Continuing the downward trend in February, the prosperity index of the petroleum and chemical industry in March 2023 dropped to 92.67, entering the colder range.
The petroleum and chemical industry prosperity index jointly compiled by the China Petroleum and Chemical Industry Federation and Shandong Zhuo Chuang Information Co., Ltd. shows that due to the impact of the off-season, the demand is sluggish, and the rubber, plastic and other polymer manufacturing industries are still facing greater challenges. Due to the destocking pressure, the prosperity index fell to the overcooling warning range, which led to a simultaneous decline in the prosperity index of the upstream chemical raw material and chemical product manufacturing industries. As the temperature picks up, the demand for travel increases, and the prosperity index of the fuel processing industry remains stable; winter is over, and the air-conditioning season is coming, and the pressure of low crude oil and natural gas inventory is relieved. Although the prosperity index of the oil and natural gas extraction industry continues to fall in February, it is still on the hot side interval.
Analyzed by the China Petroleum and Chemical Industry Prosperity Index Compilation Team (hereinafter referred to as the Compilation Team), the prosperity index continues to decline, which is in line with seasonal characteristics, and the rapid narrowing of the year-on-year decline also confirms the long-term recovery trend.
The prosperity index has entered a cold range and the economic recovery has turned into a stable period
In March 2023, the prosperity index of the petroleum and chemical industry continued to fall, falling to 92.67, a decrease of 2.36 percentage points from February 2023, entering the colder range; a decrease of 4.60 percentage points from March 2023, and the rate of decline continued to narrow .
In terms of industries, the demand side is sluggish due to the off-season. Manufacturing industries of rubber, plastics and other polymers are facing greater pressure to destock. In March, the prosperity index fell by 3.27 percentage points month-on-month, falling into the overcooled range. As its upstream chemical raw material and chemical products manufacturing industry, the prosperity index fell by 5.29 percentage points month-on-month, the largest decline among sub-sectors, and it was still in the overcooled range. With warmer temperatures and increased travel, the prosperity index of the fuel processing industry rose by 0.57 percentage points month-on-month, making it the only sub-industry with positive growth month-on-month. As the winter in the northern hemisphere has passed, oil and gas inventory levels remain relatively high over the same period, and international crude oil and natural gas prices have dropped significantly. The energy crisis is fading from the market's attention. The prosperity index of the oil and natural gas extraction industry has dropped by 2.36 percentage points month-on-month, and is still in the hot range. On the whole, the overall prosperity index of the petroleum and chemical industry fell into the cold range, which was the result of the impact of the off-season. However, compared with the same period last year, the decline has narrowed to 4.60 percentage points, which is the smallest year-on-year decline in the past 10 months. The recovery trend is still continuing.
In March 2023, the strong rebound momentum of China's economy has weakened, and the recovery process has entered a stable period. According to the National Bureau of Statistics, in March 2023, the manufacturing PMI dropped slightly to 51.9, 0.7 percentage points lower than in February.
Under multiple favorable policies, China's real estate sales have picked up significantly. From January to March, the accumulated sales of the top 100 real estate companies turned positive year-on-year. From January to February 2023, social financing will pick up significantly. On March 17, the People's Bank of China announced a reduction of the deposit reserve ratio by 25BP, and the weighted average deposit reserve ratio of financial institutions fell to 7.6%. The RRR cut released about 500 billion yuan of long-term funds, which met the credit demand and maintained reasonable and sufficient liquidity, which is conducive to supporting the economic recovery trend.
The risk aversion sentiment in the global market is heating up and the prosperity index will continue to rise
Affected by the interest rate hikes by global central banks, U.S. and European banks and investment banks encountered liquidity shocks. With the easing of market panic, part of the decline has been covered, but the market's uncertainty about demand recovery has further increased.
On March 10, Silicon Valley Bank closed down just 48 hours after it suffered a run, and the panic in the financial market quickly heated up. By mid-March, dangers such as the collapse of American Signature Bank, the thunderstorm of Credit Suisse, and the sharp rise of Deutsche Bank's CDS appeared one after another, and the liquidity crisis began to evolve into a financial crisis.
The compilation team believes that the prosperity index of the petroleum and chemical industry in March 2023 will continue to fall, which is in line with seasonal characteristics, and the rapid narrowing of the year-on-year decline also confirms the long-term recovery trend.
The growth rate of domestic credit is stable, domestic demand is gradually picking up, and the situation continues to improve. Internationally, high sticky inflation has made it more difficult for central banks to fight inflation, and further interest rate hikes are still possible in the short term. Rising interest rates will also put greater pressure on financial markets, and the risk of a global systemic financial crisis is still accumulating.
In the short term, the panic caused by the crisis of small-scale banks and investment banks in the first ten days of March led to a decline in commodity market prices. After the panic eased in late March, commodity prices made up part of the decline. In the medium term, the continuous tightening of liquidity will increase the possibility of a global systemic financial crisis, and demand recovery will face greater challenges. The compilation team expects that the prosperity index of the petroleum and chemical industry will continue to rise, with a relatively limited increase, and a higher probability of turning positive year-on-year. (Reporter Zhang Nan)
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