemical prices, in this context, downstream terminal products have entered the profit uptrend.

According to statistics, among a variety of chemicals recently, the overall price decline of polyethylene and polypropylene products downstream of olefin is small, and the product price difference maintains stable operation; EVA prices fell slightly, product price spreads widened; Styrene prices also fell significantly. In addition, there are a number of varieties due to the impact of demand led to a decline in price, such as pure benzene due to downstream styrene, phenol ketone and other parts of the device parking maintenance, the price fell sharply; Polycarbonate as the north and south of the country are entering the winter, its downstream demand gradually into the traditional off-season, demand side support is weak, product prices have declined.

The decline in the price of basic chemical raw materials has formed a favorable situation for the profit thickening of terminal products, among which the warmth of the tire, compound fertilizer, pesticide preparations and other industries has become stronger.

Recently, pesticide preparation company Knop Letter accepted institutional research said that in 2023, the price of the original drug has fallen sharply, forcing the channel to inventory, and the channel inventory has fallen sharply, and it is expected to enter the replenishment state in the future. The relevant person in charge of the company said that “because the upstream drug price is at a low point this year, the procurement cost has decreased significantly, and the gross profit margin of the product is expected to increase by 2%-3% next year.”

In the face of the current raw material market industry, new materials company Ruitai new Materials recently said that the company continues to track and in-depth analysis of the main raw material market, regularly develops procurement plans, and adjusts the procurement scale during peaks and troughs to reduce the adverse impact of raw material price fluctuations. “The downward price of raw materials will reduce the cost of the company’s related products to a certain extent; At the same time, the company makes multi-frequency small batch purchases and tries to move in and out as quickly as possible.”

The performance of the tire industry is also more obvious, since the second half of this year, the tire industry has ushered in a hot atmosphere under the downward cost of raw materials, the increase in demand, and the reduction of shipping costs.

Since December, Linglong tires, Senkirin and other tire companies have repeatedly said to the outside world that production has entered a state of short supply.

Linglong Tire said in the interactive platform that the company is currently hot orders for semi-steel, orders are still greater than production capacity; Sen Qilin said that the company in October, November production and sales of two prosperous, half steel tire continuous full production operation, steel tire production and sales continue to climb, the business situation is stable and good, according to the communication with customers, it is expected that next year orders are still full; Cylun tire said that the company’s current domestic and foreign factory production and operation is normal, the order volume and operating rate are at a high level, the company is confident that the order and operating rate will continue to maintain a high level next year.

Since October, the price of the main raw materials in the upstream of the tire has opened the road of decline. Data show that as of December 7, the main rubber futures price was 13,355 yuan per ton, less than 2 months, the rubber futures price fell by nearly 1,700 yuan per ton. In the same period, the price of carbon black fell more sharply, according to Zhuo Chuang information data, carbon black fell 14.67% and 10.02% respectively. In addition, raw materials such as antioxidants also fell to varying degrees.

Longzhong Information believes that in the later stage, the raw material level will continue to weaken, and it is expected that the carbon black market will still be lower in the later stage. The price of raw materials fell, the cost of tire raw materials fell, and corporate profits showed a thickening trend.

The current prosperity of the chemical industry continues to be low, securities analysts believe that with the chemical industry as a whole in the bottom shock stage, the current chemical industry downside risk has been greatly eased, and the prosperity is expected to bottom out next year.

Galaxy Securities believes that under the background of weak cost support, chemical prices have fallen significantly. Looking forward to 2024, the focus of oil prices may fall slightly, and the cost end will no longer be the key to the profitability of the industry; Under the internal and external need to repair resonance and actively replenish inventory market, the overall prosperity of the chemical industry in 2024 is expected to rise, and there is a structural market.

Guosen Securities said that considering the relative resilience of the global macro and the Fed’s interest rate hike cycle is expected to end, and the domestic support policies for real estate and other industries have been introduced, the demand for chemical products at home and abroad is expected to resume growth, and the overall prosperity of the chemical industry is expected to bottom out and rebound, but considering the larger supply side capital expenditure of the midstream industry, The growth rate of demand for traditional chemicals in the downstream chemical industry has slowed down, so the contradiction between supply and demand in the middle reaches of the chemical industry is prominent, and the profit level will still be at a historically low level.