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Ethylene is called “the mother of organic chemicalsâ€. There are a large number of downstream products, of which about 60% are used to produce polyethylene. Other important downstream products are ethylene glycol, polyvinyl chloride, styrene, and acetic acid. Under Sinopec and PetroChina's decompression strategy, the supply of downstream products in the relevant regions has experienced varying degrees of shortage or price increases. Taking Shandong as an example, Qilu raised the ex-factory price of styrene to 13,700 yuan/ton, and the increase rate was 500 yuan/ton.
Yin Xiaodong, a research fellow at CITIC Securities, believes that this limited production order does have some pressure on downstream products. Under the premise that the state guarantees the supply of refined oil, the production of naphtha will naturally be affected. For the production of products such as olefins and aromatics, it will also be subject to certain restrictions, among which products such as plastics, rubber, and chemical fiber are greatly affected.
Also holding the above viewpoint is Dengyong Haitong Securities researcher, he believes that the market is about to enter the peak of summer harvest oil, high oil shortage, Sinopec, PetroChina product structure adjustment is very natural. The pressure on the downstream products needs to see the length of the order.
For companies engaged in the production of plastic PET beverage bottles, preforms and other related products in China, Zhuhai Zhongfu (000659) and Zijiang Enterprise (600210), the reduction in the production of ethylene and aromatic hydrocarbons may be a test for the supply of raw materials.
“The impact on the company will naturally have, but it will not be very big.†A related person in Zhuhai Zhongfu Securities Affairs Office stated that on the one hand, the company has a special purchasing team, who will use the seasonal supply and demand relationship of materials to adjust the inventory in time. On the other hand, the risk of rising raw material prices can be reduced through the production of PET chips; at the same time, risks can be dispersed through the processing of incoming materials.
In the price increase last year, Zhuhai Zhongfu felt the pressure on its own. In mid-2007, Zhuhai Zhongfu PET raw material production gross margin was 5.75%, and by the end of 2007, the above data became 1.86%. "The increase in the cost of PET raw material business due to the increase in raw material prices at the upstream end will eventually reduce the operating profit margin," said Zhuhai Zhongfu.
Similarly, as the important raw material of Zijiang enterprise's polyester chips and other chemical raw materials, the large price fluctuations in 2007 caused a greater pressure on its product cost. In mid-2007, the gross profit rates of PET bottles and preforms and plastic anti-theft caps for Zijiang enterprises were 21.98% and 28.1%, respectively. By the end of 2007, the above figures were 21.86% and 27.62%, respectively.
"The white pollution of plastic bags and the inherent defects of glass bottles make PET beverage bottles have a competitive advantage in the market. Therefore, the pressure reduction of ethylene products and the current plastic limit will not affect the product structure adjustment of the company's customers." .
Ethylene "pressure reduction" pressure conduction downstream
In order to ensure the protection of earthquakes and disaster relief, “three summers†(short for summer harvest, summer crops, and summer tube) and Olympic oil, PetroChina and Sinopec’s two giants recently stated that they will continue to reduce production of ethylene and aromatic hydrocarbons from June 1. Increase production of refined oil. The market expects to reduce the ethylene production load by 11% in June and will reduce production of ethylene by 65,000 tons in total. People in the industry believe that this will bring certain pressure on downstream products, but the extent of the impact depends on the time limit for production.