On February 15, international oil prices closed slightly lower. As of the close, the main contract of WTI crude oil futures fell by US$0.47/barrel, or 0.59%, to US$78.59/barrel; the main contract of Brent crude oil futures fell by US$0.20/barrel, or 0.23%, to US$85.38/barrel.
Data released by the U.S. Energy Information Administration (EIA) yesterday showed that U.S. commercial crude oil inventories unexpectedly surged by 16.283 million barrels in the week ending February 10, the largest weekly increase since March 2021. It was expected to increase by 2 million barrels. The value increased by 2.423 million barrels; gasoline inventories increased by 2.316 million barrels, which was expected to increase by 1.5 million barrels, and the previous value was an increase of 5.008 million barrels; refined oil inventories fell by 1.285 million barrels, which was expected to decrease by 100,000 barrels.
On the 15th local time, the International Energy Agency released its World Energy Report for February. The report stated that the global oil market is currently generally calm and that in the first half of 2023, world oil supply will exceed demand. However, with the recovery of the economy and demand, the reduction of Russian oil production and the implementation of European and American sanctions against Russia, there is still the possibility of a rapid market reversal.
The International Energy Agency predicts that global oil demand will reach 101.9 million barrels per day (101.9mb/d) in 2023, an increase of 2 million barrels per day compared to 2022. On the supply side, oil supply is generally stable in January 2023, at approximately 100.8 million barrels per day (100.8 mb/d). The International Energy Agency predicts that global oil supply will increase by 1.2 million barrels per day in 2023.
Lack of resonance, chemical market trends diverge
Under strong expectations and weak reality, the divergent trends of commodities before and after the Spring Festival this year made the entire market feel “a joy and a loss.” Recently, when visiting chemical companies in East China, reporters learned that various uncertainties and inconsistencies in expectations currently existing in the market will also make market trading logic switch more frequently, making it difficult to grasp market trends and trading rhythms. The interviewed companies generally believe that the chemical market may show a “monkey market” in 2023, and the market will fluctuate frequently, and the transaction difficulty of industrial companies will be greatly increased.
According to the relevant person in charge of the interviewed companies, the so-called frequent oscillations are because the market does not have very consistent expectations, including the fact that the macroeconomic situation is bifurcated internally and externally, and supply and demand are also bifurcated.
“The supply-side production capacity has been put into operation. Although the demand is said to have recovered, there are still differences in expectations. For example, if the supply is small and the demand is good, the expectation will definitely be better; if the supply is large and the demand is very poor, the expectation will be worse. Now the supply is There is production capacity, but there is still a little room for imagination in demand,” the person in charge said.
From the cost side, raw material prices are also clearly differentiated. In addition to crude oil, which may fluctuate at a high level, it is unlikely that there will be unilateral fluctuations in the future. Coal prices have begun to weaken again recently.
“Generally speaking, due to the differentiation of raw materials, supply and demand, and internal and external economic differentiation, the chemical market this year will have a back-and-forth oscillation trend, and it is difficult to have a consistent expectation to go in one direction.” In the opinion of the person in charge, Come on, now that there is no support from external demand and there is no resonance between the inside and outside, it is difficult for the chemical market to have a strong upward trend unless there is a very big problem on the supply side.
In this regard, Lu Jiaming, an energy analyst at Shenwan Futures, also explained that because international crude oil prices have been in a relatively stable range in the short term, the international situation still changes with uncertainty from time to time. Crude oil prices will inevitably still be driven by macro events and fluctuate due to their own supply and demand differences. Domestically, as the pressure on the upstream refining and traditional chemical equipment to be put into operation still exists, the overall supply of chemical products is mainly increasing. On the demand side, China has emerged from the epidemic and consumption is developing steadily. However, as the downstream demand side gradually recovers and the upstream supply speed is different, there will be a periodic mismatch between supply and demand. Under the current combination structure of the above-mentioned cost side and supply and demand side, it is easy to cause a “monkey market” market in chemical products as the price center of gravity shifts upward throughout the year.
Judging from the market, some chemicals are currently showing a “monkey market” operating trend. For example, PVC, which rebounded strongly before the Spring Festival, once reached a price of 6,700 yuan/ton, but then fell back after the holiday, with the lowest price being 6,143 yuan/ton. Based on this calculation, the decline reached 8.3%. This is also the inevitable result of the dual factors of the performance difference between domestic macro expectations and implementation, and the performance difference in actual operating data of variety fundamentals before and after the Spring Festival.
