The price of refined oil has been raised, what do you think about the petrochemical industry?

Interface News

2024-04-24 15:54Posted on the official account of Beijing Jiemian News

The National Development and Reform Commission announced that according to the current refined oil price formation mechanism, from 24 o'clock on April 16, 2024, domestic gasoline and diesel prices (standard products, the same below) will increase by 200 yuan and 195 yuan per ton respectively. This round of price adjustment is the fifth increase in domestic refined oil prices in 2024 this year. According to the calculation of China News Network, taking an ordinary private car with a fuel tank capacity of 50L as an example, after this price adjustment, the owner will spend about 8 yuan more to fill up a tank of fuel.

Corresponding to the continuous increase in domestic oil prices, international crude oil prices have maintained a high level of volatility since 2024, and they have risen rapidly in early April, breaking through the $90 per barrel mark.

Chart: Brent crude oil futures topped $90 per barrel in April 2024

The price of refined oil has been raised, what do you think about the petrochemical industry?

Source: Wind, as of April 17, 2024

The reason for this is that on the supply side, frequent disturbances in regional conflict factors and a rebound in market risk premiums are the main driving force for this round of oil price rises. Major oil producers are mired in regional conflicts, and the market is worried about the decline in its crude oil production. On March 3, OPEC members announced that they would extend their voluntary production cuts of 2.2 million b/d until Q2, which pushed up crude oil and other commodity prices.

On the demand side, the resonance of PMI in China and overseas improved in March, sending a positive signal that the demand of the petrochemical industry is stable and improving.

Chart: The resonance of PMIs in China and overseas improved in March, and the demand of the petrochemical industry was stable and improving

Source: Wind, as of March 31, 2024

Since 2024, China's manufacturing PMI has continued to improve, rising from 49.00 in December 2023 to 50.80 in March 2024. At the same time, the inventory of finished products of industrial enterprises continued to increase, from +2.10% in December 2023 to +2.40% in February 2024, and gradually began to replenish the inventory, reflecting the continued improvement of downstream demand. Looking overseas, the global manufacturing PMI returned above 50 from January to March this year and showed a further upward trend, rising from 49.00 in December 2023 to 50.60 in March 2024. Among the major countries, the manufacturing PMI trend rebound in the United States, India, Mexico and other manufacturing PMIs may be driven by two aspects: one is the recovery of the U.S. real estate cycle, and the other is the recovery of durable goods demand in the United States and the start of the replenishment cycle.

Chart: The petrochemical industry is closely related to the global economic fundamentals

Source: Wind, as of March 31, 2024

From the perspective of the prosperity and investment law of the petroleum and petrochemical industry, the petrochemical industry is closely related to the global economic fundamentals. In the recovery cycle of the global manufacturing industry, the upstream resource industry that is priced globally tends to benefit from the expectation of price increases, and the A-share petrochemical industry is no exception. Since 2010, the CSI Petrochemical Industry Index has appeared in the global manufacturing boom expansion/high boom range (except for market changes in 2015).

Table: The petrochemical industry is dominant in the global manufacturing boom

Data sources: Wind, GF Securities, E Fund

If we review the cycle of four rounds of global manufacturing PMI crossing the boom and bust line since 2010 (December 2011, January 2013, June 2016, July 2020), global resources (petroleum and petrochemicals/industrial metals) have ushered in a pricing tide, showing a favorable market.

Table: Top 10 weighted stocks in the CSI Petrochemical Industry Index

Data source: Wind, as of 2024/3/31, the above is only an objective display of individual stocks, not as investment advice.

At present, the petrochemical industry boom continues to consolidate, and the chemical industry ETF (516570, OTC connection A/C: 020104/020105) one-click package PetroChina, Sinopec, CNOOC, Wanhua Chemical and other petrochemical industry leaders, for the petrochemical upstream and midstream industry chain comprehensive coverage, can become a convenient tool to grasp the expansion of related industries!

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