What is the impact of the new crown epidemic on the chemical industry?

The novel coronavirus pneumonia continues to ferment during the Spring Festival. While the whole country is actively fighting epidemics, the delay of the reemployment brought by the epidemic prevention and control, the obstruction of logistics and the stagnation of downstream consumption all have certain effects on the production and operation of chemical enterprises. The negative impact of the epidemic on the chemical industry involves production and sales, but it is temporary in general; the pressure on inventory and cash flow of most chemical products will be relieved after the resumption of work. At present, the existing competition and cooperation pattern and industrial system of chemical industry will not fundamentally change. On the other hand, this round of epidemic also stimulates the short-term demand for anti epidemic related chemical products, which is good for some enterprises in the industry.

Next, let's talk about two questions: first, the impact of the epidemic on the chemical industry, and second, how to deal with the chemical industry? In depth analysis: the four major impacts of the epidemic on the chemical industry and the prevention and control of the epidemic pose a certain challenge to the resumption of work and normal production of chemical enterprises after the festival. Although some enterprises continue to produce and do not shut down during the Spring Festival, it is the general demand of enterprises to return to work and operate with high load after the festival. Combined with the limitations brought by the epidemic prevention requirements of various regions, chemical enterprises generally face the challenges of production and operation, such as insufficient rework of personnel, new epidemic prevention and control tasks, and balance between the effectiveness of epidemic prevention and conventional production efficiency. In the aspect of downstream sales, except for anti epidemic chemical enterprises, the general shrinking of market demand forces most enterprises to bear pressure, but the restricted factors and affected degree of different industries are different. We will start from four typical chemical industry segments to evaluate the impact of the epidemic on market demand.

The decrease of travel and production activities to reduce the demand for refined oil is similar to the SARS epidemic. At present, traffic control measures have been introduced in various places. The activities closely related to the transportation industry such as goods transportation and Tourism travel have been greatly reduced, and the demand for refined oil has declined. Compared with the same period last year, the consumption of domestic refined oil decreased by about 15-20% between January and February. The decline of demand causes the price of cost oil to fall, and at the same time, it also causes the inventory pressure for refineries, especially refineries, resulting in the reduction of output of local refineries. At present, the output range of some mainstream local refineries is about 30% - 50%. Some enterprises only maintain 30% of the production load, and even some local refineries have shut down or plan to shut down. Under the severe anti epidemic situation, the period for enterprises to return to work is generally prolonged, and it will take time for the demand for refined oil to fully recover to the normal level. At the same time, the overall operating rate of the refinery decreased in February, and the profit situation in the first quarter is not optimistic.

Most of the large chemical enterprises in the upstream of the industry affected by the short-term consumption of bulk chemicals do not stop production and maintain a certain capacity load. However, due to the closure of logistics traffic between provinces and cities, as well as the lack of demand caused by the delayed resumption of work in the downstream, a short-term inventory backlog is formed and the operation rate is affected. With the start of downstream enterprises in succession, the logistics recovered smoothly, and the downstream demand gradually picked up, the negative impact of the epidemic will be limited to the short term, and the impact on the overall performance of the whole year will be limited. Taking the SARS epidemic in 2013 as a reference, during the period from mid April to mid May when the SARS epidemic was more serious, the price of polyethylene continued to decline. After the epidemic ended, the price of polyethylene gradually recovered, and returned to the price range before the outbreak in early June and entered the rising market. Source of data on the impact of SARS epidemic on polyethylene price (CNY/ton): Roland Berger, however, it should be noted that the actual resumption time of labor-intensive industries such as textile, construction and real estate downstream of bulk chemicals will be delayed, and the sales of bulk chemicals (such as glycol, PTA, etc.) used for customers in chemical fiber, building materials and other fields will still be affected to some extent, and the recovery speed of demand will be slow.

The negative impact of advanced materials industry is relatively limited in general, the impact of advanced materials enterprises during the epidemic is relatively small. Downstream industries such as automobile, electronic and electrical, advanced manufacturing have a high degree of automation, less dependence on labor, and relatively optimistic expectation of resumption. At the same time, automobile and spare parts enterprises generally have safety stock, which has a large elasticity of demand; after the epidemic is alleviated, the consumed stock will be required to be supplemented in time, so that the upstream advanced material demand will pick up.

The downstream demand of anti epidemic chemical industry enterprises is strong nationwide. The demand for masks, disinfectant water, medical protective clothing and other necessities in various regions continues to grow. The production enterprises continue to start production, which will increase the demand for related chemical products in the short term. For example, alcohol, isopropanol, hydrogen peroxide, sodium hypochlorite, polypropylene fiber material (chemical fiber spray melt non-woven fabric), polypropylene transparent material (syringe), polyethylene (breathable film), polytetrafluoroethylene (hydrophobic coating), surfactant (hand sanitizer) and other chemical products need to be significantly improved; such chemical enterprises are less affected by the delay of resumption of work, and they are fully engaged in production Enough to fight the epidemic. We expect that the demand for such chemicals will continue for a period of time after the end of the epidemic, with the development of the national health habits such as wearing masks, washing hands and disinfecting, as well as the growth of the demand for protective products of enterprises after the factory returns to work.