Wanhua Chemical is still in suspension.
During this period, the Shanghai 50 and the blue chip stocks both showed significant downward adjustments, ranging from 20% to 40%. The price of superimposed polymerization MDI has been falling all the way. Some Wanhua chemical investors are hard to calm down, even taking a stop-still in mind.
Should we not be so pessimistic? At least the author does not agree. Far from saying, Wanhua’s quarterly report is due to be released later this month. Let’s make some predictions first, which is also to give you a generous heart.
MDI: Profit contribution in the first quarter is expected to exceed the same period last year
Ningbo MDI Phase I Plant 400,000 tons/year began to stop on December 1, 2017. It is estimated that it will be inspected for about 50 days, and will be announced for resumption of production on January 23, 2018; the second phase of MDI device will be 800,000 tons/year in December 2017. Starting on the 16th, it is estimated that it will take about 45 days to repair, and it will be announced on February 7, 2018.
The two sets of MDI devices concentrate on long-term overhaul and have a great impact on the market's pure MDI supply. Simple calculation of pure MDI output during the maintenance period reduced a maximum of 60,000 tons, which is measured in accordance with the ratio of 35% pure MDI. The capacity utilization rate of Wanhua cannot reach and The output is set according to market demand, and the actual reduction in supply is much lower than 60,000 tons.
The shortage of short-term supply of pure MDI caused high prices. From January to March 1818, Wanhua Chemical's pure MDI listing price was 29,000 yuan, 30,000 yuan and 31,700 yuan respectively. The actual market price of pure MDI in the domestic market was much higher than the listing price. Show, Wanhua Chemical would like to reduce the price index of pure MDI downstream companies by reducing the listing price.
Because Wanhua occupies a lot of maintenance time in the first quarter, pure MDI produces less pure MDI, although the price is high, but the actual sales profit contribution is not too much. With Wanhua's 1.8 million tons of capacity, three sets of devices have sustained high load. Operation, pure MDI prices are expected to continue to fall back to reasonable prices.
From January to March 2018, Wanhua chemical polymerization MDI distribution quotation was 28,800 yuan, 25,500 yuan, 24,500 yuan; the direct selling market was 28,800 yuan, 26,000 yuan, 24,500 yuan.
In contrast to pure MDI quotes which are much lower than market prices, aggregate MDI quotes substantially higher than actual market prices have shown a trend of declining all the time in the first quarter of aggregated MD market prices, and once short-term fell below 20,000 yuan quoted prices higher than the actual market price shows Wanhua Chemical’s Aggregate MDI has the meaning of bidding.
Theoretically, the overhaul has an impact on aggregate MDI output of around 120,000 tons; but given that the end of 17th inventory of 160,000 tons of polyurethane series superimposed in the first quarter was the polymerization of MDI, the traditional off-season Wanhua chemical polymerization of MDI sales did not have any impact all the way down the aggregated MDI price. Explain that there is no shortage of market aggregation MDI.
According to the polymerization MDI downstream Wanhua direct sales small and medium-sized customers annual aggregate MDI consumption about 500 tons in January settlement price of 25,600, in February 23,500 price with 17% VAT at the end of the year there may be 2 points or so rebate, estimated March settlement price It may be around 20,000. The annual consumption of thousands of tons and tens of thousands of tons of large customers will be more favorable, but the overall average sales price will be higher than in the first quarter of 2017.
According to Ningbo Customs data, in January Ningbo port aggregated 43.385 tons of MDI exports, and in February Ningbo Port aggregated 52,220 tons of MDI exports, and the average export price in February was 2213 US dollars. In January-February, it exported 96,005 tons, and the export volume increased by 25.99% year-on-year. The average export price of 2,352 US dollars. According to this calculation, the average export price in January is 2520 US dollars.
