Economic downside risks remain
In 2015, the global economy continues to slow growth, frequent changes. IHS consulting firm expects the overall performance of the global economy has improved in 2016, the expected growth rate of 2.9%. Among them, the U.S. economy will continue to grow steadily, Europe and Japan will be slightly higher, Brazil and Russia, the recession is expected to ease the pressure. At the same time, the continued low oil prices, as well as monetary stimulus from the European Central Bank (ECB), the people's Bank of China will not only support economic growth, but also may bring unexpected rise in space. However, excessive public and private corporate debt, China and other emerging economies, the further decline in the economy, as well as the grim geopolitical situation so that the economic downturn still exists. This means that the global economy in 2016 the possibility of a dilemma is still very high.
Since 2010, China's economic growth continued to decline, in 2015 the economic growth rate is the lowest level in 20 years. IHS consulting predicts that China's economic growth will fall to 6.3% in 2016, and will continue to slow down over the next few years. Heavy industry, public utilities and mining industry overcapacity, high debt levels, low yield, as well as negative return on capital and other issues, will continue to drag on economic development. In addition, the service industry and light industry performance is excellent, and will continue to maintain vitality, housing sales gradually warmer, the real estate market is no longer a consistent negative news. But the RMB into the International Monetary Fund's special drawing rights system, the short term impact on the economic development of limited.
The oil supply and demand will return to balance
In 2015, China's manufacturing slowdown led to a sharp fall in commodity prices, a sharp decline in import demand. Although suppliers have cut, but the demand is far greater than the decline in the magnitude of the future, this trend will continue. In 2015, commodity prices have fallen 1/3, IHS consulting company forecast 2016 commodity prices will begin to stabilize.
The oil, in 2015, the United States Chinese demand yield increase, and OPEC production three factors to cause oversupply, market prices continue to dip. After 2015 9 ~ October after the transition period, the price decline trend intensified. In early December, OPEC said it would not cut production, Brent oil prices fell to 40 U.S. dollars / barrel below. Under the stimulus of a sharp fall in prices, global oil demand in 2015 increased by 1 million 700 thousand barrels / day, mainly from China and the United states. Oil demand growth is expected to slow to 1 million 200 thousand barrels per day in 2016, as some emerging markets face financial difficulties, but demand growth is expected to exceed supply growth, making the global market supply and demand roughly balanced. Oil and other commodity prices are expected to roughly flat in the first half of 2016, the second half began to gradually rise.
At the same time, the market share of the country's market share is still continuing, the U.S. shale oil production will be the key factor to balance the global supply and demand. Shale oil producers in the United States affected by low oil prices in 2016 will continue to reduce production costs and improve production efficiency by reducing the profit and loss balance point. Saudi Arabia believes that the oil market should be adjusted by the inherent price, rather than by OPEC supply management to control. Saudi Arabia intends to maintain production in more than 10 million barrels / day, with seasonal demand changes, production can be increased to 10 million 600 thousand barrels / day.
In addition, Iran is also ready to return to the oil market in 2016, is expected by the end of 2016 production will increase by 500 thousand barrels / day. In addition, the OPEC production in November 2015 reached 32 million barrels / day, the world's crude oil inventories may be further increased.
The chemical industry lies between the energy and consumer goods, and therefore, in essence, it is influenced by the two party. Changes in energy prices will affect the cost of chemical production, and changes in the consumer market will ultimately affect the demand for chemical products. Due to the sharp decline in energy prices, in 2015 the industrial performance is good.
Low cost benefits to consumers
In 2015 the world's major chemical products apparent demand growth of 4.5%, as the world's largest consumer of chemical products, China's demand growth rate of 10% to lead the global growth. Despite the rapid growth of the stock is part of the cumulative, but strong consumer and product replacement is still driving most of the demand growth, resulting in an increase in the actual consumption.
With the decline in commodity prices, such as oil, consumer spending power has increased, most of the benefits of low prices of raw materials are transferred to the consumer.
