China Petroleum and Chemical Industry Federation, Information & Market Department
Major characteristics of the economic operation
1. Maintaining a fast growth in benefits
Profits grew rapidly. In 2018, the total profit of the whole industry grew by more than 30%, which was significantly ahead of the average profit growth rate of the national scale industry (10.3%). In detail, the profit of oil and gas exploitation industry increased by 5.8 times, with the contribution rate exceeding 65%.
Income growth was generally stable. Revenue of the whole industry increased by 13.6% in the whole year. From the perspective of the trend, the growth rate in the first quarter was 11.4%, 13.2% in the first half, and 14.8% in the first three quarters. The fluctuation in the whole year was small. In detail, the chemical industry grew by 8.6% in the whole year, 9.8% in the first quarter, 10.3% in the first half and 10.7% in the first three quarters.
The industry's loss has been improving. In 2018, the loss of loss-making enterprises in the whole industry was RMB116.23 billion, down 36.9% year-on-year. In detail, the oil and gas exploitation industry declined 63.0%, and the chemical industry declined 14.4%. The loss of the whole industry was 16.7%, which was two percentage points down from that in the first half of the year.
2. The economic structure continues to optimize and upgrade
Growth structure continues to be optimized. The contribution rates of basic chemical raw materials, synthetic materials and special chemicals manufacturing to income growth were higher, reaching 35.0% (organic chemical raw materials contributing 27.1%), 30.9% and 18.6% respectively. It is worth noting that the value-added of emerging industries was growing rapidly. In 2018, the added value of biomass material manufacturing increased by 211.9%, and that of biomass fuel manufacturing increased by 37.6%.
Growth efficiency has increased, and unit energy consumption continued to decline. In 2018, the revenue of petroleum and chemical industry decreased by 10.0% compared with the same period last year. In detail, the chemical industry fell by 6.3%, the petroleum processing industry by 16.6%, and the oil and gas exploitation industry by 11.3%. Energy consumption was declining in an accelerating trend, energy efficiency was constantly improving, and the profitability of the whole industry was constantly increasing. In 2018, the profit margin of the main business income of petroleum and chemical industry reached 6.77%, which was the highest since 2012. In detail, the profit margin of the main business income of chemical industry reached 6.89%, which is the best level in history.
The structural reform on the supply side has been steadily promoted. The asset-liability ratio continued to decline. In 2018, the asset-liability ratio of petroleum and chemical industry was 1.4 percentage points lower than that of 2017, and 1.97 percentage points lower than that of national industrial assets-liability ratio in the same period. In detail, the chemical industry fell by 1.33 percentage points over the same period last year.
3. Exports were better than expected
Export growth was high. In 2018, the export delivery value of enterprises above the scale of petroleum and chemical industry increased by 22.0% year-on-year, and the growth rate was 5.9 percentage points higher than that of the previous year. In detail, the export delivery value of petroleum processing industry increased by more than 80%, and the chemical industry increased by 13.1%.
Export structure has optimized. Exports of specialty chemicals, synthetic materials and organic chemical raw materials increased rapidly, with the proportion rising. In 2018, the export delivery value of the above three increased by 19.7%, 17.2% and 21.6% respectively, which were significantly higher than the average growth rate of the chemical industry, accounting for 19.7%, 16.7% and 12.7% of the export delivery value of the chemical industry, respectively, and increased by 1.1 percentage points, 0.6 percentage points, and 1.0 percentage point higher over the same period of last year. The proportion of traditional export-oriented products such as chemical fertilizers and rubber products continued to decline. The annual fertilizer export delivery value decreased by more than 5%, accounting for only 2.3% of the total, 0.5 percentage points down over the previous year; the rubber product export delivery value increased by only 4.4%, accounting for 28.3% of the total and down by 2.4 percentage points.
In addition, the proportion of export delivery value of petroleum processing industry in the whole industry increased significantly, reaching 19.9%, 6.6 percentage points higher than the previous year.
4. Energy consumption growth accelerated
In 2018, China's apparent consumption of crude oil and natural gas was 903 million tons (oil equivalent), an increase of 9.7% year-on-year. The growth went up by 2.2 percentage points than the previous year, the largest increase since 2011.
Problems in economic operation
The market went up and down violently. In 2018, the petroleum and chemical markets fluctuated considerably. Especially in the fourth quarter, some commodity prices continued to fall sharply. In December 2018, the decline of some bulk organic chemical raw materials and synthetic materials continued to expand. For example, propylene, benzene and methanol dropped by 8.6%, 14.6% and 22.9%; polypropylene, acrylonitrile and styrene butadiene rubber down by 12.7%, 22.4% and 5.7%, respectively.
