By Fan Min, China Petroleum and Chemical Industry Federation
In 2022, under the work arrangement and business guidance of relevant state ministries and commissions, China's petroleum and chemical industry actively responded to the impact of many unexpected factors, and the industry generally achieved a stable operation. However, the industry was also facing strong pressures, such as demand contraction, supply shock and lowing expectation. The operating presents a strong falling trend from high level, and the unbalanced development of external factors has also intensified the internal differentiation.
Basic situation
1. The added value of the industry had a slight increase
In 2022, the industrial added value of enterprises above designated size in the petroleum and chemical industry increased by 1.2% year-on-year, and the growth rate dropped by 4.1 percentage points compared with 2021.
The three major sectors differentiated significantly: The added value of the oil and gas exploration industry increased by 5.4% year-on-year, 3.2 percentage points faster than that of the previous year; the added value of the oil refining industry fell sharply by 8% year-on-year, dropped by 10 percentage points year-on-year; the added value of the chemical industry increased by 5.7% year-on-year, a year-on-year drop of 1.8 percentage points.
Among the 9 major sub-sectors of the chemical industry, there are 5 sectors increased year-on-year, of which basic chemical raw materials, pesticides, and coal chemical industry grew rapidly, and synthetic materials and special chemicals increased slightly. In the meantime, there are 4 sectors decreased year-on-year, including chemical ore, fertilizer, paint and rubber products, all of which were down slightly.
2. Energy production was stable and chemical production was slowing down
Oil and gas production maintained steady growth. According to the National Bureau of Statistics, China's cumulative crude oil output reached 205 million tons in 2022, a year-on-year increase of 2.9%, and the growth rate accelerated by 0.5 percentage points. The output of natural gas was 217.79 billion cubic meters, a year-on-year increase of 6.4%, and the growth rate slowed down by 1.8 percentage points. Crude oil processing suffered its first decline after years of continuous growth. The total processing quantity of the whole year was 676 million tons, down 3.4% year on year. The output of refined oil increased despite the reduction of crude oil processing, and there was a large differentiation among varieties. The total output of refined oil (including gasoline, kerosene, and diesel) was 366 million tons, a year-on-year increase of 3.2%, and it was down 8.1% in the previous year. Among them, diesel increased by 17.9% year-on-year; gasoline decreased by 5.1% year-on-year; kerosene decreased by 24.9% year-on-year.
Chemical production slowed down slightly. The total output has declined slightly. In 2022, the capacity utilization rate of China's chemical industry was 76.7%, a year-on-year decrease of 1.4 percentage points, and the total production of major chemicals decreased by 0.4% year-on-year. Key chemicals mainly saw a slight decline, among which the output of ethylene was 28.975 million tons, a year-on-year decrease of 1%. The total output of synthetic materials decreased, of which synthetic resins increased slightly by 1.5%, synthetic rubber decreased by 5.7%, and synthetic fiber single (polymer) bodies decreased by 6.5%. The output of chemical fertilizers was basically stable, with a total output (in purity) of 54.719 million tons, an increase of 1.2% year-on-year, and the output of pesticide (dry 100%) amounted to 2.497 million tons, a year-on-year decrease of 1.3%. The output of tire casings decreased by 5.0% year-on-year.
3. The overall demand was sluggish, and the growth rate of apparent consumption dropped
In 2022, affected by the slowdown of the macro economy, high energy prices, the impact of the pandemic beyond expectations, and the continuous decline in real estate, the downstream demand for petroleum and chemical industry was sluggish in general. The total apparent consumption of crude oil and natural gas of the year was 1.039 billion tons (oil equivalent), a year-on-year decrease of 0.3%. The total apparent consumption of major chemicals decreased by 1.4% year-on-year.
