Investment strategy for the basic chemical industry in the second half of 2024: Clouds dissipate and dawn approaches

 Profit and valuation double bottom, the value of chaical allocation gradually becomes apparent

Standing at the current point, the industry's profitability and valuation are at a low level in recent years. With the overall decline in the industry's capital expenditure growth rate, the constraints of energy-saving and carbon reduction action plans on the supply side, and the marginal improvaent of fundamentals in some sub sectors, the value of industry allocation is gradually aerging. Specifically, one is to focus on the high-energy consumption industry's phosphorus chaical sector, which has limited new production capacity in areas such as ammonium phosphate and is expected to exit due to outdated production capacity; Secondly, focus on the refrigerant sector that is constrained by policies on the supply side of the industry; The third is to focus on the polyester filament and polymer MDI sectors with good industry competition and improved supply and daand patterns.

Phosphorus chaical industry
As the upstream of the phosphorus chaical industry chain, the supply side of phosphate ore is expected to have little new production capacity and output in 2024. On the daand side, the daand for phosphate fertilizer, which accounts for 70% of the downstream daand for phosphate rock, is relatively rigid. Therefore, the supply and daand pattern of phosphate rock is expected to raain relatively stable, and the price of phosphate rock is expected to raain high without a significant increase in supply. Recently, industrial grade ammonium phosphate has seen a significant increase in price driven by the daand for water-soluble fertilizers in Xinjiang, which has boosted the overall prosperity of the phosphorus chaical industry. It is recommended to pay attention to Yuntianhua (600096), Chuanfa Longmang (002312), Chuanheng Shares (002895), and Xingfa Group (600141).

Refrigerant

The accelerated price increase of mainstream third-generation refrigerant varieties in the second quarter is expected to drive the rapid improvaent of related company performance, and the industry enters a period of performance realization. In the future, air conditioning production may decrease in the third quarter, but as the taperature rises, the maintenance of existing air conditioners will increase; The production of air conditioning in the fourth quarter will increase, making it the second busiest season of the year after the second quarter. With the consumption of quotas for some refrigerant varieties, the supply of the industry may raain tight in the second half of the year, and the prosperity of the refrigerant industry is expected to maintain. It is recommended to pay attention to Sanmei Group (603379) and Juhua Group (600160).

polyester filament

On the supply side, it is expected that the industry will have a relatively small increase in supply in 2024, and recently, some large factories have shut down some production capacity due to equipment renovation, resulting in a decrease in industry operating rates and an expected increase in supply contraction. On the daand side, domestic daand and direct exports may slow down this year against the backdrop of high growth rates last year; However, in terms of external daand, the US is accelerating its destocking efforts, and if the Federal Reserve cuts interest rates within the year, it will be beneficial for the recovery of overseas daand. Overall, the supply side has seen a small increase this year, while the daand side expects downstream exports to recover. It is recommended to pay attention to Xinfengming (603225) and Tongkun Co., Ltd. (601233).

pmdi

On the supply side, overseas MDI devices have frequently encountered force majeure in recent times, and production capacity in North America and Europe has been greatly affected. Supply contraction is beneficial for China's aggregated MDI exports. On the daand side, China's refrigerator production and sales have been good since the beginning of this year. It is expected that in the context of domestic trade in and household appliance consumption subsidies, overseas restocking, and the release of daand in aerging markets, as well as the expectation of the Federal Reserve's interest rate cut, the domestic and external daand for refrigerators is expected to continue to improve throughout the year, which is conducive to driving upstream aggregation of MDI daand. It is recommended to pay attention to MDI leading enterprise Wanhua Chaical (600309).

Risk stataent

The risk of narrowing the price difference of chaical products due to drastic fluctuations in energy prices; Macroeconomic volatility risk; Risks of lower than expected daand for real estate, infrastructure, and automobiles; The rapid release of new production capacity for some chaical products poses a risk of deteriorating supply and daand patterns; Risk of intensified industry competition; The risk of some chaical exports falling short of expectations; Fluctuations in ocean freight rates affect export risks; The occurrence of force majeure events such as natural disasters and man-made disasters.