The central economic work conference, continue to deepen the structural reform of the supply side will become the main theme of economic work in 2017. The next step will focus on how enterprises in production and deleveraging and other aspects?

Ji Xiaonan: to promote the supply side structural reform of central enterprises, must take measures to comprehensive measures, precise force, comprehensive use of “four rules, add, subtract, multiply and divide” to enhance the quality and benefit as soon as possible, to reverse the total profit growth slow.

Actively do addition”

Mainly is the key industry based on the relationship between national security and national economy and important areas, accelerate the development of new technologies, new products, new formats, bigger and stronger strategic emerging industries, and actively cultivate new growth (310328, fund), the central enterprises to expand the development of new space, at the same time, seize the favorable opportunity of the global layout.

Take the initiative to do subtraction”

The main is to support and promote the merger and reorganization of central enterprises, the survival of the fittest, increase the loss of corporate governance efforts, actively revitalize the stock; reduce excess production capacity, and defuse the risk of overcapacity; disposal of poor corporate and zombie companies, non core assets disposal management and corporate inefficient; Yajian level, to achieve fitness and health; to further reduce the SASAC central enterprises the specific management of central enterprises, stimulate the vitality and power.

To do the multiplication”

urea prices rebounded strongly, the market continued to be expected. Domestic urea prices began to fall into the channel since the second half of 2012, in August this year, urea prices fell below 1200 yuan / ton.

After the raw materials in the upstream coal prices rose rapidly under the impetus of urea prices rose to 1500 yuan / ton. The recent industry continued to affect the low operating rate and low stock market, when coal prices stabilize, urea prices from the previous cost push up demand led to rising prices for switching. As of December 27th, the price of urea market in most areas of Shandong, Jiangsu, Hunan, Hubei, Sichuan and Guangdong has risen to 1700 yuan / ton.

Long term, industry losses policy to promote the capacity to continue to deepen, the production pattern is expected to reconstruct. Due to the rising price of coal, gas and other preferential policies for cancellation of fertilizer production of electricity, and the production cost of urea significantly improved, the current price is only a small profit enterprises, small and medium capacity large area closed exit. At the same time, the supply side policy reform deepening, Chinese nitrogen fertilizer industry association to develop “13th Five-Year” during the return of 13 million tons of urea production target. In the industry losses, the promotion of policies and environmental pressure, to capacity is expected to accelerate the industry supply and demand will be greatly improved. Coal water slurry technology also has the technology and cost advantage is expected to become the future mainstream production technology.

The short term, the industry is expected to maintain a low operating rate, with the spring peak demand season, the supply gap, will probably push up the price of the birth rate of urea, structural market. This year the cost of urea long-term price and the market upside down to continue to reduce operating rate. The second half of the environmental protection policy has started to accelerate the decline rate of hypertension. At present, the industry operating rate of less than 50%, the monthly output of less than 4 million tons. At the same time starts to show the structural differentiation, the advantages of enterprises to maintain high operating rates, and backward production capacity limit production shutdown. We believe that the trade deficit and environmental pressures continue under the low operating rate is expected to remain. According to estimates of the spring season (2-5 months) monthly demand of about 5 million 800 thousand tons, there is a big gap in supply, will probably push up the price of urea rate. The fixed bed head and process cost judgment, we expect the price of urea will be at least up to 1800 yuan / ton, optimism is expected to 2000 yuan / ton. In addition, with the cancellation of export tariffs of urea, the export market is expected to pick up next year.

The global agrochemical group integration tide or will usher in a new case of giant corporate takeover. According to the Bayer Group’s official website for the latest news, the U.S. seed giant Monsanto (105.2, -0.49, -0.46%) announced a special meeting of shareholders of the company Monsanto held on December 13th, shareholders approved a wholly owned subsidiary of Monsanto and Bayer Limited by Share Ltd’s merger. According to the merger agreement, Monsanto shareholders will receive $128 in cash per share acquisition delivery, the total transaction value of $66 billion.

Bayer is a global biopharmaceutical company based in germany. Once the acquisition is completed, the new company will become the world’s largest supplier of genetically modified seeds and agricultural chemicals manufacturers. The acquisition will also become the largest overseas investment by German companies so far.
In support of Monsanto, Bayer has now submitted various filing documents. Expected to be completed by the end of 2017 delivery.
“We believe this merger can help growers and agricultural industry at present and in the future will face more challenge, this is the power of our acquisition of monsanto.” Bayer CEO Werner Baumann said, “we look forward to the completion of the transaction, in close cooperation with Monsanto, ensure the success of integration.”

Since 2015, the global agricultural industry to accelerate the integration of. In December 2015, DuPont and Dow merger. In February 2016, Chinese chemical announced a $43 billion acquisition of Swiss company Syngenta conversion (79.32, -0.21, -0.26%).