According to the National Bureau of Statistics, the total apparent consumption of basic chemical raw materials in 2022 decreased by 0.05% year-on-year, of which the apparent consumption of ethylene was 30.888 million tons, a year-on-year decrease of 0.8%, sulfuric acid decreased by 1.5%, caustic soda decreased by 3.3%, and soda ash decreased by 4.7%. The total apparent consumption of synthetic materials was about 217 million tons, a year-on-year decrease of 4.8%, of which synthetic resin decreased by 1.5%, synthetic rubber decreased by 2.3%, and synthetic fiber single (polymer) decreased by 10.5%.
Relatively speaking, the demand for agricultural chemicals was good. The total apparent consumption of chemical fertilizers (converted to pure) for the whole year was 51.329 million tons, a year-on-year increase of 10.6%.
4. The overall price rose with the support of cost, and the downstream was obviously weaker than the upstream
In 2022, the petroleum and major chemical markets were affected by external factors, and the prices rose first and then fell down, with large fluctuations. The overall price rose on a cumulative basis throughout the year. According to the price index of the National Bureau of Statistics, the ex-work price of the oil and gas exploration industry rose by 35.9% year-on-year, and the chemical raw material and chemical manufacturing industry rose by 7.7% year-on-year. Judging from the trend, the price had a relatively large increase in the first half of the year, lingered at high level in the third quarter, and declined significantly in the fourth quarter.
Affected by the prices of energy and raw materials, the prices of chemical products remained at a high level, but the downstream demand was weak, and the upward momentum was insufficient, so the increase was much lower than that of upstream raw materials. Market monitoring shows that among the 48 main inorganic chemical raw materials, there were 41 having a year-on-year increase in the annual average market price, accounting for 86%. Among the 87 main organic chemical raw materials, there were 50 having a year-on-year increase in the annual average market price, accounting for 58%. Among the 32 major synthetic materials, there were 17 having a year-on-year increase in the annual average market price, accounting for 54%. The prices of phosphate fertilizers, potash fertilizers, and compound fertilizers remained high. The annual average price of tire rose significantly year-on-year, driven by rising cost.
5. The profit remained stable, the profitability declined, and the division of the sector was obvious
By the end of 2022, there were 28 760 enterprises above designated size in petroleum and chemical industry, with a cumulative operating income of RMB16.56 trillion, a year-on-year increase of 14.4%, hitting a record high, and a total profit of RMB1.13 trillion, a year-on-year decrease of 2.8%, basically maintaining a historical high. The revenue growth rate was 8.5 percentage points higher than that of national scale industry, and the profit decline rate was 1.2 percentage points lower, accounting for 12% and 13.4% of the industry respectively, both of which increased compared with the previous year.
In 2022, the industry-wide revenue margin was 6.8%, a year-on-year decrease of 1.2 percentage points, which was 0.7 percentage points higher than the national scale industry. The loss of loss-making enterprises increased by 71.8% year-on-year. The scale of industry-wide loss was 19.4%, a year-on-year increase of 3.9 percentage points.
In terms of sectors, the accumulated revenue and profit of the oil and gas exploration industry were RMB1.49 trillion and RMB355.25 billion respectively, a year-on-year increase of 32.9% and 114.7% respectively. The cumulative revenue and profit of the oil refining industry were RMB5.19 trillion and RMB22.92 billion respectively, a year-on-year increase of 18.6% and a decrease of 87.6%. The cumulative revenue and profit of the chemical industry were RMB9.56 trillion and RMB728.92 billion yuan respectively, a year-on-year increase of 10.1% and a decrease of 8.1%.
In chemical industry, the coal chemical industry turned losses into profits, the profit of chemical mining and dressing more than doubled, the profit of chemical fertilizers and pesticides had significant growth, and the manufacturing of basic chemical raw materials and special chemicals declined slightly. The synthetic materials, coating (pigment) materials and rubber products had obvious decline.
6. Foreign trade maintained rapid growth, and the structure continued to be optimized
In 2022, the foreign trade of China's petroleum and chemical industry maintained rapid growth, and the total volume of imports and exports hit a record high. According to customs data, the total import and export volume of the whole industry reached US$1.05 trillion, a year-on-year increase of 21.7%, but the growth rate dropped by 17 percentage points from the previous year, accounting for 16.6% of the country's total import and export volume. Among them, the total export value was US$356.48 billion, a year-on-year increase of 20.6%, the total import value was US$690.13 billion, an increase of 22.2%, and the trade deficit was US$333.65 billion, a year-on-year increase of 24.0%.