According to An Ran, a senior analyst at Hua’an Futures, chemical products showed a “monkey market” pattern after the holidays, mainly due to the large differences between long and short in the market. Before the holiday, investors’ expectations for economic growth were relatively high, which brought higher growth to the entire industrial products. In particular, the valuations of low-stock products such as asphalt, LPG, diesel, etc. have been significantly increased. However, the post-holiday demand recovery was less than expected, resulting in callback demand for these varieties.
“Judging from the post-holiday resumption process, the post-holiday resumption of work in the central and western regions is significantly faster than that in the east. The main reason is that this year’s foreign trade orders are weaker than in previous years, imports from developed markets in Europe and the United States are shrinking and slowing down, and my country’s eastern coast is more integrated with the international circular economy. There are many, and the impact will be greater. However, my country’s domestic consumption economy started relatively quickly, resulting in a significant increase in the resumption of work and production in the central and western regions.” An Ran said.
Market trading expectations and reality may switch repeatedly
Pang Chunyan, chief analyst of SDIC Anxin Futures Chemicals, believes that domestic chemical products will follow a cost increase trend in the first half of 2022.��There are trading opportunities with good trend.
“Last year, the price of chemical coal was high, and the overall profits of the coal chemical industry were poor. But this year, coal prices have fallen, and the profits of the coal chemical industry are expected to be restored. However, the domestic production capacity utilization rate is not high. The profit restoration may lead to the restart of long-term suspended production capacity. , Coal chemical products face the fundamentals of falling costs and increasing supply and demand, and the trend is difficult to grasp.” Pang Chunyan said.
The expected conversion of ethylene downstream products means that companies with diversified downstream products will arrange production according to market conditions. Products with better profits will also face pressure to increase production, and products with lower profits will face the possibility of production cuts. “Just switching production will not be as simple as turning the faucet. It will still require profits to continue to improve or decline, and companies can make adjustments after predicting the future.” In Pang Chunyan’s view, the main line of trading of chemicals in the first half of the year may switch to comparison. Frequent, but with the improvement of employment and income in the second half of the year, chemical products are expected to usher in a stable recovery in consumption. At the same time, there will also be opportunities for some varieties to have poor short-term supply and demand structures.
It is worth noting that under high inflation pressure, the Federal Reserve will maintain a tight monetary policy, which will still have a negative impact on chemical products.
“From the perspective of production process differentiation, petrochemical products have a high correlation with international oil prices, and the market linkage is strong. Overseas demand weakens, international oil prices face downward pressure, and petrochemical products will most likely adjust accordingly.” Xia Congcong believes that the coal market The general tone of ensuring supply and stable prices will remain unchanged in 2023. The cost side of coal chemical industry-related products shows a weak stability trend, lacking positive stimulation, and there is still a strong expectation of recovery for products dominated by domestic demand.
In addition, a series of active regulatory policies have provided support for the stabilization and recovery of the real estate market. As relevant policies are implemented and take effect, the real estate market will gradually undergo positive changes in 2023. Then, terminal demand is linked to real estate, especially those that have undergone deep destocking, may continue to have a strong trend in the first half of the year.
“From the perspective of investment opportunities, we are relatively bearish on the overall price, especially for some products that are more related to energy. The overall cost has fallen and the supply has returned to products with clearer returns, such as methanol. At the same time, proximal aromatics trading The demand for oil adjustment in summer has a relatively high overall valuation. At present, gasoline and diesel are relatively weak. Once proven false, PTA and other varieties may suffer a considerable decline. For more allocations, you can choose some varieties with lower valuations and flexible prices. For example, MEG, which is gradually realizing its production conversion logic.” Dai Yifan said that when the Yuanxing plant is put into operation in the second half of this year, the strength of soda ash may usher in a turning point. “There are no obvious variables in other varieties for the time being, but based on the slow recovery, relative to the 05 contract, the absolute price is more optimistic about the 09 contract.” He said.
According to Lu Jiaming, at present, from the perspective of flexibility, it is recommended to treat the chemicals side with a hedging approach. At present, some chemicals are still in a significantly weak supply and demand situation, so they can still be placed in the empty mix. Some varieties whose fundamentals have been significantly improved can be placed in multi-match combinations.
</p