This week (12.19-12.25) crude oil market rebound, acrylic acid, urea, viscose staple fiber, caprolactam led, PVC prices continue to fall. The fertilizer export tariff rates fell, positive export. Investment, recommended fertilizers and pesticides, viscose staple fiber industry, underestimate the value of high growth stocks in the layout of new chemical materials.
Plate Market Performance: down 0.23%, stronger than the broader market

Led the stock shares, including Wansheng Hengda high-tech, Chongqing Three Gorges A, driving the core reason is rising product prices, equity transfer, company mergers and acquisitions; this week, led by a Taurus chemical, oxiranchem, Jinlu group is the main factor, valuation regression.
Industry news and comment: fertilizer export tariffs substantially reduced, industry expected to usher in spring
In 2017 the state canceled urea, ammonium chloride, calcium carbonate, calcium superphosphate, ammonium phosphate, diammonium phosphate, nitrogen and phosphorus fertilizer export tariff of two yuan to three yuan; NPK compound fertilizer export tariff from 30% to 20%; potassium chloride, potassium sulfate and potassium to maintain 600 yuan / ton export tariffs remain unchanged. As a whole, it is beneficial to the export of products, easing the situation of excess production capacity and improving the profit of the industry. It is recommended to focus on Hualu-Hengsheng, Luxi Chemical, Yang Feng, Swart, Jin Zhengda, STANLEY, sky.

Analysis of changes in product prices remain strong: urea, viscose staple fiber
The market gradually optimistic about OPEC production cuts, oil prices rebounded slightly; the North haze, industry production, market operating rate is not high, methanol prices soared, part of the enterprise production, urea prices continued to rebound, good Hualu-Hengsheng Luxi Chemical Industry, etc.; environmental restrictions started low, low inventory, viscose staple fiber prices upward, positive, Nanjing Sanyou chemical chemical fiber; consumption off-season, PVC prices continued to fall, bad Thailand chemistry, Jun Group etc..
View of investment: high conversion

In December, the experience of previous years, even in the off-season, chemical boom is still high, prices Puzhang situation, the core driving force for coal prices, rising oil prices, the cost of the uplink, tighter environmental protection, the suppression of trade started, tight supply. The investment, improve the supply and demand of the times the recommended configuration varieties, chemical fertilizers and pesticides recommended (glyphosate), silicone, viscose staple fiber, TDI industry, concern, Yuntianhua, Xin’an Huaneng Power shares, XX group, Jin Zhengda, STANLEY, Yang Feng, Swart, *ST, big Cang Sanyou chemical. At the same time, continue to be optimistic about the new chemical materials industry, sustained import substitution, frequent policy, catalytic market, key recommendation: (1) electronic chemicals: import substitution + technological innovation has brought new demand, Kang Dexin, Ding long shares, Wan Run shares. (2) and other new materials: continuous replacement of foreign products, rapid growth, recommend Haley, sinocera.
Risk warning:
1 Environmental and safety risk;
2 market development risks.

The solvent of xylene to discuss the market reference price in 4700-5600 yuan / ton, heterogeneous xylene reference 4950-5500 yuan / ton. Xylene solvent market offer 4700 yuan / ton (Zhangjiagang tank), domestic heterogeneous xylene market offer in 4700-4750 yuan / ton (tank). The central branch of Sinopec Changling refinery, xylene: Wuhan petrochemical, China Petrochemical 4700 yuan / ton. Sinopec Southern China Guangzhou Petrochemical Company solvent xylene: the implementation of 5450 yuan / ton, Maoming petrochemical price 5300 yuan / ton; heterogeneous xylene: Guangzhou petrochemical, Zhanjiang Dongxing are the implementation of 5450 yuan / ton. North China sales company Sinopec Qingdao refinery, Tianjin: xylene ethylene and Shijiazhuang refinery implementation of 4700 yuan / ton. Sinopec East China sales company xylene: Yangzi BASF, Zhenhai Refinery quote out 5600 yuan / ton. Liaoning huajintongda chemical Limited by Share Ltd xylene quotation implementation of 5380 yuan / ton, price stability.

Specific data show that as of December 21st week recorded gasoline inventories fell 1 million 309 thousand barrels, forecast to increase by 1 million 420 thousand barrels, the former value increased by 497 thousand barrels, for the first time in five weeks when the week recorded a decline; refined oil inventory recorded by 2 million 420 thousand barrels, is expected to be reduced by 1 million 152 thousand barrels, the former value decreased by 762 thousand barrels, two consecutive weeks when the week recorded a decline; Oklahoma Oklahoma Cushing area recorded in crude oil inventories fell 245 thousand barrels, the former value increased by 1 million 223 thousand barrels, is expected to decline in the price of xylene.