Domestically Listed Petrochem Players Perform Well, Jan-Sept

Nine petrochemical enterprises listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange estimate an explosion in profits for January-September. They are engaged mainly in new materials, lithium products, PTA and vitamins, and include Teamax Smart City Technology Co., Ltd. (SZ: 000662), with profit surging 39 027% YoY, Hengyi Petrochemical Co., Ltd. (SZ: 000703, 5 003%), Beijing Easpring Material Technology Co., Ltd. (SZ: 300073, 3 057.4%), Rongsheng Petrochemical Co., Ltd. (SZ: 002493, 2 043%), Tianqi Lithium Industries, Inc. (SZ: 002466, 1 718%), Do-fluoride Chemicals Co., Ltd. (SZ: 002407, 1 180%), Xinjiang Zhongtai Chemical Co., Ltd. (SZ: 002092, 1 014%), Shenzhen Selen Science & Technology Co., Ltd. (SZ: 002341, 968%) and CEFC Anhui International Holding Co., Ltd. (SZ: 002018, 828%).
In the first eight months, China produced 258 000 new-energy vehicles, soaring 111% YoY, and 245 000 of them were sold, with the sales volume shooting up 115.6% YoY. Growing output of new-energy vehicles heated up domestic demand for lithium battery separators, especially for high-end products, which are in short supply: over 90% of domestic demand for high-end wet-process separators employed in power batteries is satisfied by imports, signifying huge potential for Chinese manufacturers.
In the PTA market, leading enterprises benefited from eliminating units with high operating costs, and rising crude oil prices helped players boost profits. Seizing a 40% PTA market share and boasting a capacity utilization of 90%, Zhejiang Yisheng Petrochemical Co., Ltd. is forecast to see an continually increasing profits, as the PTA market is believed to be more promising in the foreseeable future.
Vitamin prices remained high due to DSM on hold at its Swiss plant.
Enterprises specializing in electronic chemicals are likely to make technical breakthroughs in key materials via continuous R&D. Profit of Holitech Technology Co., Ltd. (SZ: 002217) jumped 215.4% YoY in H1 and is estimated to have shot up over 210% YoY in January-September; that of Shenzhen Selen Science & Technology Co., Ltd. (SZ: 002341) increased 82% YoY in H1 and is estimated to have surged more than 968% YoY in January-September; that of Zhejiang Yongtai Technology Co., Ltd. (SZ: 002326) grew 0.2% YoY in H1 and is estimated to have improved by more than 30% YoY in January-September.
In the tire sector, operating rates remained no lower than 70%, reaching 90% at some leading enterprises, with the sales volume of heavy truck tires rising. Qingdao Doublestar Co., Ltd. (SZ: 000599) and Aeolus Tyre Co., Ltd. (SH: 600469) both estimate growth in profits for January-September.
Inorganic salt enterprises posted soaring profits for H1, like Shandong Sinocera Functional Material Co., Ltd. (SZ: 300285), Inner Mongolia Lantai Industrial Co., Ltd. (SH: 600328) and Guizhou Redstar Developing Co., Ltd. (SH: 600367).
Due to environmental protection restrictions and low inventories, delivery prices of 95% glyphosate technical have reached RMB20 000 per ton, increasing more than 11% YoY.
Furthermore, firms in making titanium dioxide, viscose short fiber, MDI and compound fertilizers may report better performance in this period, as products have been sold at higher prices.
However, the financial performance of traditional sectors troubled by overcapacity was still less than satisfactory – mainly the makers of fertilizers, industrial explosive materials (IEM), spandex and dyestuff. In addition to resource integration, the government currently operates a market admission system and a problem control system to manage the IEM market.
Chinese firms aiming to export fertilizers encountered new challenges, owing to new production capacity in the international market and cancellation of domestic preferential policies. Hence, domestic overcapacity can hardly be alleviated by export, resulting in more severe competition in China. Enterprises announcing year-on-year profit declines of over 100% for January-September include Sichuan Meifeng Chemical Industry Co., Ltd. (SZ: 000731), Shanghai Shenkai Petroleum and Chemical Equipment Co., Ltd. (SZ: 002278), Zhejiang Huafon Spandex Co., Ltd. (SZ: 002064), Hangzhou Hangyang Co., Ltd. (SZ: 002430), Kinghand Industrial Investment Co., Ltd. (SZ: 000615), Guangxi Hechi Chemical Co., Ltd. (SZ: 000953), Hubei Guochuang Hi-tech Material Co., Ltd. (SZ: 002377), etc.
Suzhou Jinfu New Material Co., Ltd. (SZ: 300128) and Zhangjiagang Furui Special Equipment Co., Ltd. (SZ: 300228) estimate losses for the first time, while the profit of Chengdu Huaze Cobalt & Nickel Material Co., Ltd. (SZ: 000693) is estimated to have declined most sharply, plummeting 23.05 times YoY in January-September.