A butterfly wing in the Amazon rainforest occasionally vibrate, and perhaps in two weeks it will cause a tornado in Texas, — — this is the famous butterfly effect.
In real economic life, environmental policy has much more influence on capacity, price, profit and share price of listed companies than between butterfly wings and tornadoes.
Public information shows: this year, the Ministry of environmental protection set up 28 tracking research team of experts, the Beijing Tianjin Hebei and surrounding 2+26 City stagnation guidance. Increasingly overweight environmental pressures, has many industries capacity and profit pattern has a huge impact.
Luxi Chemical before raised third quarter results, three quarter net profit rose up to 4.29— 4.85 times. Luxi Chemical, said the rise in performance mainly due to the impact of market supply and demand, most of the products caused by price increases.
Under the pressure of environmental protection, many small and medium-sized enterprises in the chemical industry have stopped production and shut down, which has aggravated the pressure on prices of products. According to statistics, as of the end of August this year, prices rose as high as 120% formic acid, caustic soda prices rose 61%.
High prices have contributed to an increase in the import of some chemicals. China's imports of polycarbonate rose again in the first 7 months of the year after a two-year decline.
When the industrial development hit environmental pressures, the whole market is undergoing drastic changes.
Chemical industry performance to good: Luxi Chemical profits rose four times
Luxi Chemical recently released performance notice, the first three quarters of this year, the net profit was 950 million — 1 billion 50 million, an increase of 429.31%— 485.02%. Luxi Chemical, said its continued strengthening of safety, environmental protection, control efforts, the production of equipment to maintain a long period, full load, stable operation, because the product prices, and achieved better economic results.
Luxi Chemical was founded in 1992, before 2008, the main products are compound fertilizer, urea and other chemical fertilizer products, and then gradually turn business to coal chemical, salt, chemical and other products. Luxi Chemical Performance brisk this year, mainly thanks to the chemical business.
According to earnings, the first half of this year, Luxi Chemical total revenue of 7 billion 288 million, up 42.5%; net profit was 551 million, up 330.38%. Luxi Chemical in the first half of this year revenue and net profit hit a record high. The chart below shows the total revenue and net profit of the bread industry in the first half of the year:

Not only Luxi Chemical Industry, the performance of Listed Companies in the chemical industry are very brisk. Wanhua chemical in the first half of this year revenue and net profit rose, net profit reached 4 billion 861 million, up 255.35%.
Jiangshan chemical in the first half of total revenue of 2 billion 221 million, up 34.39%; net profit was 195 million, up 11.21 times. Jiangshan chemical, including rising performance of the main reason: chemical industry rebound, prices rebounded, raw materials and product price increase caused by price scissors.
Environmental protection meritorious: chemical products prices rose
Product prices to stimulate listed companies to rise in gross margin.
In the first half of this year, the gross profit margin of Luxi Chemical Industry was 22.73%, up 9.66 percentage points higher than that of the same period of last year. Jiangshan chemical gross profit margin was 20.99%, an increase of 5.98 percentage points.
Price increases continued in the second half: in the third quarter of this year, the average price of chemical products octanol rose by 20%. As of September 25th this year, octanol tax price has been as high as 8800 yuan / ton, an increase of 35%. From the beginning of the end of July this year, prices have continued to rise in alcohol.
China Merchants Securities research reported: 65% octanol capacity are concentrated in the fourth batch of environmental supervision of the province, 2+26 air pollution prevention and control work of environmental governance not loose, strict supervision will continue, the overall tight supply, prices are expected to continue until the end of the year octanol.
The price increases for other chemicals are staggering. According to the securities brokerage Research Report, the second half of 2016, the second major domestic production enterprises in Shandong Asd acid acid plant park, market supply and demand is broken, acid prices soared, from 2000 yuan / ton rose to 4000 yuan / ton. In addition, the third quarter of this year, the average price of caustic soda market reached 941 yuan / ton, compared with the same period last year, or 61%.
