Report Industry Investment Rating - Not provided in the given content Core Viewpoints of the Report - Since 2019, domestic petrochemical production capacity has grown rapidly, but demand has faced difficulties, resulting in an oversupply of traditional petrochemical products and poor industry profitability [11] - The production capacity growth rates of varieties such as PX and ethylene glycol have begun to slow down significantly this year, and the rapid growth of polyester industry production capacity may be coming to an end [11] - In the future, the trend of reducing oil and increasing chemicals will continue, and the R & D and scale growth of high - value - added new materials will accelerate. Policy regulation is expected to reduce supply growth and relieve the pressure of future concentrated production [11] Summary by Related Catalogs 1. Some old - fashioned production capacities have undergone a transformation - In the petrochemical industry, the proportion of pre - 1996 production facilities is relatively high in ethylene, downstream PE, and pure benzene (about 17%), and about 15% in propylene. The proportion of mainstream petrochemical products such as ethylene glycol, polypropylene, styrene, PX, and PTA is within 10% [3] - The over - 20 - year - old facilities in the industry are concentrated in state - owned enterprises and are mostly refining - supporting facilities. Some old - fashioned state - owned production capacities have gradually withdrawn, while others have been upgraded through technological transformation [3] - It is difficult to simply eliminate production capacity by "one - size - fits - all". Policy tends to "close first and then open" the refining capacity, and the replacement of refining capacity often leads to continuous growth in chemical product production capacity [3] 2. "Solving oversupply through major overhauls" is essentially industrial upgrading - The integration of upstream and downstream refining and chemical industries in the domestic petrochemical industry has deepened. Enterprises are actively deploying high - value - added petrochemical products, and profit accounting has shifted to comprehensive benefits [6] - Due to the complexity of refinery terminal product layout and comprehensive consideration of benefits, short - term market - based adjustment may fail for individual products, and it is difficult to reach a unified production reduction agreement [6] - The path to "solve petrochemical oversupply through major overhauls" may be to upgrade old - fashioned facilities, but it is a complex system project with many challenges and unclear implementation paths [7] 3. Controlling new additions and project approvals to relieve supply growth pressure - The state's approval of large - scale refining and chemical integration or chemical production projects using crude oil as raw materials has become stricter. The production capacity growth rate of domestic PX has slowed down significantly [8] - In the future, ethylene project construction may be subject to strict national approval. Although new production capacity will bring pressure, strengthening project approval may relieve the pressure of continuous production [8] - Overseas, the scale of naphtha cracking production capacity tends to shrink, and the improvement of the overseas olefin supply - demand pattern will help relieve China's import pressure [9] 4. Summary and outlook - The petrochemical industry has an oversupply of traditional products and poor profitability. The production capacity growth of some products has slowed down, and the rapid growth of polyester industry production capacity may end [11] - The proportion of old - fashioned production capacity in the industry is relatively low, and the impact of policies is expected to be limited. Attention should be paid to the upgrading and withdrawal of supporting facilities of small - scale old - fashioned refining capacity [11] - In the future, the trend of reducing oil and increasing chemicals will continue, and policy regulation will focus on olefin downstream products, reducing supply growth and relieving the pressure of concentrated production [11]

Supply Situation - Global benzene production capacity has shown a distinct pattern of slow growth followed by rapid expansion, with an average annual growth rate of less than 2% from 2015 to 2019, increasing to 5% from 2020 to 2024, resulting in a capacity increase from 69.3 million tons per year to 83.3 million tons per year, a 20% increase. However, growth momentum has begun to slow down entering 2024 [1] - North America and Western Europe rank second and third in global benzene production capacity, each exceeding 10 million tons and accounting for approximately 12% of global capacity. Refining companies in these regions have faced constraints due to policy impacts and demand shrinkage, leading to the gradual elimination of