Environmental storms accelerate the industry's reshuffle packaging paper will raise the price surge
release time ：2018-9-8
time visited：1982
In order to crack down on air pollution prevention and control, and win the blue sky defense war, the high emission industry restricted areas are no longer limited to Beijing-Tianjin-Hebei and surrounding areas, and the Yangtze River Delta, the three provinces, and the Yan Plains will also be included.
Recently, Jiangsu, Shandong, Zhejiang, Tianjin, Guangdong, Shanxi and other places have introduced remediation plans for chemical companies, and the number of cities involved will increase from the previous “2+26” to 80. The industry believes that this also means that a new round of reshuffle of the chemical industry will begin in the second half of 2018.
Will the environmental protection storm escalate, will it set off a surge in chemical prices?
Environmental protection becomes an important variable at the supply end
In order to win the battle against the blue sky, since 2018, a number of legal systems for environmental pollution have been introduced in many places across the country, not only covering a wider range, but also the stricter the accountability method will be in the future.
Tian Weiyong, director of the Environmental Supervision Bureau of the Ministry of Ecology and Environment, said at the end of June that the scope of this round of inspections was broader, extending from Beijing, Tianjin and Hebei and the surrounding 28 cities to 80 cities. The Ministry of Ecology and Environment will also conduct strict supervision and accountability on cities that have concentrated environmental pollution problems in industrial enterprises, inadequate prevention and control of air pollution, inadequate implementation of responsibilities, and air pollution problems.
"Under the new normal of economic development, environmental protection has become an important variable affecting the supply end of the chemical industry." Xu Yeming and Deng Xianhe, analysts of Industrial Securities, said that the judicial interpretation of the "two high" criminal cases concerning environmental pollution, various environmental protection policies and bills The implementation of domestic environmental safety requirements continues to increase, and the implementation of local governance has increased.
Some enterprises have reduced production and stopped production due to environmental protection failures or the inability to withstand the increase in processing costs in production, which has a greater impact on both the supply and demand sides of the industry. With the government's subsequent efforts to strengthen environmental governance, stricter regulations and strict emphasis on the company's own clean production, the chemical industry is expected to accelerate the elimination of backward energy consumption.
“The environmental protection storm in the domestic chemical industry has actually started last year. It was gradually strengthened in February this year. First, the first round of environmental supervision conducted by the Ministry of Ecology and Environment on February 7th looked back, for East China, South China, Northwest China, Northeast China, and Southwest China. Key inspections are carried out at the location of the supervision center," said Xu Wei, a researcher at Meierya Futures Chemicals.
Huang Liqiang, an analyst at Jinshi Futures, said: “The domestic environmental inspection has been regularized since 2016.” On the one hand, environmental inspections are due to the fact that the company’s emissions are not up to standard, resulting in more serious pollution, objectively an act of protecting the environment; In terms of aspects, it can also be regarded as a supply-side reform act to raise the threshold of business operations and eliminate small and medium-sized enterprises that are not up to standard.
SMEs frustrated
It is worth mentioning that this round of environmental supervision has turned back to emphasize the avoidance of "one size fits all", but resolutely "cut a knife" for illegal enterprises.
"This transformation has made great progress compared with the previous period. It distinguishes different types of large and small factories. The small factories in the downstream part are not able to meet the standards due to the discharge of pollutants, resulting in the reduction or shutdown of the production facilities of the factory. The large-scale factories are up to standard due to environmental protection. Unaffected, the operating rate of some manufacturers remained at around 90%." Xu Wei said.
Huang Liqiang also said: "Because of the normalization and deepening of environmental inspections, the production of domestic small and medium-sized chemical enterprises has been greatly affected. Among them, coal chemical enterprises are the most polluted, therefore, PVC, methanol, urea, and ethylene. Alcohol companies will be affected."
“The impact of environmental protection policies on chemicals is mainly reflected in three dimensions: one is to promote supply-side reforms – to eliminate backward production capacity; the other is to limit the operating rate of upstream and downstream equipment in the industrial chain; the third is to trigger the transfer of downstream orders.” Xu Wei said .