In 2022, China imported 508 million tons of crude oil, a slight decrease of 1.0% year-on-year, and its dependence on foreign imports was 71.2%, a decrease of 0.8 percentage points year-on-year. The annual import of natural gas was 152.07 billion cubic meters, a year-on-year decrease of 10.4%, and the dependence on foreign imports was 40.2%, a year-on-year decrease of 4.4 percentage points.
In 2022, the export of refined oil products was 34.428 million tons, a plummet of 14.6%. The physical export quantity of chemical fertilizers was 24.741 million tons, a year-on-year decrease of 24.8%. The export value of rubber products was US$61.19 billion, a year-on-year increase of 5.8%, and it was still a large chemical exporter, accounting for 17.2%, which was basically stable.
Imports of organic chemicals and synthetic materials decreased for the second consecutive year, while exports increased significantly, and net imports decreased significantly. In 2022, the import volume of organic chemicals decreased by 26.6% year-on-year, the export volume increased by 11.3% year-on-year, and the net import volume was 22.804 million tons, a sharp decrease of 45.7% year-on-year. The import volume was 21.304 million tons, a year-on-year decrease of 24.5%.
7. Investment presented a healthy growth trend
In 2022, the completed investment in the oil and natural gas exploration industry increased by 15.5% year-on-year, and the growth rate increased by 11.3 percentage points year-on-year. The completed investment in the chemical raw material and chemical product manufacturing industry increased by 18.8% year-on-year, and the growth rate increased by 3.1 percentage points year-on-year. The completed investment in the fuel processing industry decreased by 10.7% year-on-year, and last year increased 8% compared to the year before last.
In 2022, the national industrial investment increased by 10.3% year-on-year, and the manufacturing investment increased by 9.1% year-on-year. The growth rate of oil and gas exploration and chemical industry investment significantly exceeded the national average level of industry and manufacturing, laying a solid foundation for China's energy supply and raw material self-sufficiency in the later stage.
Trend forecast
In terms of macroeconomics in 2023, the overall trend will be rising internally and declining externally. The slowdown of world economic growth, high inflation and geopolitical turbulence are still uncertain factors affecting the outlook of the world economy. 2023 is a critical year for the implementation of China's 14th Five-Year Plan (2021-2025). Facing the internal and external environment full of uncertainties, the Central Committee of the CPC and the State Council will keep following the general principle of economic work of seeking progress while keeping performance stable. Under the policy background of the pandemic turning around and promoting the overall improvement of economic operation, the overall Chinese economy will show a relatively obvious recovery trend.
In 2023, the impact of the cost side on chemical product prices will weaken, and demand is expected to pick up. However, the supply is still in the production capacity release cycle, the external environment is not optimistic, and the pressure of supply and demand contradiction is still large. Therefore, it is expected that the recovery of demand is not enough to support the sustained rise of prices. Whereas with the relief of cost pressure, the operating rate and benefits of chemical industry are expected to improve marginally.
Relatively speaking, chemical raw materials and products in the domestic demand market will have a better performance, and the enterprises with integrated advantages will have a more resilient recovery. As the global planting area continues to expand, pesticides and fertilizers will keep prosperous. The demand for chemical raw materials related to new energy such as EVA and POE is still expected to maintain rapid growth.
From the perspective of China's Petroleum and Chemical Industry Prosperity Index (PCPI), the industry's prosperity in 2022 generally showed a trend of falling from a high level, and in the third quarter it fell into the cold and super-cool range, and steadily recovered from the fourth quarter despite the declining of the industry prices and benefits. The index continued to rise in the latest January 2023, from the cold to the normal range (99.34), showing a good trend of recovery. Considering the advanced nature of the prosperity index, we predict that the industry will generally recover and stabilize in 2023.