some facilities [1] - Northeast Asia dominates global benzene production capacity, with an estimated capacity of 42.2 million tons per year by the end of 2024, accounting for 50.7% of global capacity, with China contributing 25.73 million tons per year [1] Demand Situation - Global benzene demand has consistently grown since 2015, with a notable decline only in 2020 due to the COVID-19 pandemic. From 2020 to 2024, global benzene consumption is projected to increase from 50.17 million tons per year to 65.20 million tons per year, a total growth of 30%, with a year-on-year growth rate exceeding 10% in 2023 [7] - The primary demand regions for benzene are Northeast Asia, North America, and Western Europe, with their respective demand shares being 60%, 13%, and 10% by the end of 2024. In Northeast Asia, benzene consumption is expected to rise from 27 million tons in 2020 to 39.2 million tons in 2024, increasing its global share from 54% to 60% [7] - The largest application of benzene globally is for the production of styrene, accounting for 49% of usage, followed by isopropylbenzene at 21% [8] Trade Flow - In 2024, the global benzene trade flow has not changed directionally compared to the past five years, although some regional circulation volumes have shifted. The most active trade involves Asian exports to China and arbitrage between Northeast Asia and North America [10] - Northeast Asia is a key hub for benzene trade, with significant intra-regional trade among China, South Korea, and Japan. North America is a net importing region, primarily sourcing imports from Northeast Asia [12] China Trade Dynamics - China is the largest consumer and importer of benzene globally, with imports rising steadily from 2020 to 2024. The majority of imports come from neighboring Asian countries, with around one million tons entering Jiangsu for redistribution to downstream users [13] - From 2015 to 2018, China's benzene imports grew from 1.205 million tons to 2.57 million tons, with the import dependency rising from 13.3% to 23.7%. This increase was driven by domestic demand outpacing local production growth [14] - In 2019, imports dropped to 1.939 million tons, a 24.6% decrease, due to increased domestic production capacity and reduced international prices [15] - From 2020 to 2024, imports are expected to exceed 4.2 million tons, with an average annual growth rate over 20%, driven by strong domestic demand and increased exports from South Korea [17] Import Characteristics - China's benzene imports are highly reliant on neighboring Asian countries, with South Korea being the largest supplier, followed by Brunei, Thailand, Malaysia, and Singapore [19] - In 2024, Zhejiang province is projected to import 1.5262 million tons, accounting for 35.4% of national imports, followed by Shandong and Shanghai [22][23]

Investment Rating - The investment rating for the company is "Outperform" (Maintain) [3] Core Views - The company is expected to achieve a revenue of 401 million yuan in 2024, a decrease of 8.55% year-on-year, with a net profit attributable to the parent company of 40 million yuan, down 14.00% year-on-year. The decline is attributed to the price drop of high-priced stainless steel products and oil slurry steam generators [3] - The company is well-positioned to benefit from the "reduce oil and increase chemical" policy, coupled with its accelerated expansion into overseas oil and chemical heat exchanger markets, maintaining an "Outperform" rating [3] Financial Summary - The company's total revenue for 2022 was 367 million yuan, with a year-on-year growth of 18.4%. The projected revenue for 2023 is 438 million yuan, a growth of 19.5%, followed by an expected decline to 401 million yuan in 2024 [6] - The net profit attributable to the parent company for 2022 was 40 million yuan, with a significant year-on-year increase of 103.2%. The forecast for 2024 is a net profit of 40 million yuan, reflecting a decrease of 14.0% [6] - The company's gross margin is projected to be 20.5% in 2024, down from 22.2% in 2022, while the net margin is expected to be 10.1% in 2024 [6] Market Trends - The domestic heat exchanger market is expected to grow from 900.2 billion yuan in 2023 to 992.1 billion yuan by 2026, with a compound annual growth rate (CAGR) of 3.29% [4] - The "reduce oil and increase chemical" policy is driving the demand for heat exchangers, as large refining enterprises are actively promoting integrated refining and chemical upgrades [4] Company Positioning - The company has extensive experience in petrochemical heat exchangers and has established itself as a qualified supplier for major global companies such as Shell, Saudi Aramco, and ExxonMobil, indicating a strong competitive position [5] - The company is accelerating its overseas expansion efforts, which are expected to become a new growth driver while maintaining its domestic business [5]