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How will the sharp drop of crude oil affect the chemical and plastic industry chain?
Time: 2020-3-21 14:59:36 Source:绿凯思科GETRECYCLING Author:GET营销中心 Hits:32

College of plastic sustainable development

Under the influence of the crude oil production reduction agreement and the epidemic, the global financial market plummeted on March 9. On the same day, US stocks were rare, the Dow fell sharply by more than 2,000 points, crude oil futures fell by more than 30% and fell below $ 30, and the yield on 10-year U.S. Treasuries fell below 0.4%, a record low.

On March 12, the scene reappeared. Global financial markets plummeted, the US and other 11 countries stock markets melted, crude oil futures continued to plummet, and precious metals, gold and silver, were not spared.

Crude oil prices can be said to affect the entire petrochemical industry chain. So what are the specific impacts of the plunge on crude oil on the petrochemical and logistics industries?

Upstream industries in the chemical industry chain

The decline in oil prices will have the most direct impact on upstream oil companies, bringing temporary negative impacts. But for consumer countries with high oil dependence, although Chinese oil companies will suffer some shocks in the short term, they may benefit from low oil prices in the long run, because this will significantly reduce costs.

In addition, falling oil prices will squeeze new energy consumption to a certain extent, which is not conducive to the new energy industry. The direct impact is to make it easier for fuel vehicles to be replaced by new energy vehicles. In addition, it will crowd out the consumption of other energy sources, which is not conducive to energy companies such as natural gas, coal power, and hydropower.

For other industries, it is generally beneficial. After all, falling oil prices can reduce energy consumption costs, especially for transportation and chemical product manufacturing companies. Each round of sharp fluctuations in oil prices will promote the industry's "survival of the fittest," because in the downward phase of oil prices, high-quality companies can often achieve contrarian expansion and increase market share through advantages such as scale, capital, and brand.

Petroleum and petrochemical industry

From the perspective of the capital market, for downstream companies in the petrochemical industry chain led by refining and petrochemical companies, costs will be greatly reduced, and plastics, rubber, tires, pesticides, fertilizers, and chemical fiber industries will benefit directly and help these industries expand. Production, lower product prices, but the degree of profit improvement also depends on whether the industry's pricing power is in control.

Taking the plastic products industry as an example, raw materials are basic petrochemical products such as polyethylene and polypropylene, and the cost of raw materials accounts for a large proportion of production costs, and changes in oil prices have a greater impact on them. The industry is in the context of a downward economic boom. The prices of plastics (PP, PS, ABS, etc.) and synthetic rubber are at historically low levels. The decline in cost prices has helped improve the profitability of downstream modified plastics and tire industries. On the other hand, as a rigid demand product, modified plastics and tires have a relatively solid growth demand and will maintain a high degree of prosperity.

The decline in oil prices will gradually increase commercial inventories in the oil upstream and downstream industries in order to import cheaper crude oil and reduce the cost of the entire industrial chain in the future to benefit from it.

Shipping and logistics industry

Compared with the chemical industry's crisis-seeking opportunities and counter-current search, the decline in crude oil prices for shipping, logistics and other industries is more "blunt".

According to the calculation of China Merchants Securities, taking the data of 18 years as an example, whenever the price of oil drops by 10%, the cost of aviation fuel of China Southern Airlines, Air China and China Eastern Airlines will be reduced by 43/38 / 3.4 billion yuan, accounting for about 3% of their respective operating costs.

At the moment when the Global Sulfur Limitation Order was implemented, the impact of oil price fluctuations on the shipping industry is greater than ever.

The purchase of marine fuel oil has always accounted for the bulk of the cost of the shipping industry. The sharp drop in oil prices can effectively reduce the purchase cost of shipowners, thereby increasing the company's profits. Whether it directly affects the profit of shipping companies remains to be seen. Because the epidemic is entering the global supply chain into a financial crisis or even a credit crisis.

Demand-side recession has become a medium-to-long-term trend, and prices are ultimately determined by supply and demand. At the same time as the economy is weak in 2020, the overall capacity of container ships will increase significantly. Falling international oil prices will inevitably drive down China's crude oil import and conversion costs, which will cause the prices of refined oil products to fall, which is undoubtedly a good thing for truck drivers.

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