Shell Global(US:SHEL) Tianfeng Securities·2025-04-19 07:16Investment Rating - Industry Rating: Outperform the Market (maintained rating) [5] Core Insights - The European petrochemical industry is experiencing a wave of shutdowns due to high energy prices and declining competitiveness, with 11 million tons of chemical capacity expected to close between 2023 and 2024 [1][16] - The trade balance between the EU and China has shifted from a surplus of €9.9 billion in 2020 to a deficit of €9.6 billion in 2024, indicating a significant loss of market share for Europe [1][33] - Japan's refining industry is in decline, while South Korea's refining capacity remains stable, but both countries are facing reduced utilization rates due to global economic slowdowns and increased self-sufficiency in China [2][42] - China's refining capacity has stabilized at around 980 million tons, with a shift towards high-quality development and increased flexibility in refining operations [3][48] Summary by Sections 1. Refining Landscape Shift - Global refining capacity increased from 82.86 million barrels per day in 2000 to 103.49 million barrels per day in 2023, with China contributing 12.58 million barrels per day [11] - European refining capacity has declined from 17.99 million barrels per day in 2000 to 14.88 million barrels per day in 2023, with a total exit of 3.12 million barrels per day [11][12] 2. High Energy Prices Impact - European chemical industry heavily relies on natural gas, with over 40% of raw materials sourced from it; current gas prices are significantly higher than pre-conflict levels, averaging $12.3 per million BTU from 2023 to 2025 [26][27] - Electricity prices in Germany have surged to an average of $95.38 per MWh, compared to $52.94 per MWh from 2019 to 2021 [26] 3. Decline of Japan and South Korea's Petrochemical Business - Japan's refining capacity has decreased from 5.01 million barrels per day in 2001 to 3.07 million barrels per day in 2023, while South Korea's capacity has remained stable [40] - Utilization rates for PX and ethylene in South Korea and Japan have dropped significantly due to economic slowdowns and increased competition from China [42] 4. China's Transition to High-Quality Development - China's refining capital expenditure has slowed, with a focus on high-quality development and a shift from quantity to quality in refining operations [3][48] - The country has achieved a refining capacity of 18.48 million barrels per day, surpassing the US for the first time [12]