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According to statistics, the ex-factory price index of chemical products began to decline month by month after reaching the highest point in January this year. Judging from the changes in the industry's total monthly accumulated profits and gross profit margins, although the total monthly accumulated profits still show an increase this year, the growth rate has obviously slowed down. Prices of major chemical products such as PVC, methanol and dimethylformamide fluctuate. Many companies have begun to change their sales in recent years. The listed companies that are the development targets of the industry are not optimistic about future profit forecasts. Among the 41 listed companies that issued relevant forecasts, 56.1% of companies are expected to experience a drop in profits or losses. The monthly situation report just released by the China Petroleum and Chemical Industry Association shows that in July, the 149 kinds of petroleum and chemical products that were tracked were almost half of the prices falling compared with the previous month. In the same period of last year, the price increase products accounted for 81.7%.
However, with the "downward trend of the industry's business climate," the judgment is accompanied by the trend of investment in the oil and chemical industry. Although no one has made accurate statistics on the overall investment of the industry, it is an indisputable fact that a large number of large projects that have invested billions or even tens of billions of yuan in the industry this year are emerging. Only a few hundred items have been built, under construction, and planned to be built in this newspaper. In terms of these project areas, almost all fields such as petrochemicals, basic chemical raw materials, and coal chemical industries are covered. From a geographical point of view, it is almost everywhere in China.
The multi-year cyclical development track of the oil and chemical industry proves that the industry's boom degree has a very close relationship with investment. During the decades since the reform and opening up, we have experienced several downturns in the industry that are related to over-investment and blind projects. While quite a number of experts have judged the reasons for the current downturn in the current industry, they all believe that over-investment has caused more and more serious supply to exceed demand. Since the beginning of this year, the prices of coke, polyvinyl chloride, liquid chlorine, melamine and other products have fallen rapidly and have a lot to do with blind investment in these areas. Although as early as a few months ago, the leaders of relevant state departments and the China Petroleum and Chemical Industry Association had warned that the investment in the industry was overheated, but from the current situation, this warning did not inhibit the investment impulse in the industry. The downward trend in the industry’s increasingly prosperous economy since the second half of the year once again sounded the alarm for investment fever.
According to the plans for many large-scale projects currently under construction, the production capacity of these large-scale projects will be released during the “Eleventh Five-Year Plan†period. There is no indication that this round of economic downturn will change in a short time. In this way, on the one hand, the release of large-scale production capacity, a large number of products into the market; the other hand, is the decline in the industry boom, market demand and prices gradually weakened. The superposition of these two factors, the result is likely to be another boom. The more investment that is currently being made, the greater the release of production capacity, the faster the arrival of such a trough, and the longer it will last. This, of course, is a situation that every company that undertakes large-scale project construction is unwilling to see. However, it does appear repeatedly in the course of domestic economic development.
It is undeniable that the construction of each project has its feasibility and rationality in part. However, countless projects that seem to be feasible in some areas will be launched, which will most likely lead to industry-wide investment overheating. Why is this economic phenomenon repeated in China? This belongs to a more profound reform proposition.
It is not groundless to judge that the investment alarm bell sounds when the economy is down.
After experiencing the peak of development since 2002, since the beginning of this year, the judgments of the oil and chemical industries have peaked and fell into the down channel. This kind of judgment is not groundless.