The trend of “reducing the use of oil and increasing the amount of chemicals” and “new materials” is driving demand.

1. Refining equipment: "decoupling" oil prices, new demand brought by the development of the chemical industry
The refining equipment market is mainly driven by downstream refining and chemical industries. Refining and chemical equipment includes static equipment, mechanical equipment, process pipelines, and automatic control instruments, among which static equipment and mechanical equipment are the main body of refining and chemical equipment. Static equipment includes heat exchangers, chemical furnaces, etc., and mechanical equipment includes compressors, motors, pumps, etc. The downstream of refining equipment mainly consists of two major industries: refining and chemical engineering, and can also be applied in fields such as metallurgy and nuclear energy.

Since 2010, there have been three periods in which refining companies have increased their capital expenditures: 2010-2012: Capital expenditures in the refining industry are closely related to oil prices. With the steady implementation of the "Ten Measures to Further Expand Domestic Demand and Promote Stable and Rapid Economic Growth", the bottom of refining terminal demand recovered in early 2010, driving the growth of capital expenditure in the refining industry. From then on, until 2012, oil prices remained above $100 per barrel, eroding the refining profit space, and the marginal decline of refining prosperity. The capital expenditure of PetroChina and Sinopec in the refining industry began to decrease in 2013, The revenue of refining and chemical equipment related companies significantly decreased in 2014.

2017-2020: The era of private large-scale refining began, and the correlation between capital expenditure in the refining industry and oil prices gradually weakened. In 2015, the National Development and Reform Commission issued the "Petrochemical Industry Planning and Layout Plan", proposing to focus on the construction of seven major petrochemical industry bases. In the same year, the "Notice on the Management of the Use of Imported Crude Oil" and the "Notice on the Application for Non State Trade Import Qualification by Crude Oil Processing Enterprises" were issued, and the state relaxed the right to use crude oil imports and the qualifications for crude oil imports. Private capital began to enter the refining and chemical industry in large quantities. Meanwhile, after the oil price bottomed out in 2016, a new upward cycle began. The rise in oil prices, coupled with the promotion of national policy goals, has led to a significant improvement in investment in the refining and chemical industry in 2017. Several major private refining and chemical projects have quickly landed, and the revenue of refining and chemical equipment related companies has significantly rebounded. At the end of 2018, oil prices fell, and throughout 2019, oil prices fluctuated at mid to low levels. However, capital expenditure in the refining and chemical industry still maintained a relatively high growth rate.

The petroleum refining industry covers five major industrial chain processes, including oil extraction, refining, basic organic chemicals, polymer synthesis, and polymer synthetic material molding. Through the upstream petroleum exploration, extraction, storage and transportation industry, crude oil is continuously sent to the midstream refining and processing process, where it is refined and processed through a series of processes such as refining and cracking, converting it into basic organic chemical raw materials. And basic organic chemical raw materials can further produce thousands of organic chemical intermediates, synthetic materials, and fine chemicals. Through polymer synthesis technology, the above-mentioned chemicals can be polymerized into polymer polymers such as synthetic resin and synthetic rubber, and ultimately processed through material forming technology to produce plastic, fiber, rubber products, as well as various adhesive and coating products. With the technological innovation in the chemical industry, new material products downstream of petrochemical raw materials are gradually gaining momentum, and the added value of products is constantly increasing.