In recent years, China's petrochemical industry has been loosening its policy constraints and foreign investment restrictions have been sharply reduced. The arrival of foreign capital will not only bring advanced direct cracking technology of crude oil to olefins and high value-added high-end chemical products, but also new investment and operation modes, new product standards, advanced intelligent manufacturing concepts and brand-new competition and cooperation modes with domestic enterprises, which will bring tremendous demonstration and leading role to domestic enterprises. . But in the long run, the centralized investment of foreign capital and other large capital will shape the new market structure and operation logic of domestic petrochemical industry.

Wen / Lv Xiaodong, serving in Sinopec economic and Technological Research Institute
In the future, how to grasp the logic of capital, technology and brand development in the process of industry evolution will be the key for petrochemical enterprises. In the traditional sense, expanding production scale, reducing production costs, or no longer the first important meaning in the process of enterprise development, industry competition will also change from “ melee ” mode to a new “ Hierarchical competition and complementary ” mode.
In April 2018, the Nordic chemical industry plans to produce the world's leading high-quality chemical terminal products in Huizhou, Guangdong.
In July, Basf announced that it would invest 10 billion US dollars in the construction and operation of a fine chemical integration base in Zhanjiang, Guangdong Province.
In September, Exxon Mobil announced the $10 billion sole proprietorship project in Huizhou, Guangdong.
Subsequently, SABIC and the Fujian provincial government signed a memorandum of understanding on investment in the world-scale and tens of millions of tons of petrochemical projects; Shell plans to expand its cooperation with CNOOC to build the third phase of Huizhou Refining and Chemical Project.
With the continuous entry of foreign capital and large-scale private capital, the investment environment of China's petrochemical industry will be confronted with five major challenges, and the logic of industry development will be transformed. The petrochemical industry will enter the post-project era, presenting the important characteristics of the times such as capital, technology and brand.
The threshold of policy is decreasing and environmental protection is continuously promoted.
Since the major reform of petrochemical industry in 1998, a new round of reform of petrochemical industry in China has been deepening in the past 20 years. In 2015, China liberalized the right to use crude oil imports from local refineries, and in the same year, decentralized the authority to examine and approve provincial petrochemical projects.
In 2018, the restrictions on foreign capital access and joint venture ratio of gas stations and petrochemical projects were relaxed. BP and Shell announced a large-scale layout of domestic gas stations, and enterprises such as Basf and ExxonMobil announced the establishment of wholly owned plants in China.
However, as the threshold of industrial policy is decreasing, the restriction of China's environmental protection policy is constantly increasing. In 2015, China followed “ Atmospheric 10 ” Later issued “ Water 10 ” 2016, & ldquo; Earth 10 ” Promulgated, the same year “ Industrial Pollution Sources Fully up to Standard Emission Plan ” Implementation; 2017, the national carbon trading market started; 2018, the implementation of the new "Environmental Protection Law", environmental protection tax began to levy. Accept. In the meantime, the Ministry of Ecology and Environment carried out several environmental inspections, & ldquo; Blue Sky Defense & rdquo; and & ldquo; Autumn and Winter Production Restriction & rdquo; action. The domestic petrochemical industry has a new situation of easy investment and hard work.
Overcapacity of refinery and transmission to chemical sector
In 2017, China's refining capacity was about 816 million tons per year, and the refining start-up rate was only 69.5%, far below the world average of 81.6%. In the future, stimulated by a series of reform dividends, such as the liberalization of crude oil imports and the decentralization of approval authority, domestic refining capacity is expected to reach 960 million tons per year by 2025, with a starting load of about 71%.
Faced with severe oil refinery overcapacity situation, the transformation of domestic refining to chemical industry is the consensus of the industry. But at present, the chemical market is not fully aware of the potential new supply brought about by the refining transformation, and still stays in the market understanding of & ldquo; oil is oil, chemical is chemical & rdquo; and so on.
At present, the newly-built large-scale integrated refining and chemical enterprises have greatly reduced the output of refined oil, and the yield of refined oil in some enterprises is even lower than 40%. The purpose is to increase the output of chemical raw materials and chemical products. Existing refineries have constructed large-scale reforming units to meet the needs of upgrading the quality of refined oil. In recent years, Shandong local refining and reforming units have increased their production capacity by more than ten million tons.
