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As an important pillar of the national economy, the petrochemical and new materials industries play a vital role in promoting the country's economic and social development. The latest data shows that the operating income of China's petrochemical industry has exceeded 12 trillion yuan, making it an important force in the global chemical new materials field.
In the first half of 2024, China's petrochemical market was relatively strong, with the organic chemical index rising by 6.09% and Brent crude oil rising by 10.64%. Among the 41 major products, 31 items had an average price increase in the first half of the year, accounting for 75.6%, while 10 items had an average price decrease, accounting for 24.4%.
The main factors affecting the strong market performance
1. International crude oil prices remain strong
Brent crude oil prices rose by 10.64% in the first half of 2024, which provided strong cost support for the prices of petrochemical products. The strong performance of the international crude oil market is due to the recovery of global demand on the one hand, and the production cuts of OPEC+ on the other.
2. Steady recovery on the demand side
Consumption of automobiles and electronic appliances continued to increase, driving the growth in demand for related petrochemical raw materials; the real estate and chemical fiber industries gradually improved, promoting the demand for chemical raw materials; the external economy gradually recovered, and the foundation for export growth was relatively good, which helped ease domestic inventory pressure.
3. New production capacity is less than expected
In the first half of 2024, the pace of new capacity addition in the petrochemical industry slowed down, and the commissioning dates of some projects were postponed to 2025-2026. This reduced supply pressure and supported market prices.
4. Declining inventory levels
Due to the gradual recovery of demand and the delay in the release of new production capacity, the overall inventory level of the petrochemical industry has shown a downward trend, and the contradiction between supply and demand has eased.
5. Market expectations are positive
The domestic economy has recovered steadily, and the consumer market as a whole has shown a stable recovery trend; the domestic economy has shown a structural recovery, especially the rapid development of industries such as automobiles, electronics and electrical appliances, which has brought new growth momentum to the petrochemical industry.
In the first half of 2024, China's petrochemical products market showed a relatively strong operating trend. This trend is expected to continue in the second half of 2024, and the industry's profit level is expected to gradually recover.
Operation of key sectors
Oilfield services, petroleum and petrochemicals, oil extraction and other industries
1. Oilfield Services Industry
In 2024, the oilfield service industry actively seized the upswing cycle of the oilfield service industry, and the production and operation were stable and efficient. The third quarter report of 2024 showed that the main business revenue of Sinopec Oilfield Service was 54.885 billion yuan, a year-on-year decrease of 1.72%; the net profit attributable to the parent company was 676 million yuan, a year-on-year increase of 52.44%.
2. Petroleum and petrochemical industry
In the first half of 2024, the petroleum and petrochemical industry continued to expand its production capacity, but the growth rate slowed down and the overall profitability level faced great pressure.
3. Oil extraction industry
In the first three quarters of 2024, the country produced 159.869 million tons of crude oil, a cumulative increase of 2%.
PX, PTA, PET industry
1. PX
As of October 21, the latest PX-naphtha spread (PXN) was $165.12/ton, and the PX short-process production profit was $93.5/ton, down $13/ton from the previous week. The PXN spread continued to fall, and PXN is currently at a neutral to low level.
2. PTA
In October 2024, the average price of the domestic PTA price index was 5,042 yuan/ton, up 191 yuan/ton from the previous month, a month-on-month increase of 3.94%. From the supply side, the recent changes in PTA enterprises' equipment are limited, and the operation of PTA enterprises remains at a level of more than 80%. The market spot supply is sufficient, and PTA is in a cycle of accumulating inventory.
3. PET
In October 2024, the average price index of polyester semi-gloss chips was 6,395 yuan/ton, up 165 yuan/ton from the previous month, a month-on-month increase of 2.65%.
Polyester bottle flakes industry
In 2024, the domestic polyester bottle flakes market as a whole showed a volatile and weakening pattern. According to data monitoring by Tuduoduo, the average annual price of polyester bottle flakes in the East China market was 6,880 yuan/ton, down 3.13% from last year. In October this year, the average price of the polyester bottle flakes price index was 6,388 yuan/ton, up 118 yuan/ton from the previous month, a month-on-month increase of 1.88%.
In October, the comprehensive operating rate of domestic polyester enterprises was 88.40%, up 1.76% from the previous month. At the end of October, the operating rate was around 89%. In the later period, as the changes in polyester equipment decrease, the polyester load will still maintain a high level.
Important release, policy guidance
In July this year, the Ministry of Industry and Information Technology, the National Development and Reform Commission and nine other departments jointly issued the "Implementation Plan for the Innovation and Development of the Fine Chemical Industry (2024-2027)" (hereinafter referred to as the "Implementation Plan").
1. Main Objectives
The "Implementation Plan" proposes that by 2027, more than five world-class enterprises with strong innovation leadership and collaborative integration capabilities will be cultivated, and more than 500 specialized and innovative small giant enterprises will be cultivated; more than 20 chemical parks dominated by fine chemicals and with strong competitive advantages will be created, forming an innovation and development system with the integration of large, medium and small enterprises and the collaboration of upstream and downstream enterprises.
2. Promote high-end industry
At present, my country's fine chemical products are mainly concentrated in the middle and low-end fields, mainly raw material-based and general-purpose products, and the supply of high-end products is insufficient, which affects the security and stability of the industrial chain and supply chain. The "Implementation Plan" proposes three measures: First, promote the extension of traditional industries and promote the high-end extension of traditional industries. Second, accelerate the research and development of key products, enhance the supply capacity of key products in the fields of high-end polyolefins, special rubbers, high-performance fibers, high-performance membrane materials, electronic chemicals, new catalysts, high-end reagents, etc., and strengthen the supporting guarantees of important equipment, high-end instruments, control software, etc. for fine chemicals. Third, promote the quality improvement of advantageous products.
3. Optimize industrial layout
The "Implementation Plan" also proposes to guide leading enterprises in the industrial chain to form an innovation alliance of industry, academia, research and application with relevant enterprises, universities, institutes, etc., to accelerate the collaborative research, verification and application of new technologies, new products and new equipment; comprehensively enhance the basic capabilities of the industrial chain, and continuously promote the "one-stop" application demonstration of advanced technologies and products such as high-voltage cable insulation and shielding materials, electronic special gases, and microchannels.
Combined with the current international situation and domestic economic cycle, the petrochemical industry is still facing challenges and opportunities. Disorderly expansion of the market may lead to the risk of serious overcapacity in the industry. Therefore, when making decisions, enterprises need to comprehensively consider the actual needs of the upstream and downstream of the industrial chain and the final application, and reasonably evaluate the market situation to avoid potential risks and seize development opportunities.
Equipment investment, technology update
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*The above content only represents the author's personal opinion and is for reference only
（Image source: Photo Network）