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In 2016, the international crude oil price began to rise at the bottom. Under the influence of the global economic recovery, the implementation of OPEC crude oil production reduction plan and the geopolitical turmoil, the rise of oil price accelerated in the second half of 2017. On May 14, 2018, Brent's spot price hit $78.1 a barrel, again the highest level in nearly three years. Which industries will benefit from the rise in oil prices and which industries will suffer relative losses?
Rising oil prices are good for mining enterprises, while lagging oil clothing equipment benefits. Rising crude oil prices are good for oil mining enterprises. First, rising product prices directly increase the gross interest rate of the mining business. Second, the value of inventories increases, and enterprises with rich oil reserves benefit more obviously. Oil price increases also indirectly benefit the oil clothing and equipment industry, but there is a certain lag (1-2 years). In the latest annual report, PetroChina and Sinopec continue to raise their capital expenditure plans for 2018. In the future, the demand of oil service industry and oil and gas equipment industry will continue to pick up.
The refining industry has benefited from moderate price increases. Under the domestic oil product pricing mechanism, when the international crude oil fluctuates in the range of $40-80 per barrel, the oil product pricing is equivalent to the addition method. For refineries, the rise of the cost-side crude oil price can be smoothly transmitted to the product price, and refineries will benefit from the increase of gross interest rate and stock appreciation. When the oil price is higher than $80, refined oil pricing begins to deduct processing profit margin, and price conduction is blocked downstream. Continued price increase may damage the profitability of refineries. At present, the price of crude oil is still in the range of moderate price increase. In theory, the rise of oil price is good for the refining industry. In fact, this improvement has already taken place. In the second half of 17 years, the price of crude oil rose from $47.4/barrel at the end of June to $66.5/barrel, and the gross interest rate of refineries increased from 12.4% in the second quarter to 15.5% in the fourth quarter.
The upstream and middle reaches of the petrochemical industry chain benefit while the downstream is damaged. Petrochemical industry mainly uses crude oil as raw material, and the rising oil price makes its cost rise sharply, but most of the petrochemical product prices are almost entirely driven by the cost, so the pressure of rising cost in a certain range can be fully transmitted downstream, and some products will benefit from the replenishment demand brought by the establishment of the rising price trend. Sum up the stock appreciation. Taking the polyester industry chain as an example, the rise of oil price often leads to the expansion of PTA price gap and the rise of prosperity of related manufacturers. The gross interest rate of listed companies with synthetic fiber as the main industry also shows a significant positive correlation with oil price. In the downstream links, such as textile industry, raw materials are directly affected by oil price, while the downstream products are facing. Demand is relatively rigid, cost increases are difficult to transmit quickly, and profits will be compressed. For example, in the plastic industry chain, general plastics enterprises such as polypropylene (PP), the main raw material of plastics, have benefited most from the rising oil price trend, while the downstream plastics industry has high competitiveness, weak bargaining power, squeezed profits and damaged profits.
Alternative industry chains or alternative processes are relatively beneficiary. In recent years, the new coal chemical technology, which is based on coal instead of petrochemical products, has gradually developed, and the cost advantage of coal chemical industry has been significantly improved by the rising oil price in the past 16 years. There are also many kinds of production processes for some chemical products. Different production processes will appear under the rise of oil price. For example, there are two production processes of chlor-alkali: calcium carbide process and ethylene process. Under the rise of oil price, the cost of PVC production by ethylene method will increase, while PVC enterprises by calcium carbide process will benefit indirectly; for example, in rubber industry, stone-based production will increase indirectly. The cost of synthetic rubber, which is the main raw material of chemical products, has risen, while the natural rubber industry is advantageous. Rising oil prices are also good for the fuel ethanol industry.
The cost of aviation and shipping industry with fuel as its main raw material is under pressure. Take the aviation industry as an example, the cost of aviation oil is a very large proportion of the operating costs of domestic airlines, accounting for 20% - 30%, and some low-cost airlines may be higher. The operating costs of domestic airlines have increased substantially after the oil price rise, which is a drag on performance. Over the past two years, the airline industry's profits have grown tremendously. On the one hand, the global economic recovery has brought about demand growth, on the other hand, oil prices are at a low level, and airlines have been able to further stimulate the growth of passenger traffic through low fares. Although the combination of various factors has brought about rapid profit growth, passengers are becoming more and more sensitive to price under the low fare strategy, and cost transfer is becoming more and more difficult, which means that the profit erosion of airlines will be more serious after the oil price rises.