The Great Earthquake in Japan Makes a Good Contribution to China's Petrochemical Industry

On the whole, we analyzed that the reduction in the output of Japan's petrochemical industry will have a positive effect on China’s petrochemical industry. First, it is expected that it will, to a certain extent, stabilize the recent rapid rise in oil prices and reduce the pressure on the profitability of Chinese oil refining companies. Second, it is expected that In the short term, the supply of the vast majority of petrochemical products will be reduced, which will benefit most of China's petrochemical companies.

Below we will analyze several varieties that will benefit significantly: methyl ethyl ketone industry: This time, Japanese methyl ethyl ketone companies such as Maruzen Chemical and Idemitsu Chemical are all located in the hardest-hit area of ​​Chiba and are seriously affected. Its direct impact on MEK production capacity is 210,000 tons, which is equivalent to more than 80% of Japan's total production capacity, and taking into account Japan's methyl ethyl ketone production capacity of 130,000 tons, that is, more than 50% are dependent on exports, so we expect this stop, In the short term, methyl ethyl ketone will face a tight global supply situation and will significantly increase the export capacity of methyl ethyl ketone companies in China. Therefore, prices are expected to increase significantly. Companies that are expected to benefit from such as Qi Xiang Tengda (002408) (Buy rating), Tianli Hi-tech (600339) (not rated) etc. We maintain Qixiang Tengda’s earnings forecast of RMB 2.13 and RMB 2.68 for 11-12 years, with a target price of RMB 55.

PO industry: This disaster may affect Sumitomo Chemical's 180,000 tons of PO capacity, which is equivalent to nearly 10% of East Asia's total capacity. The impact on supply may be quite significant, and the previous 80,000 tons of capacity that Takahashi closed, The short-term PO supply and demand situation is expected to be very tight. From the perspective of China's imports, 10 years of imports accounted for 362,000 tons, accounting for about 25% of apparent consumption, and the self-sufficiency ratio was relatively low. Although imports from Japan are not large, we analyzed that Japan's possible reduction in production is still It will indirectly affect our country through its influence on global supply and demand. Therefore, we are optimistic about PO's price trend for a period of time in the future. It is expected that the related companies such as Binhua (601678) (not rated) will benefit.

Polyurethane industry: Mitsui Chemicals near Chiba Prefecture and NPU in the Gulf of Kyoto are also included in this affected area. Its total polyurethane capacity is MDI 400,000 tons TDI 265,000 tons, which is equivalent to 40% of the production capacity of these two products in China. Around the same time, taking into account that after entering the second quarter, it will enter the peak season for the use of polyurethanes. The sharp reduction in production capacity will significantly intensify the contradiction between supply and demand in the future. Therefore, we are also optimistic about the price increase of MDI and TDI products. Those companies that are expected to benefit, such as Yantai Wanhua (not rated) and Cangzhou Dahua (600230) (not rated), are involved in the acrylic industry: Sumitomo Chemical is also included in the affected area, and its acrylic acid production capacity is 80,000 tons. Therefore, we believe that Shenyang Chemical Industry (000698) is also one of the potential beneficiaries. Maintaining the company's EPS for 10-11 years is forecast at 0.41 yuan and 0.6 yuan, and maintains the company's buy rating.