Looking back to 2023, the economic operation of the petrochemical industry is stable and rising

Looking back at 2022, China's petroleum and chemical industries are generally stable and orderly

In 2022, the global economic growth slowdown and local contradictions are prominent, in the face of a complex and severe situation, China's petroleum and chemical industry under the strong leadership of the Party Central Committee, actively respond to the impact of many unexpected factors, the industry as a whole to achieve stable operation, providing a solid guarantee for national energy security and economic and social development.

Purely from the perspective of investment growth, the national industrial investment increased by 10.3% in 2022, and the manufacturing investment increased by 9.1%, while the growth rate of oil and gas extraction and chemical investment significantly exceeded the national industrial and manufacturing average. Data show that in 2022, the completed investment in the oil and gas extraction industry increased by 15.5% year-on-year, with a growth rate of 11.3 percentage points. The completed investment of chemical raw materials and chemical products manufacturing industry increased by 18.8%, the growth rate increased by 3.1 percentage points year-on-year; Completed investment in the oil, coal and other fuel processing industry fell 10.7% year on year, compared with 8.0% growth last year. The growth rate of oil and gas exploitation and chemical investment is obvious, laying a solid foundation for China's energy supply guarantee and raw material self-sufficiency in the later period.

In terms of data in the oil and gas field, crude oil production in 2022 will reach 205 million tons, an increase of 2.9%. Natural gas output was 217.79 billion cubic meters, up 6.4% year on year. China's crude oil production increased for four consecutive years last year, and natural gas production increased by more than 10 billion cubic meters for six consecutive years last year. It has made important contributions to the country's energy security and food abundance.

In spite of this, the petrochemical industry is also facing strong demand contraction, supply shock and expected weakening pressure, the operation trend shows a strong high fall trend, and the unbalanced development of external factors has also intensified the internal differentiation.

From the perspective of the petroleum and chemical industry prosperity index (PCPI), the overall industry prosperity in 2022 showed a high trend of decline, and the third quarter fell to the cold and undercold range. However, since the fourth quarter, although the industry prices and benefits are still declining, the prosperity has shown a stable recovery.

Looking forward to 2023, the recovery of demand will be conducive to the marginal improvement of the petrochemical industry

In terms of macro economy in 2023, the overall situation will be "internal rise and external decline". The world economic growth has slowed down, downward pressure has increased, developed economies such as Europe and the United States have dragged down the global economic repair, high inflation, geopolitical turbulence and other uncertainties affecting the outlook of the world economy. The year 2023 is the first year for the full implementation of the 20 Principles and a key year for the implementation of the 14th Five-Year Plan. In the face of the internal and external environment full of uncertainty, the Party Central Committee adheres to the principle of "stability, stability and progress", and it is expected that under the policy background of promoting a comprehensive improvement in economic operation, China's economy as a whole will show a relatively obvious recovery trend.

From the perspective of oil demand, driven by factors such as the slowing growth of oil demand affected by the weak global economy, the long-term lack of investment in fossil energy, and the implementation of sanctions against Russia by the United States and Western countries, oil supply growth is expected to be limited, and the average price of Brent is expected to be 80-90 US dollars/barrel in 2023, lower than 2022 but still at a high level.

The chemical industry is also a complex environment. In 2023, the impact of the cost on the price of chemicals will weaken, demand is expected to pick up, but the supply is still in the production capacity cycle, coupled with the external environment is not optimistic, the contradiction between supply and demand pressure is still large, it is expected that the recovery of demand is not enough to support the price continues to rise, but the relief of cost pressure, the chemical operating rate and efficiency are expected to improve.

From the perspective of the petroleum and chemical industry prosperity index (PCPI), in January 2023, the index continued to rise, from the cold to the normal range (99.34), showing a good warming trend. As shown in the following picture.

In January 2023, the climate index of the petrochemical industry picked up rapidly, and the climate value rose to 99.34, which was 4.53 percentage points higher than that in December 2022, and the climate index returned to the normal range. From a year-on-year point of view, it was 8.4 percentage points lower than the same period in 2022, a sharp narrowing of the decline.

Oil and Chemical industry business index operating trend (historical average = 100)

Oil and Chemical industry business index operating trend (historical average = 100)

From the perspective of different industries, from December 2022, international crude oil prices ended the continuous decline and bottomed out, and the upstream mining industry rebounded significantly under the drive of oil prices from decline to rise, and the boom zone continued to be in an overheating warning. Downstream rubber plastic polymer manufacturing industry also rebounded in the case of gradual recovery of the demand side, the boom value rose by 6.79 percentage points, the largest increase in the sub-index. With the substantial increase in China's refined oil export quota, the fuel processing industry, which continues to be depressed, increased by 6.69 percentage points from the previous quarter. In the middle of the industrial chain, the chemical raw materials and chemical products manufacturing industry is under the pressure of rising raw material prices and destocking, the boom value is relatively limited, and it is still in the supercold warning range, and it takes time to recover.

In January 2023, the market is expected to usher in an overall improvement. With the implementation of various measures to stabilize growth, market confidence has been significantly enhanced. According to the National Bureau of Statistics, the manufacturing PMI in December 2022 rose from 47 to 50.1, returning to the expansion range. Driven by China's economy, PMI of Southeast Asian countries has rebounded to varying degrees; The euro zone composite PMI rose to 50.2 in January, back above the line between expansion and contraction. The international market and the domestic market are expected to pick up the economic growth in 2023. Taking into account the predominance of the prosperity index, we expect that the industry will generally recover and stabilize in 2023.

Petroleum and Chemical Industry Climate Index (PCPI) is jointly developed by China Petroleum and Chemical Industry Federation and Shandong Zhuochuang Information (70.500, 0.70, 1.00%) Co., LTD., which belongs to the micro-economic cycle monitoring index of the petrochemical industry. The index sample is located in the upstream commodity raw materials, and is calculated from the five dimensions of "capacity utilization rate", "product profitability", "inventory level of finished products", "cost profit rate" and "inventory turnover rate", including the medium and micro indicators.

In addition to the main index, the PCPI also contains four sub-indexes, namely, "oil and gas mining industry climate index", "fuel processing industry climate index", "chemical raw materials and chemical manufacturing industry climate index", "rubber, plastic products and other polymer products manufacturing industry climate index".

The index algorithm belongs to the category of prosperity index of the synthetic method. The selection of industry samples is based on the National Economic Classification (GB/T 4754-2017) as the reference standard rule, and the characteristics of different industries are taken into account at the same time, and appropriate adjustments are made.