The domestic chemical industry wilderness worry about the power of chemical investment

The phenomenon of power curtailment that we once worried about in the previous report has now become a national phenomenon. The electricity shortage started in March and was initially limited to places such as Jiangsu, Zhejiang, and Shandong. Since April, the east wind has gradually grown and spread all over the country. Its scope, depth, and early start have greatly exceeded market expectations. Among them, two landmark phenomena are worth noting: First, the electric shortage phenomenon that appeared only in the summer of last year advances to the spring; Second, the provinces of Hubei and Hunan, which are major hydropower provinces, and Shanxi, Henan, and Shaanxi, the major coal provinces, also suffer from electric power shortage.

What is the root cause? Coal power is upside down and demand is strong.

This power shortage is the result of the combined effect of the three major factors: the relative locking of electricity prices, the weak supply and the strong demand. Although the country may ease the status quo by increasing the price of electricity and encouraging the creation of new power plants, due to the deep inversion of coal prices, the length of time it takes for power plant construction and the increasing certainty of strong demand, we believe that the root causes of the power shortage are short-term solutions. , The extent and duration of the electricity shortage may well exceed the initial market expectations.

How is the degree? Throughout the country, throughout the years.

At present, the power shortage and the consequent power cuts have spread across the country. Considering the additive effect of uncertainties such as climate, incoming water, and coal supply, the future power gap may further expand. This year may become the peak of power supply in our country's history. At present, many provinces, cities, and regions have begun to implement power-limiting policies, and differentiated power prices have also been put on the agenda. From the perspective of duration, it is expected that the situation of power shortage during the “Twelfth Five-Year Plan” period will hardly be fundamentally alleviated. It is expected that 2013 will be a culmination of a large-scale electricity shortage in the country.

What is the market outlook? Energy conservation and emission reduction, price increase limit.

According to reports, in the first quarter, the use of electricity in industries such as chemical industry showed a pick-up, which verifies the premise of our previous “recovery of industrial energy consumption and triggered the restart of the energy-saving emission reduction policy in May”. Under the dual background of high electricity consumption in high-energy-consuming industries and shortage of electricity in the country, the resumption of energy-saving, emission-reduction, and power-restricted production and production policies has become a high probability event. We believe that this year's energy-saving and emission-reduction policies will not only limit electricity, but also increase the price of policies will be significantly stronger than last year. In this process, the traditional bulk chemicals industry was significantly affected, and fine chemical and new material companies were relatively less affected.

Where is the subject? The industry is high in consumption and resources are self-sufficient.

We believe that the most profitable chemical companies in the process of limiting electricity production and production should be high-supply-rate enterprises in high-energy-consuming industries. At the same time, investment opportunities will spread along with the power shortage or appear in the western region. Under this logic, we are optimistic about the chlor-alkali enterprises with high self-sufficiency in the west, including Inner Mongolia Junzheng, Zhongtai Chemical, Yinglitex and Tianyuan Group. At the same time, we are optimistic about the highly self-sufficient Binfen shares.