While the reforming unit is being built, a new increase in aromatic hydrocarbons such as pure benzene will be supplied, and alternatives for further production of PX (p-xylene) will be provided. In addition, some refineries try to use the refinery propylene, liquefied petroleum gas, naphtha resources to build PDH (propane dehydrogenation) unit, DCC (deep catalytic cracking) unit, extending the propylene industry chain to chemical transformation.
Moreover, many traditional refining enterprises are also actively extending to the downstream industry chain. For example, Lihuayi develops engineering plastics such as polycarbonate, HSBC and Hengyuan develop olefin cracking and aromatics deep processing industry chain, Jincheng and Hualian develop carbon fiber and high quality needle coke, and Haike Group develops special industry combining petrochemical industry with salt chemical industry.
The current pattern of domestic refining and chemical markets is also an area that many foreign-funded enterprises need to carefully assess when entering the domestic market. Basf has adopted the method of not building refining capacity and importing naphtha to build its petrochemical base with investment of tens of billions of dollars; ExxonMobil has also adopted the method of direct cracking of crude oil to produce olefins, producing no or less refined oil.
External market environment and competitive pressure increase
From 2017 to 2025, North America is expected to add about 12 million tons of polyethylene production capacity, more than 50% of the new capacity needs to be exported. It is estimated that only 15% of the South American region will be diverted, most of which will only flow to the Chinese market. If we do not consider the impact of trade friction, the proportion of low-cost polyethylene imports from the United States will increase from about 6% to about 30%, the impact on the domestic market can not be ignored.
In particular, LLDPE (linear low density polyethylene) products, 2025, North American exports from the current 36% or so LLDPE share will increase to 20%.In 25 years, 48% of North America's large number of low-cost alpha; - olefin copolymer products will provide North America LLDPE with strong competitiveness.
In the face of competition, domestic enterprises will be more passive, but it should be seen that the Middle East also used its ethane resources around 2005 to expand its petrochemical production capacity on a large scale and export to the Northeast Asian market, but the domestic petrochemical projects still achieve a large number of construction and rapid expansion of production capacity.
With the decline of ethane resources in the Middle East, the construction of chemical production capacity in the Middle East will be slowed down dramatically in the future, and the expansion of production capacity brought about by the shale gas revolution in North America may repeat this process. Although the challenges facing domestic petrochemical industry come from outside, we should consider how to face up to them and how to adapt to them.
Narrowing of the domestic petrochemical market
According to the current construction plans of several major refining and coal chemical projects, it is expected that by 2025 the domestic ethylene equivalent self-sufficiency rate will increase to nearly 80%, propylene will exceed 90%, butadiene and PX will be nearly 100% self-sufficiency.
From the perspective of trade balance, it is inevitable that China will not import low-cost derivatives from the Middle East and the United States at all. When the market for bulk petrochemical products is about 80% self-sufficiency, it is in fact in a state of supply-demand balance.
In addition, the establishment of the seven refining and chemical industry bases and the rectification of chemical industry parks have also raised the entry threshold of new projects for domestic petrochemical enterprises. Many small and medium-sized refining and chemical enterprises, including Shandong local refining, will therefore face greater policy barriers. With the expansion of future carbon trading into the petrochemical industry, and possible future carbon taxes, the competitiveness of coal chemical production lines will be significantly affected, weakening its incentive to further expand production capacity.
Under such a market environment, enterprises can strive for greater development space only by means of market digestion, technological breakthroughs and capital operation.
The competition pattern of the whole industry chain is forming.
In recent years, with the liberalization of the right to use imported crude oil, non-state-owned trade import qualifications and export quotas of finished oil by the state to local refineries, the crude oil resources of local refineries have been guaranteed and the export channels of finished oil have been opened up, and the starting rate has been continuously improved.
At present, policy, technology, talent, capital and other factors are no longer the threshold for private enterprises to enter the refining and chemical industry. Under the background of market liberalization, private enterprises have accumulated certain advantages in these areas, and gradually formed a complete industry which integrates oil storage and transportation trade, oil processing, product oil sales and fuel oil sales. Chain.
With the support of local governments, some enterprises have made rapid progress in the construction of petroleum, product pipelines and gas stations. The competition in petrochemical industry is spreading to the whole industrial chain.
One
Post Project Era: ROI increases with concern.
Before 2010, China's petrochemical industry was basically in the era of project. At that time, the resources, technology and capital of the domestic petrochemical industry were monopolized, and the pressure on the supply side of the market was small. Whether the enterprise or the government, in dealing with the relationship between the project and investment, they still remained in the project as the core, project-led investment, project-driven investment.
