Investment Rating - The report maintains an "Overweight" rating for the basic chemical industry [1] Core Views - The fire at Covestro's German plant has led to a rapid increase in TDI prices, which may also drive up MDI prices [1] - Covestro's TDI production capacity of 300,000 tons/year is significantly impacted, affecting 30% of TDI capacity in Europe [4] - Domestic TDI prices have risen to 14,913 RMB/ton, a 6.04% increase, with expectations for further price hikes in Q3 [4] - The report anticipates that TDI price increases will lead to a rise in MDI prices, which are currently at 15,200 RMB/ton, up 1.33% [4] Industry Trends - Covestro's supply disruptions and domestic maintenance activities are tightening TDI supply, leading to increased prices [4] - The report notes that overseas TDI capacity is shrinking, with significant closures in Germany and Japan, which may benefit Chinese exporters [4] - China's TDI exports reached 51,600 tons in May 2025, a year-on-year increase of 98.45%, indicating strong demand in Southeast Asia [4] - The report highlights key companies in the industry, including Wanhua Chemical, Cangzhou Dahua, and Hualu Hengsheng, with respective TDI capacities of 1,110,000 tons/year, 160,000 tons/year, and 300,000 tons/year planned for 2024 [4]

Investment Rating - The investment rating for the chemical industry is "Positive" (maintained) [1] Core Viewpoints - The petrochemical industry's stable growth plan is expected to optimize the competitive landscape of the chemical industry on the supply side [4][30] - The TDI market price has risen sharply due to supply disruptions caused by an incident at a production facility in Germany [4][24] - The overall profitability of the chemical industry is under pressure due to increased capital expenditures and concentrated new capacity over the past four years, but the upcoming stable growth plans may lead to the elimination of outdated capacity and recovery of product profitability [30] Summary by Sections Industry Trends - The chemical industry index outperformed the CSI 300 index by 0.69% this week, with 302 out of 545 stocks in the sector rising [18] - The CCPI (China Chemical Product Price Index) reported a decrease of 0.27% this week [20] Key Products Tracking - The TDI market price increased to an average of 14,063 CNY/ton, up 17.06% from the previous week [24] - The glyphosate market is showing strong performance with prices continuing to rise, averaging 25,901 CNY/ton [55] Recommended and Beneficiary Stocks - Recommended stocks include Wanhua Chemical, Hualu Hengsheng, Hengli Petrochemical, and others in various sub-sectors [6][30] - Beneficiary stocks include Cangzhou Dahua and others that may benefit from the current market conditions [25][31]

Investment Rating - The report maintains an "Outperform" rating for the basic chemical industry [2] Core Viewpoints - The basic chemical sector has outperformed the market, with the industry index rising by 1.8% from July 11 to July 18, compared to a 0.7% increase in the Shanghai Composite Index [9][20] - The report highlights significant price increases in TDI, glyphosate, and glufosinate due to supply disruptions and rising demand, particularly in South America [6][31][33] Summary by Sections 1. Core Viewpoints - The basic chemical sector is expected to benefit from supply-side reforms and improved demand due to recent government policies aimed at stabilizing the economy [17] - The report emphasizes the potential for long-term investment in core assets as the profitability of chemical products has likely bottomed out, suggesting a recovery in valuations [17][18] 2. Overall Performance of the Chemical Sector - The basic chemical industry index has shown a year-to-date increase of 10.8%, outperforming both the Shanghai Composite and ChiNext indices by 5.4% and 4.5%, respectively [20][26] 3. Individual Stock Performance in the Chemical Sector - Among 424 stocks in the basic chemical sector, 251 stocks rose while 162 fell during the reporting week, with notable gainers including Shangwei New Materials (+148.8%) and Dongcai Technology (+33.2%) [29][30] 4. Key News and Company Announcements - A fire at Covestro's TDI plant in Germany has led to significant supply disruptions, creating opportunities for price increases in TDI [31][32] - Glyphosate prices have increased to 25,500 CNY per ton, reflecting a 7.16% month-over-month rise, driven by reduced inventory levels [33] - New regulations on glufosinate are expected to constrain supply, potentially leading to price increases as the market adjusts [34]

Group 1 - The chemical sector showed strong performance with the chemical ETF (516020) experiencing a maximum intraday increase of 1.63% [1] - Major stocks in the sector saw significant gains, with Wanhua Chemical rising by 7%, Huafeng Chemical increasing over 4%, and several others gaining more than 3% [1] - The basic chemical sector attracted substantial capital inflow, with net inflows exceeding 5 billion yuan, ranking second among 30 major sectors [1][3] Group 2 - The chemical ETF (516020) is currently trading at a price-to-book ratio of 1.94, which is at a low point historically, indicating potential for long-term investment [4] - Analysts predict a recovery in the chemical industry, with improvements expected in supply-demand dynamics and a gradual increase in industry sentiment [5][6] - The government is focusing on reducing disorderly competition and promoting product quality, which may lead to a more favorable environment for the chemical sector [6] Group 3 - The chemical ETF (516020) tracks the CSI sub-sector chemical industry index, providing exposure to major companies and various sub-sectors within the chemical industry [7] - Investors can also consider the chemical ETF linked funds (A class 012537/C class 012538) for broader exposure to the sector [7]

