Policy support for the petrochemical and chemical industry once again

The implementation of the "Work Plan for Stable Growth in the Petrochemical and Chemical Industry" will inject new impetus into the industry's development, and have a positive impact on stabilizing the operation of the petrochemical and chemical industry and promoting the stable development of the industrial economy.

Recently, the Ministry of Industry and Information Technology, the National Development and Reform Commission, and other seven departments jointly released the "Work Plan for Stable Growth in the Petrochemical and Chemical Industry" (hereinafter referred to as the "Work Plan"), proposing overall requirements, work measures, and guarantee measures for the stable growth of the industry this year and next. The Work Plan points out that by expanding effective investment, enriching high-quality supply, stabilizing foreign trade, and strengthening factor supply, the average industrial value-added growth rate of the petrochemical industry from 2023 to 2024 will be maintained at around 5%. In 2024, the main business revenue of the petrochemical industry (excluding oil and gas extraction) will reach 15 trillion yuan, and the ethylene production will exceed 50 million tons.

In fact, in the first half of this year, the operating conditions of the petrochemical and chemical industry continued to be under pressure due to multiple factors such as lower than expected recovery in downstream demand for products. In the view of many industry insiders, the implementation of the "Plan" will inject new impetus into the development of the industry, and have a positive impact on stabilizing the operation of the petrochemical and chemical industry and promoting the stable development of the industrial economy.

The task of stabilizing growth is arduous

The petrochemical and chemical industry is a fundamental and pillar industry of the national economy, with a large economic aggregate and high industrial correlation, which is related to stable industrial growth and economic operation.

In the first half of 2023, due to factors such as sluggish downstream demand, the prices of petrochemical and chemical products have significantly decreased, and the efficiency of enterprises has significantly decreased year-on-year. The decline has exceeded the national industrial average level, highlighting industry pressure and making the task of stabilizing growth difficult.

According to data from the National Bureau of Statistics, the petrochemical industry achieved a revenue of 7.6 trillion yuan in the first half of the year, a year-on-year decrease of 4.4%; The total profit of the entire industry was 431.09 billion yuan, a year-on-year decrease of 41.3%.

The most prominent manifestation behind the decline in benefits is the overall decline in the prices of petrochemical and chemical products.

Data shows that in the first half of 2023, the ex factory prices of oil and natural gas decreased by 13.5% year-on-year, while the ex factory prices of chemicals decreased by 9.4% year-on-year; Among the 48 key inorganic chemicals monitored in June, 44 had a year-on-year decrease in average market prices, accounting for 91.7%; Among the 72 major organic chemicals under key monitoring, 68 have a year-on-year decrease in market average prices, accounting for 94.4%.

The overall economic situation this year is relatively severe, with insufficient investment in the petrochemical and chemical industry, and the demand side is still recovering in an orderly manner. Therefore, ensuring the stable development of the industry is a top priority, "Sun Renjin, Secretary General of the Expert Committee of the China Petroleum Circulation Association, said in an interview with China Energy Daily.

When interpreting the 'Work Plan', the relevant person in charge of the China Petroleum and Chemical Industry Federation pointed out: At present, the operation and development of the petrochemical and chemical industry are facing issues such as global economic downturn and increasing stage pressure. It is necessary to seize the critical period of industrial economic recovery and industrial upgrading window, strengthen government enterprise coordination, improve expected management, improve policy environment, strengthen guarantee services, and focus on solving problems such as lower than expected demand recovery, more difficulties in enterprise production and operation, and insufficient endogenous growth momentum

Stable development through the combination of "six forces"

Based on the current situation faced by the petrochemical and chemical industry, the introduction of the 'Work Plan' can be described as a 'timely rain', injecting new impetus into the stable operation of the industry.

The relevant person in charge of the Petroleum and Chemical Industry Planning Institute interprets the "Work Plan" as a combination of "six forces" to ensure stable industry growth, which includes three driving forces: expanding effective investment, enriching high-quality supply, and stabilizing foreign trade; Two driving forces, namely strengthening factor supply and stimulating enterprise vitality; One type of guarantee, namely guarantee measures.

The implementation of the Work Plan will lay a solid foundation for promoting the smooth operation and high-quality development of the petrochemical and chemical industry, and provide strong support for the stable and healthy development of the national economy, "said the relevant person in charge of the Petroleum and Chemical Industry Planning Institute.

Specifically, in terms of expanding effective investment, the "Work Plan" proposes to promote the completion and operation of more than 5 major petrochemical projects under construction by the end of 2024, promote the commencement of a batch of "oil reduction and chemical increase" projects, and strengthen the guidance of modern coal chemical project planning and layout; At the same time, we will increase efforts in technological transformation and promote intensive and concentrated development.

In addition to expanding investment, the "Work Plan" points out the need to enrich high-quality supply and activate and unleash consumption potential on the consumer side. Support local governments and industry associations to adhere to the principle of balancing application demand driven and technological innovation driven, establish a supply and demand docking platform for chemical products, promote upstream and downstream collaborative development of new products, formulate new standards, demonstrate new applications, and create new scenarios. Focus on the demand of key industrial chains such as aerospace, electronic information, new energy, energy conservation and environmental protection, hydrogen energy, and healthcare, and enhance the supply capacity of high-end products.

The "Work Plan" focuses on the weak links in the current petrochemical and chemical industry, targeting supply chain bottlenecks and industry chain weaknesses that affect stable growth, safety, and promotion of industry improvement, focusing on precise implementation of policies to solve problems. The relevant person in charge of the China Petroleum and Chemical Industry Federation stated above.

Taking the path of specialization is fundamental

In order to effectively promote the stable growth of the industry, the Work Plan proposes specific safeguard measures from four aspects: strengthening policy coordination, strengthening expected management, improving fiscal policies, and strengthening guarantee services. With the implementation of various measures, the development environment of China's petrochemical and chemical industry will continue to be optimized, the development space of the industry will be further expanded, the confidence in industry development will gradually recover, and the growth momentum of the industry will continue to rebound, injecting new impetus into the industry from big to strong, "said the relevant person in charge of the China Petroleum and Chemical Industry Federation.

It is worth noting that the overall structural contradictions in China's petrochemical and chemical industry are prominent, with excess low-end production capacity and insufficient high-end production capacity becoming the fundamental pain points hindering the high-quality development of the industry.

In the view of industry insiders, promoting the transformation and upgrading of the petrochemical industry, moving from low-end to high-end, and taking the path of specialization is the fundamental guarantee for achieving stable and high-quality development of the industry.

There are still many gaps in high-end products in the petrochemical and chemical industry, including some white oil, specialty chemicals, etc., which largely rely on imports, "said Sun Renjin, Overall, the demand for petrochemical and chemical products will continue to grow in the coming decades, but there may be significant differences. The higher the technological content, the greater the demand. Ordinary basic chemical products are definitely oversupplied. Therefore, deep processing, increasing added value, adapting to the 'dual carbon' goals, and pursuing a green, low-carbon, and high-end development path is a major direction

Whether it is a state-owned enterprise or a private enterprise, they must follow the path of specialization and specialization, and cannot cluster together to produce basic petrochemical and chemical products. For example, enterprises that can produce special oil may need to make some research and development investments, but they will face less competition and profits