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

In fact, in the first half of this year, under the impact of multiple factors such as lower-than-expected recovery of downstream demand for products, the operating conditions of the petrochemical and chemical industry continued to be under pressure. According to 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 steady development of the industrial economy.

■■ The task of stabilizing growth is arduous

The petrochemical and chemical industry is a basic and pillar industry of the national economy. It has a large economic aggregate and a high degree of industrial correlation. It is related to the stable growth of industry and the smooth operation of the economy.

In the first half of 2023, affected by sluggish downstream demand and other factors, the prices of petrochemical and chemical products fell sharply, and corporate profits dropped significantly year-on-year. The decline rate exceeded the national industrial average. Industry pressure was highlighted and the task of stabilizing growth was arduous.

Data from the National Bureau of Statistics shows that in the first half of the year, the petrochemical industry achieved operating income of 7.6 trillion yuan, a year-on-year decrease of 4.4%; the industry-wide profit totaled 431.09 billion yuan, a year-on-year decrease of 41.3%.

Behind the decline in efficiency, the most prominent manifestation is the overall decline in the price of petrochemical and chemical products.

Data show that in the first half of 2023, the ex-factory price of oil and natural gas fell by 13.5% year-on-year, and the ex-factory price of chemicals dropped by 9.4% year-on-year; among the 48 types of inorganic chemicals monitored in June, the average market price dropped year-on-year for 44 types, accounting for 91.7%; among the 72 major organic chemicals under key monitoring, 68 had a year-on-year decrease in average market price, accounting for 94.4%.

"The overall economic situation this year is relatively severe. There is 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." Renjin Sun, Secretary-General of the Expert Committee of the China Petroleum Distribution Association, said in an inerview with a reporter from China Energy News.

When interpreting the "Work Plan", the relevant person in charge of the China Petroleum and Chemical Industry Federation pointed out: "Currently, the operation and industrial development of the petrochemical and chemical industry are encountering problems such as the global economic downturn and increasing periodic pressure. It is necessary to seize the critical period of industrial economic recovery and the period for industrial upgrading, strengthen government-enterprise collaboration, improve expectation management, improve the policy environment, strengthen support services, and strive to solve problems that demand recovery is less than expected, enterprises have many difficulties in production and operation, and endogenous growth momentum is insufficient."

■■ "Six Forces" Simultaneous Development and Stable Development

Based on the current situation faced by the petrochemical and chemical industry, the introduction of the "Work Plan" can be described as "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 interpreted the "Work Plan" as "six forces" to ensure the steady growth of the industry, including three driving forces, namely expanding effective investment, enriching high-quality supply, and stabilizing foreign investment and foreign trade; two driving forces , that is, strengthening the supply of factors and stimulating the vitality of enterprises; a kind of guarantee, that is, guarantee measures.

"The implementation of the "Work Plan" will lay a solid foundation for promoting the smooth operation of the petrochemical industry and achieving high-quality development, 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 commissioning of more than five major petrochemical projects under construction by the end of 2024, promote the start of a number of "reducing oil and increasing chemical" projects, and strengthen the planning and layout of modern coal chemical projects guidance; at the same time, we will increase technological transformation and promote intensive development.

In addition to expanding investment, for the consumption side, the "Work Plan" points out that it is necessary to enrich high-quality supply and activate and release consumption potential. Support local governments and industry associations to attach equal importance to application demand and technological innovation, build a supply and demand docking platform for chemical products, and promote upstream and downstream collaborative development of new products, formulation of new standards, demonstration of new applications, and creation of new scenarios. Focus on the needs of key industrial chains such as aerospace, electronic information, new energy, energy conservation and environmental protection, hydrogen energy, and medical health, and improve the supply capacity of high-end products.

"The "Work Plan" focuses on the current weak links in the petrochemical and chemical industry, focusing on supply chain blockages and industrial chain shortcomings that affect the industry's stable growth, security, and promotion, and strives to implement precise policies to solve problems." The above-mentioned relevant person in charge of the China Petroleum and Chemical Industry Federation said.

■■ Taking a characteristic path is fundamental

In order to effectively promote the implementation of stable growth of the industry, the "Work Plan" proposes specific safeguard measures from four aspects: strengthening policy coordination, strengthening expectation management, improving fiscal policies, and strengthening security services. “With the implementation of various measures, the development environment of my country’s petrochemical and chemical industry will continue to be optimized, the industry’s development space will be further expanded, industry development confidence will gradually recover, and the industry’s growth momentum will continue to pick up, injecting new impetus into the industry from big to strong. ." The above-mentioned relevant person in charge of the China Petroleum and Chemical Industry Federation pointed out.

It is worth noting that the current overall structural contradictions in our country's petrochemical and chemical industry are prominent. Excessive low-end production capacity and insufficient high-end production capacity have become fundamental pain points hindering the high-quality development of the industry.

According to industry insiders, promoting the transformation and upgrading of the petrochemical industry, from low-end to high-end, and taking a characteristic path are the fundamental guarantees for achieving stable and high-quality development of the industry.

"The petrochemical and chemical industry still has gaps in many high-end products, including some white oil, special chemicals, etc., which rely heavily on imports." Renjin Sun said, "Overall, the demand for petrochemical and chemical products will continue to grow in the next few decades, but the difference may be relatively large. The higher the technical content, the greater the demand. Ordinary basic chemical products will definitely be oversupplied. Therefore, it is a general direction to carry out deep processing, increase added value, adapt to the "double carbon" goal, and follow the path of green, low-carbon, and high-end development."

"Whether they are central enterprises, state-owned enterprises or private enterprises, they must follow the path of characterization and specialization, and can no longer concentrate on making basic petrochemical and chemical products. For example, companies that can produce specialty oils may need to make some R&D investments, but they will face less competition and have relatively higher profits. " Renjin Sun said.