Demand expansion, three major sectors prospects——2023 chemical industry investment strategy (Part II)

Under the background of the new round of scientific and technological revolution and the rise of global resource nationalism, the supply of new production capacity has contracted, while downstream emerging fields have continued to expand, and related sectors such as fluorine materials, phosphorus chemicals, The prosperity of aramid and other industries is expected to continue, and many securities companies are also optimistic about its development prospects
.

Fluorine chemicals: The market space continues to expand

In 2022, the performance of fluorine chemical listed companies is eye-catching
.
According to incomplete statistics, in the first three quarters, the net profit of more than 10 fluorine chemical listed companies increased year-on-year, and the net profit of some enterprises increased by more than 6 times
year-on-year.
From refrigerants to fluorine-containing new materials, to new energy lithium battery raw materials, fluorine chemical products continue to expand their market space
with their unique performance advantages.

Fluorite is the most important front-end raw material in the fluorine chemical industry chain, and the hydrofluoric acid prepared from it is the basis of
modern fluorine chemical industry.
As the core of the entire fluorine chemical industry chain, hydrofluoric acid is the basic raw material for the preparation of fluorine chemical products in the middle and lower streams, and its downstream main industries include refrigerants
.

According to the provisions of the Montreal Protocol, the production and use of third-generation refrigerants in China will be frozen at the baseline level
in 2024.
Changjiang Securities Research Report believes that after the three-generation refrigerant quota competition period, enterprises may return to a more market-oriented supply level
.
In 2024, the third-generation refrigerant quota will be officially frozen, and the second-generation refrigerant quota will be reduced by 67.
5% in 2025, which is expected to bring a supply gap
of 140,000 tons/year.
On the demand side, the resilience of the real estate industry remains, and under the optimization of epidemic prevention and control, industries such as home appliances may gradually recover
.
It is expected that the third generation of refrigerants is expected to reverse from the bottom of the boom
.

China Business Industry Research Institute expects that with the rapid development of new energy, new energy vehicles, semiconductors, electronic and electrical, medical and other industries, the research and development of new fluorine-containing fine chemicals such as fluorine-containing intermediates, special fluorine-containing monomers, fluorine-containing coolants, and new fluorine-containing fire extinguishing agents continues to deepen, and the market space of these downstream industries continues to expand, which will bring new growth points
to fluorine chemicals.

China Galaxy Securities and Guosen Securities believe that high-end chemical materials are expected to continue to increase the localization rate, optimistic about the fluorite-refrigerant and other upstream fluorine materials
.

Phosphorus chemical: Expand the scope of downstream applications

In 2022, affected by the supply-side structural reform and the "dual control" of energy consumption, the new production capacity of phosphorus chemical related products is limited and the price is high, laying the foundation for the performance of
the phosphorus chemical sector.

Phosphate ore is the basic raw material of the phosphorus chemical industry chain, and the downstream includes phosphate fertilizer, food-grade phosphate, lithium iron phosphate and other products
.
Among them, lithium iron phosphate is the most prosperous subdivision of the phosphorus chemical industry chain
.

It is understood that for each ton of lithium iron phosphate production, phosphate ore (purified) 0.
5~0.
65 tons, monoammonium phosphate 0.
8 tons
.
The rapid growth of lithium iron phosphate demand is transmitted upstream along the industrial chain, which will drive the demand for phosphate ore in the field of new energy
.
In the actual production process, 1GWh lithium iron phosphate battery requires 2500 tons of lithium iron phosphate cathode material, corresponding to 1440 tons of phosphate ore (purified, that is, P2O5=100%)
.
It is expected that by 2025, the demand for lithium iron phosphate will reach 1.
914 million tons, and the corresponding phosphate ore demand will be 1.
11 million tons, accounting for about 4.
2%
of the total phosphate ore demand.

Guosen Securities Research Report believes that multiple factors will jointly promote the sustained high prosperity of the phosphorus chemical industry chain
.
From the upstream point of view, in the future, under the background of increasing industry entry threshold and high environmental protection pressure, the supply side of phosphate ore will continue to tighten, and the scarce attribute of resource products will be highlighted
.
Coupled with the sharp rise in foreign energy prices, the cost of foreign phosphorus chemicals has soared, and the cost advantages of domestic related enterprises have emerged
.
In addition, the global food crisis and agricultural boom cycle will drive the demand for phosphate fertilizer upward; The explosive growth of lithium iron phosphate batteries also provides an important increase
in phosphate ore demand.

Capital Securities said that the root cause of the new round of global resource inflation is the capacity cycle, including phosphate ore and other mineral resources due to insufficient capital expenditure in the past 5~10 years, resulting in tight supply, and the release of new production capacity takes a long time, so the tight situation on the supply side of phosphate ore in the next 2~3 years is difficult to alleviate
.

Kaiyuan Securities believes that the high prosperity of the new energy track continues, and it is optimistic about upstream materials
such as phosphorus chemicals in the long term.

Aramid: Innovation for incremental business

With the rapid development of the information industry, aramid has attracted more and more attention
from the capital market.

Aramid is one of the world's three major high-performance fibers, which is listed in the national strategic emerging industry and is also a strategic high-end material
supported by the state for a long time.
In April 2022, the Ministry of Industry and Information Technology and the National Development and Reform Commission jointly proposed to improve the level of high-performance fiber production and application and support the application of
aramid in downstream high-end fields.

Aramid has two structural forms: para-aramid and meta-aramid, and the main downstream includes optical fiber and cable industries
.
According to the data, the global aramid market size was US$3.
9 billion in 2021 and is expected to increase to US$6.
3 billion in 2026, with a compound annual growth rate of 9.
7%.

In recent years, China's optical fiber and cable industry has developed rapidly and ranked first
in the world.
According to statistics from the Ministry of Industry and Information Technology, the total length of optical cable lines in the country reached 54.
88 million kilometers in 2021, and the demand for high-mode para-aramid products was close to 4,000 tons, of which 90% still relied on imports
.
As of the first half of 2022, the total length of optical cable lines in the country reached 57.
91 million kilometers, a year-on-year increase of 8.
2%.

Changjiang Securities, Huaxin Securities and Guosen Securities believe that in terms of application, the standard of meta-aramid personal protective equipment will be gradually promoted, and the demand for para-aramid in the field of optical communication and rubber will remain strong
.
In addition, the demand for lithium battery separator aramid coating market has broad prospects, with the acceleration of the domestic substitution process of aramid, the level of aramid localization is expected to be greatly improved in the future, and the related sector stocks are worth paying attention to
.