Bio-based materials, the new underlying materials for the global industry in the next 40 years!

  • 2022-09-22

1. The next wave of chemical industry pattern depends on talent competition

Huaan Securities believes that the investment strategy of the chemical industry is to invest in systematic innovation and low-cost expansion. The next wave of chemical industry landscape depends on talent competition. The chemical industry has changed from a purely capital-intensive industry to a talent- and capital-intensive industry. The latecomers cannot overtake them through capital, but can only watch the latter, and the cyclicality of the chemical industry has become weaker as a result. Excellent companies rely on effective incentives, excellent management and continuous innovation to create unshakable technological iteration advantages, low-cost advantages and efficient service advantages, and conquer cities in the global market.

 

2. In the next 40 years, the development of the chemical industry will go through 3 stages

Carbon neutrality has a profound impact on the chemical industry, and carbon neutrality may bring disruptive changes and opportunities to the chemical industry. According to the statistics of the National Petroleum and Chemical Industry Planning Institute (NPCPI), China's petrochemical industry and basic chemical industry lead all industries in carbon emissions, accounting for about 18% of the country's total carbon emissions, of which "process carbon emissions" accounted for 6% About 12% of the total, "engineering carbon emissions" is greatly affected by the 3060 carbon neutrality target. From the perspective of industry evolution, we believe that the chemical industry is expected to go through three stages in the next 40 years under the background of carbon neutrality:

 

The first stage reaches its peak step by step. There are many chemical products, and each product has different energy consumption and carbon emissions, and its carbon peaking requirements may be different. We understand that high-energy-consuming products or industries do not mean that there is no development, but that they will peak first, and low-energy-consuming products or industries are expected to gain a longer growth window.

 

The future competition in the second stage is downstream and overseas. With the carbon peak, the upstream bulk raw materials in China's chemical industry have reached the ceiling due to relatively high energy consumption, but without a large amount of new production capacity, the profit center has greatly improved (such as coal, calcium carbide, etc.), and large chemical companies have obtained huge cash. Stream or invest in downstream fine chemicals and new materials (such as BDO, PBAT, etc.), or continue to expand the production capacity of similar products (such as PE, PTA, PA, etc.), but transfer the new production capacity to countries with larger carbon capacity or region.

In the second stage, chemical companies may face large-scale technical upgrades of public works, and use green energy alternatives to reduce energy consumption in order to reduce the cost of taxes and fees related to carbon neutrality.

 

The third stage of the era of bio-based materials and energy. Chemical products are closely related to people's lives, and demand will not disappear because of policies. But under the carbon neutrality goal, fossil-based materials may face subversive impacts locally. Bio-based materials are a possible alternative/complementary option. With the decline in the cost of bio-based materials, the rise in the cost of fossil-based materials (increase in carbon emission taxes and fees), and the breakthrough of bio-based materials for "non-food" raw materials, bio-based materials are expected to become the new underlying materials for the global industry. It is worth emphasizing that the above is a 40-year-old industry evolution idea. 3060 mainly affects long-term high-energy-consuming products or the ceiling of industrial development, and has less impact on approved planning projects. In addition, a series of actionable policies will evolve under the 3060 goal. With the implementation of specific policies and breakthroughs in new technologies (including synthetic biology, new energy storage technologies, new nuclear power technologies, new recycling technologies, etc.), the three stages we understand may also be intertwined.

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