The export volume in the first two months showed a larger year-on-year growth. The average export price also increased significantly. In US dollars, the year-on-year average export prices rose by about 20% year-on-year, but there was still a large increase after deducting exchange rate effects. The data for March is not yet available. It can be predicted. The average export price in January-March was gradually declining, and the price of domestic aggregated MDI went down.
Under normal circumstances, Wanhua chemical pure MDI export, polymerization MDI, domestic MDI internal sales ratio is 1: 1: 1. The average price of normal sales is the average price of export polymerization MDI + domestic polymerization MDI average price + domestic MDI average price) Dividing by 3, in accordance with this formula, Wanhua Chemical's MDI business will continue to contribute greater turnover and profit in the first quarter of 2017.
Besides the cost side: From January to March 2017, raw material benzene prices fell from a high of about 9,000 to March 650018, while pure benzene prices were lower than 6,000 yuan at a time. The overall average price of pure benzene was lower than the same period of last year. The price of coal has been falling all the way to a higher level, which is a larger decline than the fourth quarter of 2017 but still higher than the same period in 2017.
Combining the cost of raw materials and the increase in MDI sales volume, we can easily conclude that MDI's domestic export prices have both increased and sales have also increased. In the first quarter, Wanhua Chemical's MDI contribution profit is expected to exceed the same period of last year.
Other business: Online production capacity is expected to continue high-load operation
In 2017, Wanhua Chemical designed a 179-million-ton PO/AE integrated plant, which has annual capacity utilization rate of 98% and 2016 capacity utilization rate of 75.18%. For chemical plants, this capacity utilization rate is equal to full production.
In the first quarter of 2018, the device is expected to continue its high-load operation. During the same period, the prices of related products have a larger correction from the 2017 highs but still have a larger increase than the first quarter of 2017.
Wanhua Chemical's 70,000-ton PC device was completed in early 2017 and early 2018. Wanhua Chemical received the approval on January 23. The device was formally put into production.
The PC project is a new product developed by Wanhua Chemical using the existing MDI phosgene device derivative industrial chain. The domestic gap is very large. The import of more than 1 million tons per year has great market potential. A shares of Luxi Chemical benefit from the 2017 profit of PC products. The stock price has been increasing. Roussi's product line is also very full. In 17 years, it also benefited from other products.
A new product needs market acceptance to open the market, and it will take time for capacity utilization to increase. By the end of 2018, PC should be able to contribute a certain amount of profit. The subsequent 130,000 tons PC device is expected to be completed by February 2019.
In 2016, Ningbo Wanhua Chemical plans to start a 15,000-ton HDI project, and the production capacity will be expanded to 50,000 tons per year. It is estimated that the project will be completed in June 2017. The project was publicized on February 28, 2017 and the 2017 annual report showed that the project budget investment 4.1 Billion project progress 98.59% has not yet seen the relevant project production report.
According to the 2017 annual report, Wanhua Chemical's 300,000-ton TDI will be completed in October 2018. On March 30, 2018, Wanhua Chemical held a customer conference for the North Sponge, indicating that the 300,000-ton TDI device of the Yantai Industrial Park will also be ready in the second half of the year as soon as possible. Put on the market to meet the needs and expectations of downstream sponge customers.
According to the TDI device contractor Sinochem VI, the news report, on the morning of April 3, the electronic branch of Yantai Wanhua TDI device was successfully sent and received successfully. The success of this transmission signaled that the TDI device had already been tested and started the next step. The pre-installation testing of the process equipment and the commissioning of the general equipment commissioning TDI device provided a powerful message.
All signs indicate that the TDI device is expected to be put into operation in the second half of 2018. It will take one minute to feel bad in Cangzhou Dahua...
Yantai Industrial Park 50,000 tons of MMA 80,000 tons PMMA is also expected to be completed and put into operation in October 2018, there are some other products will no longer list them. The continuous construction of these projects under construction, will continue to contribute more profit growth point Wanhua Chemical .