In addition to consumer demand growth in the end, the decline in the price of chemical products also stimulated the growth in demand for other alternative commodities. Because of some chemical products and other non chemical products can replace each other, such as for beverage packaging polyester and polyethylene can replace the glass and aluminum, with the rapid decline in prices of chemical products, consumer goods manufacturers tend to use high performance materials to reduce costs. The majority of consumer goods manufacturers are particularly sensitive to the cost of the main products, and therefore the substitution of materials is very common in China.
In addition, another important factor to promote the apparent demand growth is the return to material replacement. Generally speaking, the return cost is relatively stable, when the fresh raw material prices fell to close to the price, the consumer goods manufacturers to give up the use of recycled raw materials and raw materials. In 2014, China consumed about 17 million tons of recycled plastic, while the consumption of recycled plastics fell by more than 2 million tons in 2015. The decline in the consumption of recycled materials drives the demand for fresh raw materials, thus driving the increase in apparent demand.
With the global population and gross domestic product (GDP) growth, global demand for chemical products will continue to grow, the Chinese market will continue to be the main driving force. Slightly different is that demand in North America will be accelerated after 20 years of stagnation. In recent years, the low cost of raw materials brought by the shale oil and gas revolution will revitalize the manufacturing sector in North america.
Although some labor-intensive and low-end consumer industry from China transferred to a more competitive labor cost, high profit and sensitive intellectual property business corporations will also stay away from Chinese, but most of the manufacturing industry will remain in Chinese. Therefore, even if the cost increases, China is still the world's most cost-effective manufacturing center in the short term.
From a global perspective, China's laborThe fastest growing power costs, the average labor costs rose nearly 3 times over the past 10 years. However, most people do not realize that China's labor productivity has increased significantly over the past 10 years, offset some of the rising costs. In addition, the popularity of industrial automation has greatly reduced the demand for labor.
In addition, China's advantage lies in the integration of manufacturing industry. China's manufacturing industry is highly complex and highly integrated. 2001 accession to the World Trade Organization (WTO), China gradually built from raw material production, logistics, supply, parts manufacturing, assembly, product distribution and service chain aspects of the efficiency of industrial cluster. Even in the rising labor costs, the high cost of public utilities and the pressure of Taxation, the integration of China's manufacturing industry has an unparalleled cost advantage. Therefore, China will maintain the leading position in the global manufacturing industry. More positive change is likely to continue to expand, China manufacturing, and manufacturing countries and regions from the traditional high-tech products, such as Japan, Korea and Europe, acquiring more high-end products include digital products, home appliances, heavy equipment, high-speed railway market share. China will make full use of the huge market size and cost competitiveness, so that the high-end products to the public, and to get the global market share.
Capital investment reached a record high
In the past 5 years, the capital investment of chemical industry has reached the highest. 2014, the global investment of up to $125 billion, a record high. Northeast Asia accounted for 60% of the total investment in the world. Among them, most of the investment concentrated in aromatics, synthetic gas and plastics industry. From the early stage of the project investment will be driven by the rapid decline in 2016, including the fastest decline in Northeast Asia, the decline is sufficient to offset from 2016 to 2019, the North American shale oil and gas driven investment growth.
Although there may be no published devices appear in 2017 to 2019, but the investment rate will be significantly slowed down, and fell to the lowest level since 2000.
In recent years, Chinese enterprise investment enthusiasm rising, mainly concentrated in the coal chemical industry, with imported methanol as feedstock for methanol to olefin (MTO), imported propane as raw materials to prepare propylene propane dehydrogenation (PDH) and other non conventional chemical raw materials industry, while the traditional investment continued to decline since 2011. But because of low prices for capital returns have a serious impact, coal chemical industry investment boom at “ ”, add water resource restricted China West coal resource rich areas in the scale of investment, Chinese enterprises will significantly reduce the capital investment, and thus have an impact on Northeast Asia investment. When investors finally realized investment unprofitable, methanol to olefins and propane dehydrogenation to propylene investment bubble will eventually burst, traditional petrochemical investment will once again favored in 2020.
In addition, private investment is the main support force of China's chemical industry production capacity growth in the near future. The next 5 years, private enterprises in the petrochemical industry investment will become more active. And the Chinese government to relax the allocation of crude oil imports, allowing private enterprises to import crude oil, will make private investment in China to further gain market share.