Summary of Conference Call Industry or Company Involved - The conference call primarily discusses the macroeconomic environment, policy signals, and various industry sectors including oil and gas, chemicals, construction materials, and transportation. Core Points and Arguments 1. **Policy Signals and Economic Outlook** - The discussion highlights the anticipation of new policy signals before identifying structural opportunities in the market. The recent easing of tariffs between the US and China is noted, although uncertainty remains regarding future negotiations [1][2][3]. 2. **Impact of Tariffs on Trade** - In April, the US collected approximately $1-2 billion in additional tariffs from China, which is insufficient to offset the fiscal risks posed by tax cuts. This indicates a potential expansion risk in the US fiscal situation [2]. 3. **Domestic Economic Conditions** - The domestic economy shows signs of slowing down, particularly in exports to the US, which have declined due to tariff tensions. There is a concern that the temporary boost in exports may not be sustainable [3][4]. 4. **Fiscal Policy and Debt Issuance** - The Chinese government has been proactive in fiscal policy, issuing a significant amount of debt to stimulate the economy. Approximately 2 trillion yuan of bonds were issued in the last quarter, with expectations for continued issuance [4][5][6]. 5. **Monetary Policy Outlook** - The potential for further monetary easing is discussed, especially as inflation indicators (CPI and PPI) are expected to decline. This could provide more room for liquidity support in the economy [7][8]. 6. **Oil and Gas Sector Analysis** - The oil and gas sector is experiencing a decline in capital expenditure, with a noted 18% drop in the previous year. Demand uncertainties, particularly due to US-China trade relations, are highlighted as a significant concern [10][11]. 7. **Construction Materials and Steel Industry** - The construction materials sector is entering a seasonal downturn, with prices under pressure. However, there are expectations for a rebound in demand as the market transitions from a slow to a peak season [24][26]. 8. **Transportation Sector Insights** - The shipping industry has seen a significant price increase, with container shipping rates doubling in the past month. However, a potential decline in demand is anticipated as the rush for shipping eases [31][32]. 9. **Investment Recommendations** - The call suggests focusing on companies with strong dividend yields and stable fundamentals, particularly in the construction materials and transportation sectors. Specific companies like China Shenhua and Shaanxi Coal are recommended for their strong dividend attributes [29][36]. Other Important but Possibly Overlooked Content 1. **Emerging Opportunities in New Materials** - Companies involved in domestic substitutes for new materials are highlighted as long-term investment opportunities [24]. 2. **Market Sentiment and Stock Performance** - The performance of small-cap stocks is noted, with fluctuations indicating a lack of strong market direction. However, some stocks have shown resilience and potential for recovery [24]. 3. **Global Economic Factors** - The call acknowledges ongoing global uncertainties, including geopolitical tensions and their potential impact on market dynamics, particularly in the commodities sector [19][20]. 4. **Sector-Specific Risks** - The chemical sector faces challenges due to demand uncertainties and potential overcapacity, which could hinder price recovery despite favorable cost conditions [11][12]. 5. **Future Monitoring of Policy Changes** - The need for ongoing observation of policy developments, particularly in fiscal and monetary areas, is emphasized as critical for future investment strategies [6][8].

Group 1 - The ethylene glycol industry is focusing on technological innovation and catalyst breakthroughs as key factors for high-quality development [1] - Experts emphasize the importance of green technology innovation and clean production processes, including carbon capture and utilization [1] - The downstream extension of the ethylene glycol industry chain is significant, with potential for producing various valuable products from dimethyl oxalate [1] Group 2 - The synthesis gas to ethylene glycol process is currently in a phase of "scale expansion and technological deepening," with large-scale facilities becoming mainstream [2] - Proprietary technology developed by Zhongke Yuandong has been applied in several large-scale ethylene glycol plants, ensuring high catalytic activity and extending catalyst lifespan [2] - Hualu Hengsheng has successfully built a 500,000 tons/year ethylene glycol facility using this technology, achieving stable operation and high product quality [2]