The continuous strengthening of environmental supervision is an important promoter of the price hike of chemical products. Societe Generale Securities research reported that major provinces in the production of chemical products are located in the list of priorities of environmental supervision in the column, some small and medium enterprises due to environmental non-compliance by shutting down rectification, supply contraction promote product prices rose sharply.
And in the next period of time, because of environmental protection and shut down factories, enterprises are likely to continue. Take Shandong Province, where Luxi Chemical Industry is located, as an example. Public information show: Shandong intends to plan to retain only 155 chemical parks, 44 rectification and cancellation, and requires key sensitive areas of chemical enterprises to enter the park before the end of 2018. Tianfeng securities research report said, the future environmental protection pressure, environmental costs outside the park enterprises will continue to increase, some enterprises will gradually shut down exit.
Industry's difficulties: China's polycarbonate external dependence of over 70%
The impact of chemicals on the environment is not only solved by limiting production, but depends more on technological breakthroughs, such as the fact that China relies heavily on imported polycarbonate.
According to customs data, as of the end of July this year, the number of China polycarbonate imports 786 thousand and 400 tons, compared with the same period last year rose 7.62%. This is the first time that polycarbonate has risen after falling imports for two consecutive years.
Polycarbonate (PC) is one of the mainstream large chemical products. In 2016, the global consumption was 4 million 330 thousand tons. Polycarbonate was widely used in electrical, electronic, automotive, optical and other fields. However, China's imports of polycarbonate are largely dependent on imports.
According to statistics, in 2016 China imported 1 million 317 thousand and 600 tons of polycarbonate, with an apparent consumption of 1 million 730 thousand tons. According to this calculation, the Chinese polycarbonateRetention is as high as 76.16%. In fact, in 2011, China polycarbonate dependency was as high as 95%. The following figure is the comparison of the consumption and import volume of China's polycarbonate between the bakery, finance, customs and Wind data:

According to Everbright Securities Research Report shows that although the global cohesive carbonate industry has entered a fully competitive market, but the low pollution production technology is still controlled by foreign enterprises, higher barriers to entry. According to statistics, 5 overseas giants including Bayer, Chesapeake, occupy 78% of the market of global polycarbonate.
The study shows that the production process of polycarbonate is divided into phosgene interfacial polycondensation and molten ester exchange. Phosgene process, which requires the use of phosgene, has a great impact on the environment, while the production of molten ester exchange method is simple, less environmental pollution. Most of the early production units were produced by interfacial phosgene polymerization. After 1990s, the new project mostly adopted molten ester exchange method.
Everbright Securities research reported that Bayer factory in Europe, GE group in Japan, Chiba and Spain are the factory by melt transesterification process, the national environmental protection laws and regulations is quite severe, but still be able to maintain productivity in the local. At present, the proportion of molten esters used in global capacity accounts for about 25%.
In 2016, China's polycarbonate production capacity was 875 thousand tons / year, but it was basically a wholly-owned or joint venture factory with international giants, accounting for more than 80% of foreign capital.
According to the China Everbright Securities Research Report, including the Teijin polycarbonate Co. (Jiaxing) company's production capacity of 147 thousand tons, Ling excellent engineering plastics (Shanghai) Co., Ltd. is the production capacity of 80 thousand tons of phosgene production capacity, Bayer (Shanghai) polymer Co. Ltd. production capacity of 200 thousand tons for indirect phosgene production.
In the past two years, China has gradually broken through in the polycarbonate industry. In 2016, 100 thousand tons of polycarbonate production capacity of Jiangshan chemical industry was put into operation. The process was used as molten ester exchange method.
The environmental pressure surgical rectifying violently affect the market short-term price movements, stimulate the performance of listed companies rose, but the real long-term competitiveness of the company, and not just rely on external stimulus, really solve the problem of environmental protection is not so simple and limited production inspection.