In addition to investing in the domestic market, Chinese companies are also actively investing in overseas markets. The state-owned enterprises and private enterprises to obtain resources, share in the international market, and the potential risk China market as the main target, actively seeking new projects and overseas acquisitions, the investment trends in the next 5 years, and even more distant future will continue and accelerate.
M & A activity gradually warming up
As commodity prices collapsed, and the value of the company was undervalued and other factors, so that in 2015 the global chemical companies M & A activity gradually warming. Among them, the most striking is the Dow Chemical Company and DuPont Co merged, will stimulate more activity in the next few years. In addition, under the situation of the global economic slowdown, the company will also be through the annexation of rival companies to achieve the purpose of integration to increase profits.
In China, M & A activities of state-owned enterprises in 2015 are very frequent, but there is no large chemical enterprises mergers and acquisitions. This situation or will change in the next few years, the state-owned enterprises need to integrate the low efficiency of the production line, energy-saving emission reduction, improve efficiency to enhance competitiveness. In the railway, electric power and shipping industries, large-scale mergers and acquisitions of state-owned enterprises in 2015 showed that the Chinese government to integrate state-owned assets, improve efficiency and global market competitiveness of the determination. The integration between the local chemical companies may drive the industry mergers and acquisitions, because these enterprises have many outdated technology and capacity, market share is seriously divided, through mergers and acquisitions market integration, the elimination of high costs and excess capacity, and streamline the management structure.
However, the integration of these companies need to overcome many difficulties. In China, private enterprises mergers and acquisitions are rare. Most business people in charge believe that the company is a symbol of personal success, is the failure of the individual to be acquired, so they are usually strongly resisted by mergers and acquisitions or mergers. This culture is not likely to change in the near future. But the acquisition of financial distressed companies will become more frequent, because of high debt ratio in the economic slowdown in the environment facing more and more challenges, so that eventually became the object of acquisition.
Low oil prices are beneficial to the chemical industry, but it is a challenge to unconventional raw materials. The next 5 years, will significantly reduce the industrial investment, so the market for the next 10 years will lead to tight supply pattern.
The profit space uneven in quality
When the low oil prices for petroleum based chemicals manufacturer profits at the same time, but also hurt the Middle East and North Africa had these cost advantages of producers, with light based raw materials manufacturer profitmargins olefin industry was a substantial compression. Although prices continued to fall, but the decline in oil prices higher than chemical products, chemical manufacturers have a huge profit space. However, this opportunity is not for all the chemical industry chain “ ”. Overall, the upstream industry is affected by the market volatility, market volatility and close to the end consumer goods are much smaller, the price of basic chemical products with oil prices fell.
In China, with naphtha as raw materials of ethylene cracking plant operators obtained in recent years the most substantial profits. Aromatics producers also benefit from low oil prices, butCompared with the former profit margin is very large. Xylene improved earnings, but the excess capacity still could improve profits. In addition, chlor alkali, methanol and ammonia product chain low energy price advantage has been the decline in product prices eroded.
In addition, the intermediate producers also obtain certain benefits from lower oil prices. Spreads between base chemicals and intermediates have been expanded. In general, the performance of non durable consumption of chemical products is relatively good, such as ethylene glycol (EG), polyester chain and styrene chain have outstanding performance. For infrastructure and durable goods chemical products affected by the slow growth in demand, just passable performance. Such as acetic acid, two diphenyl methane diisocyanate (MDI), coatings and synthetic rubber chains are more and more demand for capacity expansion and slow effect, further deterioration of profitability.
IHS consulting firm predicts that the chemical industry will be better than expected in the next 5 years, but regional differences will still exist. In the short term, low oil prices will lower the profits of chemical producers in the United States and the Middle East, which is good for oil producers in Asia and Europe. In the medium term, the recovery of oil prices will put pressure on chemical manufacturers in Asia and europe. In the long run, with the reduction of new investment industry, demand growth will gradually exceed the capacity growth, market supply and demand will be gradually tightening, the industry average performance will be improved