Investment Rating - The report maintains an "Outperform" rating for the basic chemical industry [2] Core Viewpoints - The basic chemical sector has shown better performance than the market, with a year-to-date increase of 8.9%, outperforming the Shanghai Composite Index by 4.2 percentage points [4][16] - The global potash market is characterized by oligopoly, with major producers controlling supply and prices. Recent production cuts by key players are expected to sustain potash market conditions [5][27] - Phosphate supply remains tight, with stable prices and potential improvements in export opportunities as demand increases [5][27] Summary by Sections 1. Core Viewpoints - Policies are expected to improve supply-demand dynamics in the chemical sector, with a focus on cyclical investment opportunities [13] - The chemical industry is entering a new long-term prosperity cycle, driven by improved fundamentals and reduced risks [13][14] 2. Overall Performance of the Chemical Sector - The basic chemical industry index increased by 1.5% during the week, outperforming the Shanghai Composite Index by 0.4 percentage points [16] - Year-to-date, the basic chemical industry index has increased by 8.9%, significantly outperforming both the Shanghai Composite and ChiNext indices [16][18] 3. Individual Stock Performance in the Chemical Sector - Among 424 stocks in the basic chemical sector, 298 stocks rose while 123 fell during the week [25] - The top performers included companies like Shangwei New Materials (+72.9%) and Hongbo New Materials (+24.7%) [25][26] 4. Key News and Company Announcements - The autumn fertilizer preparation has begun, with a focus on investment opportunities in potash and phosphate fertilizers [27] - Major potash producers have announced production cuts, which are expected to tighten supply and support prices [5][27] - Phosphate prices remain stable, with potential for improved export conditions as demand increases [5][27] 5. Product Price Changes - The report highlights significant price increases in various chemical products, with notable gains in dimethylamine (+16.7%) and fatty alcohol (+8.2%) [6] - Conversely, urea prices have seen a significant decline (-15%) [6]