Investing 17.9 billion ethylene projects, Wanhua Chemical USA 400,000-ton MDI project and Wanhua Chemical Ningbo Yantai expansion project, there is uncertainty about the distance from commissioning and no prediction is made.
Potential profit growth point: Million cubic meters of LPG hole library?
The 2017 annual report shows that Wanhua Chemical's inventory was 6.9996 billion yuan, an increase of 61.38% year-on-year. Inventory at the end of 2016 was 4.337 billion yuan, mainly due to the increase in LPG and polyurethane inventory.
In 2017, the stock of polyurethane series was 160,500 tons, and the inventory at the end of 2016 was 143,000 tons. A large part of the increase of 2.5 billion inventories was LPG inventory.
In 2016, Wanhua Chemical's capital chain was quite tight. The debt ratio once reached about 70%. The company was forced to postpone many projects from listing. For the first time in seventeen years, 2.5 billion yuan was added to build a PC project. Hua Chemical did not have more liquidity and energy to do the LPG off-season peak season sales to earn the difference. In 2016, the use of cave stocks was limited and it was not possible to maximize the difference.
However, after 2017, the situation has been somewhat different. According to the 2017 annual report, Wanhua Chemical LPG purchase volume was 3.29 million tons, of which trade volume was 1.74 million tons; the 2016 annual report showed that Wanhua Chemical LPG purchase volume was 1.8656 million tons. The rate factor led to an increase in raw material LPG demand. Some Wanhua Chemical LPG trade volume increased by more than 1.2 million tons year-on-year.
During the 2017 Wanhua Chemical Semi-annual Report, it showed that the inventory of inventories was 2 billion more than at the end of 2016, and it still accumulated to 1.9 billion at the end of the year. This is partly due to the large-scale accumulation of LPG off-season prices and the possibility of large-scale accumulation. Full million cubic meters of cave library.
Wanhua Chemical has a cash flow of 4.86 billion yuan in the first half of 2017. The cash flow is extremely abundant. As an old driver in the chemical industry, it is not bad money plus a storage condition of millions of cubic meters of caverns. At the same time, these factors are favorable due to the international ownership of LPG pricing advice. Wanhua Chemical will never miss the opportunity to get a 25% difference in LPG off-season peak season storage sales.
In January-February 2018, the chain reaction of China's natural gas tension resulted in high prices of coal and petroleum gas. According to the trend of domestic LPG prices, the low-to-high-price part of the premium exceeds 30% of Wanhua Chemical Energy, which has the right to recommend pricing of Middle East LPG. Get lower prices for this part of the inventory is expected to release more profits in the first quarter of 2018. One step back is the low-priced goods, Wanhua Chemical retained as a PO/AE integration project can be used as raw materials can be substantially Reduce the cost of raw materials to increase profits.
In 2017, it was reported that Wanhua Chemical continued to dig deep into the ground and continued to start construction of the LPG Cave in Yantai. According to Wanhua Chemical's expectations, this business will achieve 6 million tons or more of this year's business. The company contributes about one billion yuan in annual profits or equivalent costs.
to sum up
Although the return of MDI prices to a reasonable range led to a decrease in gross profit, capacity utilization has come up with sales. More product launches will minimize Wanhua's costs and contribute more profits.
Above, the author believes that Wanhua Chemical's first quarterly report in 2018 will be better than the first quarter of 2017 (earnings of 2.2 billion). It is estimated that the quarterly report will be 2.4 billion. According to the minimum guarantee, it will not be capped. If 2017 is true There is a smooth performance behavior. Part of the performance moved to 2018 is a surprise.
Looking at the entire year of 2018, the huge profits in 2017 gave Wanhua Chemical's cash flow energy more advantages. Short-term aggregated MDI prices returned to normal, ostensibly affecting performance, and seeing more growth points in the long term. Contribution performance and profit will surely continue to increase Wanhua Chemical's profit, and the profit source will be more diversified.