The prosperity index of the petrochemical industry in June

In June, after China's economic recovery entered a stable period, there were some fluctuations. According to the data from the National Bureau of Statistics, in June 2023, the manufacturing PMI fell to 48.8, a decrease of 0.4 percentage points from April, and raw material inventory is a weak point. The supply and demand of the real estate market in key cities continued to be weak, the market activity declined, and the pressure on real estate destocking increased. In May, social financing increased by 272.9 billion yuan year-on-year; new loans to enterprises and residents diverged, with corporate loans increasing by 683.9 billion yuan and resident loans decreasing by 241.1 billion yuan. Internationally, the Fed's interest rate hike and the US debt ceiling raised short-term interest rates, which had a major impact on the liquidity of the commodity market, and commodity prices fell to varying degrees.

From the perspective of this month, the index value dropped to 94.95, a decrease of 3.9 percentage points from April 2023, entering the colder range; a decrease of 1.01 percentage points from May 2022, and the rate of decline narrowed rapidly.

Rational view of short-term dollar liquidity shocks

The Federal Reserve raised interest rates by 25 basis points in early June, raising the cap on the federal funds rate to 5.5%. In mid-to-late May, the delay in reaching an agreement on the US debt ceiling caused short-term market bill interest rates to rise to a high of 6%. The risk of debt default has raised the short-term market interest rate. The interest rate of bills due in June once exceeded 6%, which had a great impact on market liquidity in the short term and led to an overall decline in commodity prices including precious metals. Judging from the preliminary agreement reached by the two parties on the debt ceiling issue in the United States, it has no real impact on fiscal expenditures in fiscal years 2023 and 2024. Once the debt ceiling issue is resolved, the US Treasury Department needs to issue new US debt to supplement the cash account. It will prompt the Federal Reserve to re-examine its balance sheet reduction policy to support the Treasury Department's bond issuance plan. On the whole, although short-term liquidity has been significantly impacted, in the medium term, it will accelerate the Fed's tightening of the US dollar policy, which is conducive to the overall recovery of the commodity market.

The high temperature season in the northern hemisphere is coming, energy prices may bottom out and rebound

Affected by the warm winter from 2022 to 2023, global natural gas inventories have significantly exceeded seasonal levels, which has led to a sharp drop in global natural gas prices. Taking the European natural gas TTF as an example, it has dropped from a high of 220 euros/MW in August 2022 to less than 30 euros/MW in May 2023. The fall in natural gas prices has also led to a decline in the prices of coal, propane, and methanol. From the perspective of seasonality, the high temperature season in the northern hemisphere will come soon: many places in Asia have entered the high temperature season, North America will gradually enter the high temperature season in late June, and the temperature in Europe has also significantly exceeded the historical level of the same period. High temperatures will lead to a sharp increase in electricity demand, thereby boosting energy demand, and the probability of energy prices bottoming out is higher.

Prospects for Petroleum and Chemical Industry

From the perspective of prosperity indicators, the rebound of the oil and chemical industry prosperity index in April and the fall in May are the result of the large fluctuations in the cost-profit ratio, which is a direct result of the increase in the volatility of international financial conditions under the tightening of the US dollar monetary policy. reflect. Excluding the impact of the cost side, the inventory level of the petroleum and chemical industry continues to improve, the production heat continues to heat up, and the situation of new orders has also improved. The overall recovery trend is relatively certain. It is expected that in June, as the factors affecting costs gradually subside, the recovery of bulk commodity prices will drive the demand for inventory replenishment, and the prosperity index of the petroleum and chemical industries will usher in a rebound.

The Petroleum and Chemical Industry Prosperity Index is jointly compiled by China Petroleum and Chemical Industry Federation and Shandong Zhuo Chuang Information Co., Ltd. Prosperity Index", "Chemical Raw Materials and Chemical Products Manufacturing Prosperity Index", "Rubber, Plastics and Other Polymer Products Manufacturing Prosperity Index" 4 sub-indices. The selection of prosperity indicators for the prosperity index of the petroleum and chemical industry is based on the measurement of the potential output and economic benefits of the industry, including production micro-data and industry benefit data. Production micro-data include: capacity utilization, product profitability, finished products stock level. The basic data comes from the results of regular surveys and evaluations established with more than a thousand companies.