Boom degree differentiation, the rise of new energy

1.3 Capital expenditure increased in an orderly manner, and industrial policies accelerated the optimization of industry patterns

Chemical production capacity increased in an orderly manner, and a new round of capital expenditure began. Projects under construction in the basic chemical industry reached 157.632 billion yuan in 2014, reaching a historical high. Subsequently, the industry-wide investment in construction projects continued to decline. Since 2018, the chemical industry has entered the production expansion cycle. In 2021, the construction under construction of the basic chemical industry was 206.242 billion yuan, an increase of 29.72% year-on-year, and the capital expenditure increased significantly. The construction under construction in 2022H1 was 261.04 billion yuan, an increase of 45.65% year-on-year. The year-on-year growth rate hit a new high in recent years, a new round of capital spending began, and most chemical production capacity is currently growing in an orderly manner.

From the perspective of the fine molecule industry, the capital expenditure of most sub-industries of the chemical industry has a high growth rate, and the median growth rate of 2022H1 is 39.33%. In 2021, the construction projects of modified plastics, spandex, rubber additives, nylon, carbon black, coal chemical industry and other lines are growing rapidly, indicating that most chemical sub-industries are continuing to expand and increase capital expenditure and investment. 2022H1 Capital expenditure growth trend continued, modified plastics, silicone, rubber auxiliaries, coal chemical and other sub-industries in the construction project continued to grow, an increase of more than 100%.

PPI has declined, and chemical prices have eased but remain at historically high levels. In June this year, PPI was +6.1% year-on-year, the market consensus forecast was +5.99%, the PPI growth rate was slightly higher than market expectations. In 2021, due to the further control of the overseas epidemic, the recovery of the domestic economy, the price of industrial products showed a substantial increase, and in 2022, due to the impact of the repeated domestic epidemic and the Russia-Ukraine war, PPI dropped. The price of upstream petrochemical energy is high and volatile, and the supply and demand spear shield is prominent and other factors, and the price of chemical products has fallen but is still at a historical high.

Both the CCPI index and the prices of major chemicals have declined, but they are at historic highs. On September 2, 2022, the China Chemical Products Price Index (CCPI) closed at 5000 points, an increase of 21.01% from 4153 points at the beginning of 2021, and a decrease of 4.40% from 5187 points at the beginning of this year. In the basic chemical and petrochemical 574 main products, the price of 396 kinds of rising, the rise of calcium pantothenate, refrigerant 142b, trimethyl-chlorosilane, methylnaphthalene, formic acid, etc., the main chemical prices have fallen but are still at a historical high.

The supply side logic of the chemical industry extends from environmental protection to safety, and safety policies continue to restrict supply. The strict policy will increase the pressure of compliance production and environmental protection equipment investment pressure, and the strong supervision of environmental protection penalties will make non-compliant enterprises shut down, or even shut down, to optimize the structure of industry participants, eliminate backward production capacity. Industrial policy may lead to a decline in the scale of industry operations in the short term, but in the long run, due to the withdrawal of some substandard small and medium-sized enterprises, Accelerate the industry clearance, the industry concentration is further enhanced, the competitive pattern is further optimized, at the same time, because the top enterprises themselves have scale advantages, it is expected that the trend of "strong constant strong" will gradually form.

2. The supply and demand pattern of basic chemical industry is improving, and the high economy is expected to continue

2.1 Synthetic biology: Bio-based materials are expected to usher in a period of demand explosion

Under the promotion of the two-carbon policy, bio-based materials are expected to obtain a high-speed growth window. Under the goal of carbon neutrality, stone-based materials may face subversive impacts in some areas, and low-energy products or industries are expected to get a longer growth window. With the decrease in the cost of bio-based materials and the breakthrough of bio-based materials of "non-food" raw materials, the realization of "not competing with people for food and not competing with food for land" in bio-manufacturing scale, bio-based materials are expected to usher in an outbreak of demand, and the domestic replacement process of new materials is accelerated, by strengthening the construction of high-throughput research and development facilities of the whole industrial chain of synthetic biology. Select projects with relative competitiveness, forward-looking, social significance and commercial value for systematic research and development, and will become a high-boom track with higher demand than expected in the future.