Investment Rating - The report maintains a positive outlook on the chemical industry, with specific buy and hold recommendations for various companies [2][20]. Core Insights - The report highlights the closure of Dow's organic silicon production capacity in Barry, UK, which is expected to increase domestic export demand and support the upstream industrial silicon costs, indicating a potential reversal in the organic silicon industry [4][5]. - The demand for high-end AI PCBs is projected to surge due to the continuous growth in computing power requirements, driven by GPU, ASIC, and 800G switch technologies [4]. - The report notes that the recent tariff announcements from the US on imports from Southeast Asia are lower than expected, stabilizing pessimistic market sentiments [4]. Industry Dynamics - The macroeconomic outlook for the chemical industry indicates a significant increase in oil supply led by non-OPEC countries, with a stable global GDP growth rate of 2.8% [5]. - The report mentions that coal prices are expected to decline in the medium to long term, alleviating pressure on downstream sectors [5]. - Natural gas exports from the US are anticipated to accelerate, potentially lowering import costs [5]. Company Recommendations - Companies to watch in the organic silicon sector include Dongyue Silicon Materials, Xin'an Chemical, and Xingfa Group [4]. - In the PCB sector, recommended companies include Shengquan Group, Dongcai Technology, Lianrui New Materials, Yake Technology, Tiancheng Technology, and Jiuri New Materials [4]. - For traditional cyclical stocks, the report suggests focusing on leading companies in various segments such as Wanhu Chemical, Hualu Hengsheng, and Baofeng Energy [4]. Price Trends - The report provides specific price movements for various chemical products, such as PTA prices decreasing by 2.8% to 4715 RMB/ton, while MEG prices increased by 0.7% to 4409 RMB/ton [11]. - Urea prices rose by 2.9% to 1800 RMB/ton, while phosphate prices remained stable [12]. - The report notes that the price of DMC increased by 1.9% to 11000 RMB/ton, indicating a recovery in the organic silicon market [15].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints The report focuses on the weekly data of the basic chemical industry, showing that the demand is weak and the MDI price is running weakly. It details the price and profit changes of various chemical products in different sectors such as polyurethane, oil - gas - olefin, and coal - chemical industries, and also tracks the stock price, market value, and profit of related listed companies [1][2]. 3. Summary by Directory 3.1 Basic Chemical Weekly Data Briefing - **Related Company Performance Tracking** - **Stock Price Fluctuations**: From July 11, 2025, the basic chemical index rose 1.5% in the past week, 2.5% in the past month, 11.1% in the past three months, 20.9% in the past year, and 8.9% since the beginning of 2025. Among related companies, Wanhua Chemical rose 3.0% in the past week, Baofeng Energy fell 2.6%, Satellite Chemical fell 1.8%, and Hualu Hengsheng fell 1.5% [8]. - **Profit Tracking**: As of July 11, 2025, Wanhua Chemical had a total market value of 174.9 billion yuan, with a net profit attributable to the parent company of 13.033 billion yuan in 2024A, 13.966 billion yuan in 2025E, 16.864 billion yuan in 2026E, and 19.233 billion yuan in 2027E. Similar data is provided for Baofeng Energy, Satellite Chemical, and Hualu Hengsheng [8]. - **Polyurethane Industry Chain** - **Product Prices and Profits**: This week, the average prices of pure MDI, polymer MDI, and TDI were 16,640 yuan/ton, 14,800 yuan/ton, and 12,120 yuan/ton respectively, with week - on - week changes of - 300 yuan/ton, - 420 yuan/ton, and + 120 yuan/ton. The corresponding gross profits were 3,565 yuan/ton, 2,765 yuan/ton, and 1,110 yuan/ton, with week - on - week changes of - 153 yuan/ton, - 295 yuan/ton, and + 213 yuan/ton [2][8]. - **Oil - Gas - Olefin Industry Chain** - **Raw Material Prices**: The average prices of ethane, propane,动力煤, and naphtha this week were 1,254 yuan/ton, 4,135 yuan/ton, 483 yuan/ton, and 4,211 yuan/ton respectively, with week - on - week increases of 56 yuan/ton, 65 yuan/ton, 13 yuan/ton, and 102 yuan/ton [2]. - **Product Prices and Profits**: The average price of polyethylene was 7,931 yuan/ton, down 15 yuan/ton week - on - week. The theoretical profits of ethane cracking, CTO, and naphtha cracking to produce polyethylene were 1,304 yuan/ton, 2,046 yuan/ton, and 68 yuan/ton respectively, with week - on - week decreases of 62 yuan/ton, 44 yuan/ton, and 119 yuan/ton. The average price of polypropylene was 7,064 yuan/ton, down 56 yuan/ton week - on - week. The theoretical profits of PDH, CTO, and naphtha cracking to produce polypropylene were - 45 yuan/ton, 1,670 yuan/ton, and - 127 yuan/ton respectively, with week - on - week decreases of 101 yuan/ton, 71 yuan/ton, and 145 yuan/ton [2]. - **Coal - Chemical Industry Chain** - **Product Prices and Profits**: The average prices of synthetic ammonia, urea, DMF, and acetic acid this week were 2,228 yuan/ton, 1,808 yuan/ton, 4,255 yuan/ton, and 2,301 yuan/ton respectively, with week - on - week changes of - 13 yuan/ton, + 11 yuan/ton, + 235 yuan/ton, and - 49 yuan/ton. The corresponding gross profits were 343 yuan/ton, 148 yuan/ton, 141 yuan/ton, and 12 yuan/ton, with week - on - week changes of - 9 yuan/ton, + 3 yuan/ton, + 327 yuan/ton, and + 7 yuan/ton [2]. 3.2 Basic Chemical Weekly Report - **Basic Chemical Index Trend**: No specific content provided other than the mention of the index and related data in the data briefing section [12]. - **Polyurethane Sector**: Analyzes the price trends of pure benzene, pure MDI, polymer MDI, and TDI, as well as the price and profit of polymer MDI, TDI, and pure MDI [17][18]. - **Oil - Gas - Olefin Sector**: Covers the price trends of MB ethane, NYMEX natural gas, East China propane, Brent crude oil, domestic动力煤, and naphtha, and the profit of different production processes such as ethane cracking, naphtha cracking, MTO, and CTO for producing PE and PP [24][30]. - **Coal - Chemical Sector**: Analyzes the price trends and profits of coal - coking products, traditional coal - chemical products, and new materials such as coking coal, coke, synthetic ammonia, methanol, urea, DMF, acetic acid, DMC, oxalic acid, octanol, adipic acid, caprolactam, and PA6 [10][42].

Core Insights - The report highlights the impact of the recent US-Vietnam trade agreement on China's textile exports, with US tariffs on Vietnam reduced from 46% to 20%, potentially leading to a shift of orders from US buyers to Vietnam [8] - The outdoor industry is expected to continue thriving, supported by increasing participation in events and a growing market for outdoor products, with a target industry scale exceeding 3 trillion yuan by 2025 [9] - The real estate market is anticipated to stabilize, with potential policy support from the government, which may positively influence the home furnishing sector [10] Economic News - The National Development and Reform Commission has allocated an additional 10 billion yuan for employment projects, expected to create jobs for 310,000 individuals [2] - The People's Bank of China is exploring new measures to open the bond market to foreign investors, aiming to enhance the liquidity of RMB bonds [3] - The Hong Kong Monetary Authority plans to expand offshore RMB repurchase operations, enhancing market liquidity and supporting the development of the Hong Kong bond market [4] Company News - Shentong Express has partnered with Cainiao to advance the application of unmanned vehicles in last-mile delivery, aiming to enhance its smart delivery network [6] - Huawei has announced a new patent for an auxiliary driving method, which aims to improve drivers' perception of surrounding obstacles [6] - JD.com has launched a "Double Hundred Plan" to invest over 10 billion yuan to support quality merchants, enhancing their online sales capabilities [6] Market Review - The textile and apparel industry saw a 1.36% increase, while the light industry rose by 0.58%, indicating a positive trend in these sectors [11]