After 2010, China's petrochemical industry has gradually entered the post project era. With the liberalization of the right to import crude oil, the abundance of raw material resources for petrochemical production, the reduction of domestic capital threshold, the increase of financing channels, the large-scale increase of domestic petrochemical industry operators; at the same time, the increase of domestic R&D investment, the increase of alternative commercial technologies, and intellectual property protection issues, resulting in the country With the maturity of financial market and the activity of private capital, the financing channels of projects have been greatly increased, and the threshold of financing and the impact of capital on production have been reduced.
Promoted by this, China Fast Construction has invested a number of propane dehydrogenation (PDH), methanol to olefins (MTO) and coal chemical projects, but large-scale refining projects are scarce. In fact, from 2011 to 2017, only two large-scale refining and chemical integration projects, Wuhan of China and South Korea and Chengdu Ethylene of PetroChina, were put into production.
In addition to oil prices and market factors, a shift in attitudes towards large projects is also a factor. Due to the tightening market funding environment, environmental protection and other policy constraints, enterprises become cautious about investment in large projects; and the government has tightened the audit of large projects, capital began to be more sensitive to the rate of return on large projects.
Two
Capital age: transformation from project production to capital operation
In the future, China's petrochemical industry will enter the era of capital. The petrochemical industry itself is a capital intensive industry, and capital oriented development is its endogenous driving force. With the increasing number of transnational capital, main capital and private capital in recent years, the maturity of domestic capital market system has paved the way for equity investment in petrochemical industry. For example, new refining and chemical enterprises have changed their traditional way to obtain bond financing mainly through banks and opened up capital channels through equity financing.
In addition, Zhejiang Petrochemical and Hengli Petrochemical are mostly listed companies, Shenghong Petrochemical is raising backdoor listing, capital operation is flexible; in addition, new private refining through the binding with local state-owned enterprises, to achieve local financing support.
In order to meet the requirements of industry development and domestic supply-side reform, since the Third Plenary Session of the Eighteenth Central Committee proposed to actively develop mixed ownership economy, domestic main petrochemical enterprises, after decades of development and accumulation, are trying to introduce external strategic investment, establish state-owned assets management system, realize the diversification of capital structure and improve governance. Structure, optimize state capital allocation and return.
The entry of foreign capital plays an exemplary and guiding role in the long-term investment of petrochemical enterprises in China. Domestic petrochemical industry investment risk is high, pay more attention to the industry cycle excess returns, often fast construction, rely on economic cycle recovery investment, lack of medium and long-term investment concept and operational R&D investment. The perspective of cross-border foreign investment in the medium and long-term investment in the industry will provide a new perspective for domestic industry investment.
Generally speaking, the capital age of petrochemical industry is essentially the process of capitalization of assets and capital marketization. The profit driven nature of capital will transform the development of the industry from the production and operation of the project to the operation of capital.It can be predicted that with the maturity of the domestic petrochemical industry environment and the increasing number of competitors, the threshold of direct access to large-scale projects will be greatly raised, and the phenomenon of integration, mergers and acquisitions, venture capital and other ways into the petrochemical industry will continue to appear in the future.
Three
Technology age: new technology promotes new cycle
Another feature of the future development of China's petrochemical industry is stepping into the technological age. After decades of development in the domestic petrochemical industry, a complete set of technologies and equipment, such as ethylene and aromatic hydrocarbons, have basically achieved autonomy, and coal chemical technology has also made breakthroughs.
However, in the high value-added products and other fields, independent technology is still scarce, commercial technology availability is still lacking; in the process of rapid upgrading of product quality standards led by foreign enterprises, domestic technology follow-up is slow, new trade and technical barriers are constantly forming; and in this round of light hydrocarbon raw material revolution led by North America, The domestic petrochemical industry is also not involved in resource acquisition and technology development. In addition, China has not formed an effective technical barriers and intellectual property protection system, often related technologies once broken through the rapid diffusion of technology, domestic production capacity followed by excess.
Large-scale foreign investment will bring advanced petrochemical technology including ExxonMobil crude oil direct cracking to olefins and Basf advanced chemical production technology. At the same time, the large-scale introduction and application of private capital such as Zhejiang Petrochemical Company to UOP and other foreign advanced production and engineering technology will have a great demonstration effect on the development and application of domestic related technologies, and will promote the overall technical level of domestic petrochemical industry.