Petrochemical market demand growth was weak. At present, except for energy sector, the overall growth of petrochemical market demand was weak. Apparent consumption of diesel declined by 3.0% in 2018, while in 2017 it went up by 1.3%, indicating that macroeconomic activity was slowing down. From the view of chemical industry market, the growth rate of the total output of main chemicals was only 2.3%, which indicates that the growth of chemical market demand was generally weak.
The investment motive was insufficient. Although after the fourth quarter of 2018, investment in chemical raw materials and chemicals manufacturing industry resumed growth trend, but the annual growth rate was only 6.0%, still below the average growth rate of 6.5% of the national industrial investment, and industry investment rebound momentum was still obviously insufficient.
Market trend and economic growth forecast
In 2019, the petroleum and chemical markets will face greater challenges. Especially in the first half of the year, the contradiction between supply and demand in some markets will intensify, and prices may be low and volatile. It is estimated that the total price level of oil and gas exploitation industry will decrease by about 10% and that of chemical industry down by about 3%.
Trend prediction of principal markets
1. Crude oil market
In 2019, the rising momentum of the international crude oil market may be frustrated, and the price will be lowered. The average annual price of Brent oil is expected to be around US$65 per barrel.
2. Fertilizer market
In 2019, China's total fertilizer consumption is expected to remain around 51 million tons, roughly the same as last year. Exports are likely to improve, but export growth will be limited. The total fertilizer price level in 2019 may be somewhat lower than that of the previous year. Among them, the price of urea is estimated to fall by a larger margin, with an average annual price of RMB1 900/t, down by 4.8% compared with the previous year; the average price of diammonium phosphate will be about RMB2 600/t, down by 2.5%; the average price of potassium chloride at RMB2 200/t, down by 3.5%; and the average price of sulfur-based compound fertilizer (45%) at RMB2 350/t, down by 3.4%.
3. Basic chemical raw materials market
In 2019, the supply and demand structure of the basic chemical raw materials market will continue to optimize. However, the market pressure will be greater in the first half of the year, and the price fluctuation will be greater. The total price level of the whole year will be lower than that of the previous year. Among them, the average annual price of caustic soda (flake soda) is expected to be around RMB4 000/t, down 5.7% from the previous year; the average price of soda (heavy ash) about RMB1 960/t, basically the same as the previous year; the average price of calcium carbide at about RMB2 800/t, down 3.4%; the average price of propylene at about RMB8 500/t, down 1.5%; the average price of benzene (petroleum grade) at about RMB6 500/t, roughly the same as the previous year; and toluene (petroleum grade) at about RMB5 700/t, down 4.9%; the average price of ethylene glycol at about RMB7 100/t, down 2.2%; the average price of methanol at about RMB2 900/t, down 0.7%.
4. Synthetic materials market
It is expected that the synthetic materials market in China in 2019 may show a high volatility, with various degrees of decline. Among them, the average annual price of polyvinyl chloride (LS-100) will be about RMB7 000/t, roughly the same as the previous year; the average price of high density polyethylene (5000s) at about RMB10 400/t, a decline of 5.8%; the average price of polypropylene (F401) at about RMB9 000/t, a decline of 8.0%; the average price of caprolactam at about RMB15 000/t, a decline of 9.5%; the average price of acrylonitrile (> 99.9%) at about RMB13 500/t, a decline of 11.2%; the average price of styrene-butadiene rubber (1500) at about RMB12 500/t, the same as the previous year.
5. Tire market
In 2019, the global tire market will still face protectionism. Prices may continue to oscillate at a low level. Domestic tire market will continue to be weak while stable in general. With cost support, annual average prices may be roughly equal to or slightly higher than the previous year. In 2019, the task of restructuring China's tire industry and resolving the rising cost is still very arduous, but the output will maintain a small increase and the industry's efficiency will improve.
Main economic indicators growth forecast 2019
It is preliminarily estimated that the main business income of China's petroleum and chemical industry will increase by about 8% in 2019, of which the business income of chemical industry owners will increase by about 6%. It is estimated that the total profits of the petroleum and chemical industry in 2019 will be basically equal to or slightly higher than the previous year. The export delivery value of petroleum and chemical industries is expected to increase by about 15% in 2019.
It is estimated that the apparent consumption of crude oil, natural gas and oil product will increase by about 5.0%, 15% and 3.0% respectively, with diesel rising by 1.0%. The fertilizer will be flat with 2018. The apparent consumption of synthetic resin, ethylene and caustic soda will increase by about 4.5%, 3.5% and 4.0% respectively.
