Industry associations and analysts in the outlook for the basic chemical industry in 2007 stated that after the peak of booming growth from 2002 to 2004, the basic chemical industry gradually entered the stage of declining economy from 2005, and the industry as a whole is still in decline. Among them, there are many varieties of chemical products, and the unbalanced growth of downstream demand has caused short-term surges in prices and profits for some products. Experts from the China Epoxy Resin Industry Association believe that there is an opportunity for industry growth or recovery in the sub-sectors such as soda ash, potash fertilizer, organic silicon, MDI, phosphorous chemicals, printing and dyeing auxiliaries, plastics, and tires, and relevant leading companies deserve attention.
Capacity expansion exports increased. According to the statistics of the China Petroleum and Chemical Industry Association, with the successive production of new production capacity in recent years, the output of most chemical products continues to grow rapidly. From January to November of last year, the 65 major types of petroleum and chemical products that the association focused on tracked up, with 61 kinds of production increasing compared to the same period last year, accounting for 93.8%, of which 44 were increased by more than 10%, accounting for 2/3. Strong. With the expansion of domestic production capacity, the import of many chemical products has shown a declining trend. With the increasing pressure from domestic sales, companies have focused their markets overseas and the export volume has grown rapidly. However, the export price has been The decline; high-end products are still dependent on imports, while exports are mostly roads, low value-added, import and export trade structure exposed a larger problem. With the country increasing macroeconomic control and controlling the excessive expansion of credit funds, the growth rate of investment in fixed assets across the industry tends to fall. However, investment in some regions and areas has not yet significantly subsided. In the national economy, where the demand for chemical products remains strong, the economic benefits of the chemical industry have increased in 2007, but the growth rate has continued to decline.
Soda ash industry is recovering this year. Most industry analysts are optimistic about the recovery of the soda industry, as well as leading listed companies with raw material advantages. Guojin Securities Research Institute believes that the soda ash industry will recover in 2007 in the context of lower domestic production capacity growth, rapid demand growth, and low raw salt prices. The study believes that due to sluggish industry conditions and domestic policy restrictions, the production capacity of the domestic soda industry has slowed down significantly. It is expected that the domestic soda ash production capacity will increase by less than 1 million tons in both 2006 and 2007; meanwhile, downstream industries such as alumina and daily-use glass products are fast. In terms of development, the demand for soda ash continues to grow rapidly. From January to October 2006, the apparent demand for soda ash products in China increased by 13.87% year-on-year, which was higher than the increase in output. Taking into account that the glass industry may recover next year, the demand for soda ash industry will continue to exist. Due to the increase in production capacity, the supply of domestic crude salt, especially in the coastal areas, will be sufficient. It is expected that prices will remain low in the future, Guo Jin Securities pointed out. CITIC Research believes that the full release of production capacity led to the decline in the price of crude salt to become the key factor in the bottom recovery of the soda industry in 2006. The inertial effect of capacity expansion and the decision of autumn salt listing to determine the price of raw salt still have room to fall. In 2007, the soda ash industry continued to enjoy cost reduction.
Potash prices will remain high. CITIC Securities Research believes that the world average potash fertilizer production capacity will increase by 2.1% from 2006 to 2010 at an average annual rate. The growth will be slow, the monopoly pattern will remain unchanged, and the North American stocks will be lower than the 5-year average, indicating that the international potash fertilizer prices will remain high in the future. The research department believes that the price of imported potash still determines domestic prices. In 2006, there was a shortage of imported goods, which was due to the shortage of imported potassium. The accidents caused by foreign potash mines were closed, and it was decided that the price of imported potassium chloride would increase in 2007. At the same time, the ocean freight rate has reached a record high, and the high profit rate of potash fertilizer has made up for the appreciation of the renminbi, and the import tariff has dropped from 3% to 1%. China Construction Bank Investment & Securities Co., Ltd. Research Institute pointed out that due to the scarcity of domestic potash fertilizer resources, the prospects of the potash fertilizer industry are more optimistic. The silicone industry is in great demand. Citic Securities Research Department said that the silicone industry will be the representative of the 2007 valuation differentiation of the chemical industry, and further promote the stock price rise. The research department believes that in 2006, the domestic and international organic silicon markets have continued to prosper, and domestic and foreign companies have raised their prices to reflect strong demand, fully verifying the judgment that “the price decline is not the turning point of the silicone industryâ€. The latest progress in the domestic silicone new construction project is firm and the assertion that “the expansion of production capacity is not to worryâ€. In addition, large companies monopolize the domestic silicone industry and will undoubtedly significantly increase the barriers to entry.