Xu Wei further stated that the impact of environmental protection policies is closely related to the characteristics of the chemical industry. For the oil chemical chain, the middle and upper reaches are monopolistic patterns dominated by two barrels of oil or large private enterprises. Most of them are relatively standardized and are not affected by environmental protection factors. For the coal chemical chain, the coal industry is mostly environmentally rectified. The main force, the upstream backward production capacity is eliminated is the supply-side reform effect of environmental protection; while the downstream of the chemical industry is mostly fully competitive enterprises, the characteristics of small, scattered and chaotic make it particularly affected by environmental protection. “Plastic knitting enterprises downstream of PP, weaving industry downstream of PTA, printing and dyeing industry, PVC upstream calcium carbide industry, and asphalt are all key varieties affected.”
Taking PVC and methanol as examples, Huang Liqiang said that the production of calcium carbide upstream of PVC is concentrated in the northwest region, so it is affected by environmental protection every winter. In addition, as the country has increased the requirements for mercury-based emissions, SME production must upgrade its equipment, but this is unaffordable for SMEs. Therefore, in fact, the introduction of environmental inspection policies has accelerated the production capacity. The role of methanol coke oven gas is concentrated in Shandong, Shanxi and other places, the above areas are key areas for environmental inspection, so the coke oven gas production capacity is also affected by environmental protection.
From the perspective of industrial development, Xu Liuming and Deng Xianhe said that after years of downturn, the investment willingness of the chemical industry has gradually begun to pick up. Under the general situation of strict environmental protection supervision, the release of small and medium-sized production capacity and the release of new production capacity are further Restricted, the total amount of construction in progress in the industry has only started to change from negative to positive after 10 consecutive quarters of negative growth. Considering the continued withdrawal of some inefficient production capacity in the early stage and the concentration of capital expenditures to leading companies, the release of future production capacity will be more orderly.
It depends on the terminal market "face"
In fact, before this, the chemical industry has seen three large-scale rectifications in recent years.
According to Xu Wei, in 2015 and 2016, some of the backward production capacity was eliminated for the environmental protection of the PVC upstream calcium carbide industry, which made the PVC industry chain gradually enter the low-speed production period from the excess capacity cycle. From last year to this year, the shutdown of the water jet loom in various regions has also made the downstream cloth appear a hot scene. Then, for the downstream remediation of polyolefins, orders were transferred from small factories to large factories, and the entire market behavior was regulated.
From the perspective of the overall commodity market, Huang Liqiang said that the current domestic commodity prices continue to rise. On the one hand, it is affected by external disturbance factors and the rise in the import price of the RMB depreciation. On the other hand, it is also affected by inflation expectations. Under this circumstance, the domestic chemical product trend will continue to rise. The environmental protection and limited production will play a role in fueling the price of chemical products, or it will expand the increase of commodities. This will greatly help to improve the business operation, accelerate the industrial integration, promote the concentration of the industry and enhance the competitiveness of enterprises.
Xu Wei believes that in the new round of chemical industry reshuffle, environmental factors are not the dominant factor. The low inventory of most chemicals and the lack of fundamental support in the off-season are the main drivers of this price increase.
"But at present, there is doubt about whether the domestic terminal market can withstand the continuous rise in chemical prices. Under this circumstance, once the end market has not followed up, the price increase of industrial products will be difficult to sustain." Huang Liqiang said.
In terms of A-shares, Xu Liuming and Deng Xianhe suggested focusing on four main investment lines: first, some industrial chain integration, cost and environmental protection advantages, and industry leaders with capacity release and new product production expected to continue to grow steadily; second, new installations The private refining and chemical industry with large scale, leading technology and high degree of integration; Thirdly, the fine-molecule industry with continuous improvement in supply-side reform; Fourth, high-quality assets with broad development space and relatively stable performance under industrial trends
