Crude Oil Flashover Impact Chain: Refinery Lock Price Window Opens Oil Service Giant Or Reversion Contraction Era

Beijing time on March 9th 6: 22, Brent crude oil futures fell from 45.5 U.S. dollars / barrel to 35.86 U.S. dollars / barrel, and then set a new low of 31.02 U.S. dollars / barrel.

This price is very close to the target price given by the international bank. Goldman Sachs expects the two quarter price of Brent crude oil to be 30 dollars per barrel, while the target price of Holland bank is 33 dollars / barrel.

No one knows the bottom of the international oil price in the face of such a huge drop in a single day, but the vast majority of market participants believe that short-term oil prices will continue to fall.

The crude oil, known as the "king of commodities", involves many industries, not only producing fuel such as gasoline and diesel, but also producing more than 6000 chemicals, and the industrial transmission effect brought about by the sharp fall in oil prices will also be highlighted.

Roughly divided, including upstream mining, oil service, middle reaches of petroleum refining, and downstream petrochemical three links, the impact is not the same.

Mapping to the capital market is also true, for example, the US oil service giant Schlumberger dropped more than 14% before that day, while the A company of Shanghai refining and chemical company (600688.SH) was trading for two consecutive days.

Refinery "lock price" urgent

"For the importing countries such as China, the decline in oil prices is positive. On the one hand, the production cost is expected to decrease, and on the other hand, it benefits from the fusing mechanism of domestic refined oil, and the price of refined oil can be relatively locked." Long Zhong information crude oil analyst Sun Kewen introduced 9 days.

The fusing mechanism mentioned by him refers to the pricing mechanism announced by the national development and Reform Commission in January 2016, with a set of US $130 and a lower fluctuation limit of crude oil fluctuation of US $40.

After the March 9th crash, Brent and WTI crude oil futures have fallen below the lower limit of US $40.

This is clearly an opportunity for refining and chemical enterprises to get goods at a low price. In twenty-first Century, an economic report reporter learned that the recent refinery lock prices in Shandong were very frequent.

"Even if oil prices continue to fall, they will continue to choose lock prices." Sun Kewen feedback said that on the one hand is due to the domestic oil price adjustment fusing mechanism, on the other hand, because the domestic refined oil products themselves have no corresponding futures prices, refineries mostly refer to historical prices and experience to lock prices.

However, because the crude oil purchased by domestic refineries has a certain degree of delay, it is mostly "M+2" cycle, for example, the crude oil used in the refinery now comes from the crude oil purchased in January, and the price at that time exceeds 60 US dollars.

"According to the current price of refined oil, refineries are at a loss, so whether the oil price decline can form a positive impact on the middle reaches of refinery, the key is to see how long oil prices can last." Sun Kewen said.

However, the two tier market has been the first to react.

In March 9th, after the closure of Shanghai Petrochemical Company, Sinopec (600028.SH) rose rapidly in the afternoon and rose more than 6% during the session.

Although the logic of cost reduction is also applicable to downstream chemical products, because industrial chain transmission needs time fermentation, each of them has different supply and demand relations, so there is still much uncertainty in the short term.

It is relatively clear that due to the emotional impact of the sharp drop in crude oil in the short term, this is most vividly displayed in the 9 day futures market.

On the same day, the main contract of fuel oil, bitumen, PTA, methanol, polypropylene and plastics in the lower reaches of the petrochemical industry were all down, and the fall may not be over because of its own limit.

"Considering financial attributes, crude oil price trends generally lead to downstream energy and chemical products." Zhuo Chuang Information Analyst Liu Xinwei pointed out 9.

In his view, oil prices can also affect the cost of textiles (clothing) through the price of naphtha and other chemicals, affect transportation costs through gasoline prices, affect the cost of electricity through other fuel prices, and then affect the cost of living and service industries, and even affect agricultural products and then transmit to food prices.

Mining, oil service or return to fall cycle

If the international oil prices remain low for a long time, the upstream exploration and matching oil service industry will go down again.

As for the current situation, the market generally expected that the price of 30 US dollars / barrel did not completely release the risk of falling oil prices.

A public researcher who has been tracking the energy market in Southern China for 9 days said, "according to the performance of previous 0PEC negotiations, the turbulence of the international oil market may just begin. Under the pattern of supply and demand double kill, oil prices in the first half of the year are expected to be difficult to perform well."

Compared with historical data, we can see that the last round of international oil price decline began in the four quarter of 2014, and ended in early 2016 and then stood at 60 dollars in the fourth quarter of 2017.

During this period, the "two barrels of oil" business performance had varying degrees of underground slippage.

Taking China Petroleum as an example (601857.SH), net profit in 2014 was 107 billion 200 million yuan, down to 35 billion 653 million yuan in 2015 and further down to 7 billion 900 million yuan in 2016.

In contrast, Sinopec's profits declined slightly in 2015, but increased slightly to 51 billion 100 million yuan in 2016.

This is mainly due to the fact that the former oil field has much more revenue from exploration and exploitation, while the latter relies more on the support of terminal product oil sales, so there is a significant difference between the two companies' ability to resist risks during the fall of crude oil.

The logic that the refineries benefit from is also applicable to Sinopec. Only because the company and China petroleum are integrated enterprises, and at the same time, there are many sources of business income, and the pulling effect is not as obvious as that of Shanghai petrochemical company.

In addition, the low oil price situation may also lead to the reduction of capital expenditure of upstream oil and other mining enterprises in China, and then impact on the matching oil service industry.

Take the last round of the fall in oil prices as an example.

In 2012, Brent crude oil futures ran on top of 100 US dollars / barrel, and China's oil capital expenditure was 352 billion 500 million yuan in the current period. In 2015, oil price fell below 60 US dollars / barrel, and the capital expenditure of the company was reduced to 202 billion 200 million yuan, which set a new low of 172 billion 400 million yuan in the following year.

Until 2017, when international oil prices stabilized, China's oil capital expenditure had just bottomed out. This rule applies to overseas upstream mining enterprises.

For the oil service industry, it means a decrease in total revenue. In 2016, 601808.SH and PetroChina (600871.SH) had seen a double loss of over 10 billion.

Just because the performance of oil service industry fluctuates, and crude oil price fluctuation and upstream capital expenditure are lagging behind, it is not yet clear whether it will be dragged down by low oil prices.

The main variable is whether international oil prices will fall to $20 or $10 in the future. How long will low oil prices last? After all, low oil prices are not good for Saudi Arabia or Russia.

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