The game of basic chemical turning point. First of all, experts believe that potash, MDI, and organic silicon have good growth. In 2006, the growth rate of China's chemical industry declined sharply, and the industry's profit rate continued to decline. However, the industry's investment in fixed assets continued to grow, which exacerbated the problem of overcapacity in some products. The chemical industry has ended its previous cycle of economic cycle and has entered a downslide. In the sub-industries, nitrogen fertilizers and chlor-alkali industries are in cyclical downturns. Plastics, tires, and soda ash industries are facing inflection points or industrial recovery opportunities. Potassium fertilizers, MDI, and organic silicon are located in the booming cycle, and TDI is shifting from maturity to recession. Although the overall prosperity cycle of our country's basic chemical industry has passed, due to the large number of sub-industries in the chemical industry chain, due to the differences in upstream raw materials, downstream demand, and their own development, the sub-sectors have different future development trends. Long-term investment value of the advantages of the industry and high-quality companies. In the overall investment direction of the chemical industry, we recommend that investors continue to focus on growth-oriented sub-sectors with persistently growing demand and insufficient domestic supply, such as potash, MDI, and silicones. In the selection of investment themes, we believe that the fall in the prices of energy and some raw materials in the second half of this year may bring some inflection point opportunities to downstream companies that have been unable to bear the costs; in addition, we still insist on energy saving and consumption reduction in investment strategies in the second half of this year. It is the judgment of the future development direction of the industry. New coal gasification technology and building energy conservation will remain the focus of attention in the industry.
The four key companies continued to "increase their holdings." Such as Yantai Wanhua, Salt Lake potash fertilizer, Sofitel, especially star new materials have Aspect. According to experts from the China Epoxy Resin Industry Association, the company's organic silicon expansion has caught up with the good years. This company is the leading enterprise of organic silicon and chemical new materials in China. The new 100,000 tons/year organosilicon monomer unit was at the end of 2006. In production, considering that the price of silicone monomer will not drop sharply in 2007, the timely expansion of production capacity will allow the company to catch up with the profitable opportunity. This directional injection of additional assets reflects the Group’s creation of the company as a platform for the integration of chemical new materials business, and gradually realizes its intention of listing as a whole. The Group promises to inject Rhodia Silicone assets into listed companies in the future to bring the market to the company’s future silicones. The business is especially good for the development of downstream application technologies. It is expected that the private placement will be completed in early 2007, which can basically reflect the full-year earnings of newly injected assets, and will not dilute the company's current year performance. It is expected that the company's performance in 2007 will return to a higher level of growth, EPS after the issuance of up to 1.00 Yuan, maintaining the "careful holdings" proposal, the target price of 20 yuan within one year.
Capacity expansion exports increased. According to the statistics of the China Petroleum and Chemical Industry Association, with the successive production of new production capacity in recent years, the output of most chemical products continues to grow rapidly. From January to November of last year, the 65 major types of petroleum and chemical products that the association focused on tracked up, with 61 kinds of production increasing compared to the same period last year, accounting for 93.8%, of which 44 were increased by more than 10%, accounting for 2/3. Strong. With the expansion of domestic production capacity, the import of many chemical products has shown a declining trend. With the increasing pressure from domestic sales, companies have focused their markets overseas and the export volume has grown rapidly. However, the export price has been The decline; high-end products are still dependent on imports, while exports are mostly roads, low value-added, import and export trade structure exposed a larger problem. With the country increasing macroeconomic control and controlling the excessive expansion of credit funds, the growth rate of investment in fixed assets across the industry tends to fall. However, investment in some regions and areas has not yet significantly subsided. In the national economy, where the demand for chemical products remains strong, the economic benefits of the chemical industry have increased in 2007, but the growth rate has continued to decline.
Soda ash industry is recovering this year. Most industry analysts are optimistic about the recovery of the soda industry, as well as leading listed companies with raw material advantages. Guojin Securities Research Institute believes that the soda ash industry will recover in 2007 in the context of lower domestic production capacity growth, rapid demand growth, and low raw salt prices. The study believes that due to sluggish industry conditions and domestic policy restrictions, the production capacity of the domestic soda industry has slowed down significantly. It is expected that the domestic soda ash production capacity will increase by less than 1 million tons in both 2006 and 2007; meanwhile, downstream industries such as alumina and daily-use glass products are fast. In terms of development, the demand for soda ash continues to grow rapidly. From January to October 2006, the apparent demand for soda ash products in China increased by 13.87% year-on-year, which was higher than the increase in output. Taking into account that the glass industry may recover next year, the demand for soda ash industry will continue to exist. Due to the increase in production capacity, the supply of domestic crude salt, especially in the coastal areas, will be sufficient. It is expected that prices will remain low in the future, Guo Jin Securities pointed out. CITIC Research believes that the full release of production capacity led to the decline in the price of crude salt to become the key factor in the bottom recovery of the soda industry in 2006. The inertial effect of capacity expansion and the decision of autumn salt listing to determine the price of raw salt still have room to fall. In 2007, the soda ash industry continued to enjoy cost reduction.
