Fujia Dahua discontinued Rongsheng and Hengyi involvement

“Fujia Dahua is only a raw material supplier for Dalian Yisheng, which only accounts for about 10%. We also import raw materials from PetroChina, Sinopec and South Korea.” On August 18, Rongsheng Petrochemical (002493) executive secretaries ran money. .

Affected by the “Plum Blossom” of the tropical storm, at 3:30 on August 8th, Dalian Fujia Dahua Co., Ltd. jetty broke two parts of the jetty, resulting in leakage of highly toxic chemical products and no leakage from the chemical storage tank. On August 14, the Dalian Municipality decided that the Fujia Dahua PX Project would immediately suspend production and formally decided that the project would be relocated.

After Fujia Dahua ceased production, the adjacent downstream PTA producer Dalian Yisheng became the focus of attention in the industry; and the two shareholders behind Dalian Yisheng, Rongsheng Petrochemical and Hengyi Petrochemical (000703), were in the capital. The market is seen by some investors as "mines."

Affected by the shutdown of Fujia Dahua, the domestic PX price soared from the 11,000 yuan/ton in July to the current 11,800 yuan/ton, which will undoubtedly boost the production cost of Dalian Yisheng. “But the current social inventory of PTA market is low, and the demand for downstream factories is stable, which will lead to a price-driven upward trend in domestic market PTA prices,” said Xia Ting, a business analyst.

However, the capital market has been very vigilant, Rongsheng Petrochemical fell 2.89% the same day, Hengyi Petrochemical fell 3.56%, its decline is much greater than the broader market decline.

The industry chain crisis Dalian Yisheng is a PTA manufacturing enterprise jointly invested by Rongsheng Petrochemical, Hengyi Petrochemical, and Fujia Dahua, among which Rongsheng Petrochemical and Hengyi Petrochemical hold 56% and 24% respectively. Equity. It is the leading domestic PTA production enterprise. After it was put into production in 2009, it had a production capacity of 1.5 million tons/year (planned production capacity of 1.2 million tons/year), and the new 750,000 tons/year production capacity was also put into production in June this year.

“The reason why Fujia Dahua has participated in the stock exchange is that its role as a raw material supplier is an important point,” said the company.

In the petrochemical industry chain, crude oil, naphtha, PX, PTA, polyester, and Other chemical fiber products are ranked in order from top to bottom. Fujia Dahua mainly produces PX, while Dalian Yisheng uses PX as raw material to produce PTA. As Fujia Dahua was ordered to suspend production by the Dalian Municipal Government, production of Dalian Yisheng will undoubtedly be significantly affected.

The production capacity of Fujia Dahua PX Plant is 700,000 tons/year, which accounts for approximately 8% of domestic PX production capacity. Its suspension will increase the domestic PX supply gap to 4 million tons/year.

"Although Fujia Dahua's raw material supply only accounts for 10% of what Dalian Yisheng needs, this will definitely affect the latter, both in the long and short term." . According to him, from a short-term perspective, Dalian Yisheng’s raw material supply plan will surely be disrupted due to the abrupt shutdown of Fujia Dahua. From a long-term perspective, Fujia Dahua’s production capacity accounts for 8% of the total domestic production capacity. The relocation of the device will take at least one year, and its suspension will inevitably break the balance between supply and demand. PX prices are expected to change significantly soon.

Since August 16th, Dalian Yisheng, the most direct crisis, has taken the lead in the domestic PTA market, and the other domestic PTA manufacturers have also begun to adjust their prices the next day. At the same time, Zhengzhou “PTA**” main contract has also taken place. In the transaction, on the 17th, PTA’s total position in one day doubled over 500,000 hands, and daily volume increased more than twice as much as 3 million lots. The main contract price exceeded 10,000 yuan mark, soaring 3.75% to 1,00024 yuan/ton.

"The shortage of PX will inevitably result in a reduction in domestic PTA production, and prices may rise significantly in the second half of the year," Xia Ting said. PTA is the main raw material for polyester fiber and other chemical fiber products. Once the price of PTA rises sharply, the cost of the petrochemical industrial chain and even the chemical fiber textile industry chain will increase.

Unsustainable PX Investment In fact, the tight PX supply has become a business opportunity in the eyes of many local governments. They have liaised with PetroChina, Sinopec, and CNOOC to control the supply and import of crude oil, hoping to rely on the existing “three barrels” of local petrochemical projects. , Build PX and PTA capacity.

In the eyes of these local governments, integrated production capacity of PX and even refining and refining is an important bargaining chip to boost local GDP. With these upstream devices, a large number of downstream manufacturers will actively invest in setting up factories.

Taking Dalian as an example, Dalian Western Pacific (601099) Petrochemical Company, Dalian Petrochemical, etc. have become the bargaining chips for the Dalian Municipal Government to attract investment. Relying on these two large-scale integrated refining and chemical installations, Fujia Dahua and Dalian Yiyi have Sheng Sheng and many more downstream companies have invested in Dalian, forming a highly influential Dalian Petrochemical Park.

“At present, China's chemical fiber textile enterprises are mainly concentrated in coastal cities such as East China and South China. From the perspective of being close to the market, PetroChina and Sinopec also tend to set up new PX plants in East China and South China,” said a Sinopec source. According to him, currently Sinopec's Zhenhai Refinery is planning to build a new large-scale PX plant. Hengyi Petrochemicals is liaising with Sinopec, hoping to obtain its PX supply.