| Why do chemical products go up with the rise of oil price? |
| Hits：8637 AddTime：2021-03-16 15:41:52 |
| The continuous rise in oil prices has attracted investors' attention. The rise and fall of crude oil price will have an impact on the credit fundamentals of many sub sectors, and then affect the subsequent performance of relevant credit bonds, among which the chemical industry is the most influential. This paper attempts to explore the impact of oil price changes on the profit situation of different chemical industry. Three mechanisms: cost, inventory and alternatives Crude oil is one of the most important raw materials in the chemical industry. The rise and fall of oil price will directly affect the overall profit of the chemical industry. But because of the complexity of its own industrial chain, the impact of oil price change on industry profit is not only the cost rising. Overall, the impact of oil price rise on the profitability of sub industry is roughly through three paths: cost, inventory and substitute. (1) Cost: for the chemical industry with rising cost, it is necessary to see the capacity of transferring cost downstream to judge the impact of oil price on the industry profit; (2) Inventory: the sharp change of the inventory in oil price is the accrual and rotation of the asset impairment loss, which will affect the profit; (3) Alternatives: when oil prices rise, alternatives such as artificial fibers, natural rubber and coal chemicals benefit. The cost has risen. When the crude oil price rises, the chemical industry is faced with the risk of cost rise as a whole, but the impact of the cost rise on each industry is different. Two factors need to be paid attention to here: (1) Generally speaking, the higher the sensitivity of upstream cost with the increase of crude oil, the greater the impact will be on the chemical industry; (2) Whether the industry chain has strong bargaining power can transfer the cost rise to the downstream. If it can effectively transfer the cost, the increase of crude oil has little influence on its profit. The stock price is up. For upstream enterprises, crude oil is usually an important stock of enterprises. With the rise of crude oil price, the inventory will also have the accrual and rotation of asset impairment loss, which will affect the profit. Alternatives benefit. There are also many alternatives in the chemical industry that do not use crude oil as raw materials, such as natural rubber in rubber, artificial fiber in chemical fiber, and some coal chemical products. When oil prices rise, these industries will often benefit. The influence of oil price rise on chemical industry For other chemical industries, coal chemical business mostly extends the industrial chain from coal enterprises to downstream, and there are not many enterprises that do coal chemical industry alone; the mechanism of oil price rise on rubber and plastics is relatively simple, mainly due to the impact of cost rise; but for chemical fertilizer and soda industry, the overall impact of oil price change is not large. In this section, we will discuss these industries briefly. Coal chemical industry: the rising oil price is good for new coal chemical industry. Coal chemical industry mainly includes traditional coal chemical industry and new coal chemical industry. Traditional coal chemical industry mainly includes coal coking, coal to calcium carbide and coal synthesis ammonia, while the new coal chemical industry mainly includes coal methanol, coal to olefin, coal to natural gas, coal glycol and coal to oil, etc. the new coal chemical industry mainly produces products instead of petrochemical industry. Therefore, the rise of oil price has little influence on traditional coal chemical industry, but it is beneficial to the new coal chemical industry. Plastics: resin and plastic processing profit space is squeezed, and downstream processing is damaged more seriously. The downstream of the plastic industry is mainly a light industry with plastic products as the main business. On the one hand, the demand end of the downstream plastic processing industry is mainly the stronger consumer of real estate and automobile. The rising oil price brings about the difficulty of transferring the cost of synthetic resin to the demand side; on the other hand, the industry is mostly small and medium-sized enterprises with large overall volume, low barriers to entry and strong substitutability The homogenization competition of low-end plastics is more intense, and the increase of cost will further reduce the profit space of the industry. For resin, the rise of oil price is also a negative impact, but the bargaining power is better than downstream processing enterprises, and the negative impact is smaller. Fertilizer: indirectly pull demand, but the cost will also be under pressure, and the overall impact is not large. The rise of oil price may increase the demand for biomass energy, thus promoting the demand for pesticide and fertilizer to rise. However, the process is relatively long-term, and the possible impact is relatively limited when the oil price is not rising significantly; on the other hand, due to the alternative relationship between oil price and natural gas, the recovery of oil price will also drive the price of natural gas back to the back Rising, which may put pressure on gas head fertilizer producers to increase costs. In general, the rise in oil prices has little impact on the fertilizer industry. Rubber: the cost of synthetic rubber is up, and the demand for natural rubber is rising. The main raw materials of synthetic rubber come from naphtha cracked or cracked products, such as butadiene, acrylonitrile, styrene, etc., so when the oil price rises, the cost end of synthetic rubber will face the pressure of rising naturally. At this time, for the natural rubber which mainly comes from rubber tree, the cost end is not affected. As an alternative, natural rubber benefits from the rising oil price. Soda: demand and cost are not related to crude oil, and some of them are not affected by oil prices. Raw materials for the manufacture of soda include raw salt, synthetic ammonia and limestone, which are not directly related to oil price. The downstream demand of soda includes glass, washing, printing and dyeing, alumina and other industries. The demand is not affected by oil price. Generally speaking, the rise of oil price will not have a significant impact on the soda industry. Chlor alkali industry: ethylene process is damaged and calcium carbide method benefits. Ethylene, an important raw material of ethylene process PVC, is naphtha cracking product, so the price of PVC has a positive correlation with crude oil price. However, because of the distance between the industrial chain, the price change of PVC is often lagging behind the price change of crude oil. For example, crude oil prices fell significantly in June 2014, but PVC prices fell sharply to December 14 before they began to show. Although the price rise of crude oil will stimulate the price rise of PVC in ethylene method theoretically, because most of the PVC production capacity in China is the calcium carbide method, the overall cost will not rise obviously with the rise of crude oil price, which leads to the insufficient price elasticity of PVC compared with crude oil, which leads to the deterioration of PVC profit of ethylene process. |
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