Potash prices will remain high. CITIC Securities Research believes that the world average potash fertilizer production capacity will increase by 2.1% from 2006 to 2010 at an average annual rate. The growth will be slow, the monopoly pattern will remain unchanged, and the North American stocks will be lower than the 5-year average, indicating that the international potash fertilizer prices will remain high in the future. The research department believes that the price of imported potash still determines domestic prices. In 2006, there was a shortage of imported goods, which was due to the shortage of imported potassium. The accidents caused by foreign potash mines were closed, and it was decided that the price of imported potassium chloride would increase in 2007. At the same time, the ocean freight rate has reached a record high, and the high profit rate of potash fertilizer has made up for the appreciation of the renminbi, and the import tariff has dropped from 3% to 1%. China Construction Bank Investment & Securities Co., Ltd. Research Institute pointed out that due to the scarcity of domestic potash fertilizer resources, the prospects of the potash fertilizer industry are more optimistic. The silicone industry is in great demand. Citic Securities Research Department said that the silicone industry will be the representative of the 2007 valuation differentiation of the chemical industry, and further promote the stock price rise. The research department believes that in 2006, the domestic and international organic silicon markets have continued to prosper, and domestic and foreign companies have raised their prices to reflect strong demand, fully verifying the judgment that “the price decline is not the turning point of the silicone industryâ€. The latest progress in the domestic silicone new construction project is firm and the assertion that “the expansion of production capacity is not to worryâ€. In addition, large companies monopolize the domestic silicone industry and will undoubtedly significantly increase the barriers to entry.
The game of basic chemical turning point. First of all, experts believe that potash, MDI, and organic silicon have good growth. In 2006, the growth rate of China's chemical industry declined sharply, and the industry's profit rate continued to decline. However, the industry's investment in fixed assets continued to grow, which exacerbated the problem of overcapacity in some products. The chemical industry has ended its previous cycle of economic cycle and has entered a downslide. In the sub-industries, nitrogen fertilizers and chlor-alkali industries are in cyclical downturns. Plastics, tires, and soda ash industries are facing inflection points or industrial recovery opportunities. Potassium fertilizers, MDI, and organic silicon are located in the booming cycle, and TDI is shifting from maturity to recession. Although the overall prosperity cycle of our country's basic chemical industry has passed, due to the large number of sub-industries in the chemical industry chain, due to the differences in upstream raw materials, downstream demand, and their own development, the sub-sectors have different future development trends. Long-term investment value of the advantages of the industry and high-quality companies. In the overall investment direction of the chemical industry, we recommend that investors continue to focus on growth-oriented sub-sectors with persistently growing demand and insufficient domestic supply, such as potash, MDI, and silicones. In the selection of investment themes, we believe that the fall in the prices of energy and some raw materials in the second half of this year may bring some inflection point opportunities to downstream companies that have been unable to bear the costs; in addition, we still insist on energy saving and consumption reduction in investment strategies in the second half of this year. It is the judgment of the future development direction of the industry. New coal gasification technology and building energy conservation will remain the focus of attention in the industry.
The four key companies continued to "increase their holdings." Such as Yantai Wanhua, Salt Lake potash fertilizer, Sofitel, especially star new materials have Aspect. According to experts from the China Epoxy Resin Industry Association, the company's organic silicon expansion has caught up with the good years. This company is the leading enterprise of organic silicon and chemical new materials in China. The new 100,000 tons/year organosilicon monomer unit was at the end of 2006. In production, considering that the price of silicone monomer will not drop sharply in 2007, the timely expansion of production capacity will allow the company to catch up with the profitable opportunity. This directional injection of additional assets reflects the Group’s creation of the company as a platform for the integration of chemical new materials business, and gradually realizes its intention of listing as a whole. The Group promises to inject Rhodia Silicone assets into listed companies in the future to bring the market to the company’s future silicones. The business is especially good for the development of downstream application technologies. It is expected that the private placement will be completed in early 2007, which can basically reflect the full-year earnings of newly injected assets, and will not dilute the company's current year performance. It is expected that the company's performance in 2007 will return to a higher level of growth, EPS after the issuance of up to 1.00 Yuan, maintaining the "careful holdings" proposal, the target price of 20 yuan within one year.