From a cyclical point of view, the next Petrochemical cycle is expected to occur in 2025-2030 as production capacity slows down in the future. By then, the traditional consumer markets, such as the self-sufficiency rate in Northeast Asia, will significantly increase, the raw material dividend brought about by the shale gas revolution will be greatly weakened, new shale gas production capacity such as the traditional North America will be reduced, and production costs will rise.
Although Argentina, Africa and other countries and regions have great potential for shale gas development, but its size and influence is bound to be weaker than North America, the contribution to the global refining and chemical industry is not as good as this cycle. In addition, as the export of crude oil, ethane and other resources in North America increases, the price of resources will inevitably rise, and the cost advantage of traditional resource countries will be weakened.
Therefore, the return of the next Petrochemical boom cycle, while relying on the improvement of supply and demand fundamentals, will rely more on investors'restraint and prudent investment choices, how to make use of new technologies, such as direct ethylene production from methane, direct olefin production from syngas, and industrial chains, supply chains and service chains through digital information technology. And the transformation of value chain will further promote the formation of new cycle and bring great benefits.
Essentially, the arrival of technology era in domestic petrochemical industry is the result of the close combination of large capital and big technology. Capital promotes technology, technology protects capital, and new trade barriers are formed.
Four
Brand age: brand building has become the core competitiveness of enterprises
China's petrochemical industry has been relatively backward in brand building, due to the lack of technical barriers, the degree of product differentiation is insufficient, it is difficult for domestic enterprises to form a unified brand identification, industrial chain-related enterprises to choose products are limited to low-cost priority, domestic imports and some joint venture products, through domestic sales agency After sale, most of them are simply product distribution. Industry competition mostly shows price competition, market share competition and channel control power competition.
In the future, with the localization of foreign-funded and sole-proprietorship enterprises, the domestic industry will have more opportunities to come into contact with foreign-funded enterprises near the market and customer-centered product strategies, such as Basf with its differentiated products and technology, to provide customers with a complete series of products.
At the same time, BASF has set up a special service team to provide customized, systematic and all-round professional & ldquo solutions including service and technical support in the fields of automobile, construction, packaging, medicine, paint and coatings, food and agriculture, electronics and electricity.
While working with Daimler to develop the Smart Forvision concept, Basf's automotive service team integrated the expertise of various departments to improve the economy, safety and environmental protection of electric vehicles. On the roof, coatings are provided by functional solution plates, and battery materials are provided by battery-related business units; on the body, innovative materials such as window polymer films and high-performance insulation materials are provided by plastic business plates; and on the wheels, plastic business plates provide plastic materials for manufacturing. All plastic wheels. In this way, they achieve common development with customers, even lead the development of customers, and ultimately form the core competitiveness of BASF product brand.
Essentially, the arrival of the brand era means the consistency of the quality of enterprise products, clear standards, perfect pre-sale, after-sales and even financial services, fundamentally, is the consistency of enterprise culture.
Identify the industry level of the enterprise and tap the potential.
In the future, the competition mode of China's petrochemical industry will change. With the formation of new barriers, the position of enterprises in the industry will be clearer. Traditional refining and chemical enterprises will take more flexible raw material selection, flexible production, richer and more differentiated products as competitive advantages, forming a whole industrial chain enterprise group. These enterprises are mainly traditional main enterprises and wholly foreign-owned enterprises. At the same time, some integrated kerosene enterprises will enter this field.
For coal chemical enterprises, the huge development potential of syngas, low-cost chemical products, as well as in the coal, energy, natural gas, methanol market multi-development pattern, will form a unique enterprise group. For enterprises that import light hydrocarbons and methanol to produce chemical products, flexible raw material procurement, production and operation, and more regional product positioning will complement the enterprise group.
If the entry of foreign capital brings advanced technology and new concept of products to the domestic petrochemical industry, and large capital jointly enters, it will clarify the industrial structure and logic, and promote the inter-enterprise walls at all levels.The formation of the barrier, the division of labor will be more clear, the original industry & ldquo; melee & rdquo; model will gradually break, the new competition pattern gradually formed, but also should arouse the concern of enterprises. Enterprises at different levels complement each other, while enterprises at the level show more direct competition.
At that time, it is the greatest potential development space that an enterprise can strive for outside the traditional market to recognize its positioning, development advantages and logic.