Investment Rating - The report maintains a "Recommended" rating for the chemical industry [1] Core Views - The chemical industry is expected to experience a recovery in demand, driven by government policies aimed at stabilizing growth and transforming the industry [4][5] - The demand for chromium salts is anticipated to rise significantly due to increased orders for gas turbines and commercial aircraft engines in Europe and the US, leading to a projected supply gap by 2028 [8] - The report highlights the potential for high dividend yields and improved cash flow for leading companies in the chemical sector as capacity expansion slows down globally [4] Summary by Sections Industry Performance - The basic chemical sector has shown a performance increase of 23.0% over the past 12 months, outperforming the CSI 300 index [2] Government Initiatives - A joint announcement from seven government departments outlines a plan for stable growth in the petrochemical industry, targeting an average annual growth of over 5% in value-added output from 2025 to 2026 [5] Market Dynamics - The price of chromium salts is on the rise, with significant increases noted in the prices of chromium metal and chromium oxide in October 2025 [8][18] - The report indicates that the chemical industry is transitioning from a "cash-consuming" phase to a "cash-generating" phase, with a focus on high-quality development and innovation [4][5] Investment Opportunities - Key investment opportunities identified include low-cost expansion in leading companies, improving market conditions for chromium salts, and high dividend yields from state-owned enterprises [9][10][11]

Report Information - Report Title: Big Refining Weekly Report: PTA Industry Development Symposium Held, Pay Attention to the Advancement of Anti-Involution in the Chemical Industry [1] - Report Date: November 2, 2025 [1] - Analysts: Chen Shuxian, Zhou Shaowen [1] Industry Investment Rating - Not provided in the given content Core Viewpoints - The report provides a comprehensive analysis of the big refining industry, including the performance of key refining projects, the polyester, refining, and chemical sectors, and the market performance of related listed companies [2] Summary by Directory 1. Big Refining Weekly Data Briefing - **Price and Spread Data**: Domestic key big refining project spread is 2,450 yuan/ton, down 90 yuan/ton (down 4%) week-on-week; foreign key big refining project spread is 1,302 yuan/ton, up 79 yuan/ton (up 6%) week-on-week [2] - **Polyester Sector**: POY/FDY/DTY industry average prices are 6,429/6,679/7,779 yuan/ton, up 21/61/46 yuan/ton respectively; POY/FDY/DTY industry weekly average profits are -17/-116/17 yuan/ton, down 88/62/72 yuan/ton respectively; POY/FDY/DTY industry inventories are 8.5/18.3/24.5 days, down 3.3/3.6/5.0 days respectively; filament开工率 is 90.9%, down 0.1 pct; downstream loom开工率 is 69.0%, up 2.6 pct; weaving enterprise raw material inventory is 14.0 days, up 2.9 days; weaving enterprise finished product inventory is 23.0 days, down 1.1 days [2] - **Refining Sector**: Domestic refined oil: gasoline/diesel prices declined this week; US refined oil: US gasoline/diesel/aviation kerosene prices rose this week [2] - **Chemical Sector**: This week's PX average price is 820.7 US dollars/ton, up 26.3 US dollars/ton; the spread to crude oil is 344.9 US dollars/ton, up 8.2 US dollars/ton; PX开工率 is 87.1%, up 0.8 pct [2] - **Related Listed Companies**: Private big refining & polyester filament: Hengli Petrochemical, Rongsheng Petrochemical, Hengyi Petrochemical, Tongkun Co., Ltd., Xin凤鸣 [2] 2. Big Refining Weekly Report 2.1 Big Refining Index and Project Spread Trends - **Market Performance Comparison**: The report presents the price trends and spreads of domestic and foreign big refining projects, as well as the market performance of six private big refining companies compared to the Shanghai and Shenzhen 300 Index, the petroleum and petrochemical index, and the Brent crude oil price [13][15][17] 2.2 Polyester Sector - **Price and Profit Analysis**: The report analyzes the prices, spreads, and profits of various polyester products, including PX, PTA, MEG, POY, FDY, DTY, polyester staple fiber, and polyester bottle chips, as well as their relationships with raw material prices and inventories [23][24][35] - **开工率 and Inventory Analysis**: It also examines the开工率 and inventory levels of polyester products and their downstream industries, such as looms, and analyzes the seasonal distribution of polyester filament production and sales rates [30][42][56] 2.3 Refining Sector - **Domestic Refined Oil**: The report analyzes the prices and spreads of domestic gasoline, diesel, and aviation kerosene compared to crude oil prices [78][80][87] - **US Refined Oil**: It also examines the prices and spreads of US gasoline, diesel, and aviation kerosene compared to crude oil prices [92][94][101] - **European Refined Oil**: The report analyzes the prices and spreads of European gasoline, diesel, and aviation kerosene compared to crude oil prices [106][108][114] - **Singapore Refined Oil**: It also examines the prices and spreads of Singapore gasoline, diesel, and aviation kerosene compared to crude oil prices [118][120][126] 2.4 Chemical Sector - **Price and Spread Analysis**: The report analyzes the prices and spreads of various chemical products, including polyethylene, polypropylene, EVA, styrene, acrylonitrile, PC, MMA, etc., compared to crude oil prices [132][141]

Investment Rating - The industry investment rating is "Positive" as the industry index is expected to outperform the benchmark [150] Core Insights - The report highlights an improvement in demand for polyester filament yarn, leading to a continued reduction in inventory levels [2] - The Brent crude oil average price for the week ending October 31, 2025, was $65.18 per barrel, reflecting a week-on-week increase of 3.96% [2][3] - Domestic and international refining project price differentials were tracked, with domestic projects at 2337.32 CNY/ton, down 1.97%, and international projects at 1303.72 CNY/ton, up 6.53% [2][3] Refining Sector Summary - The market is questioning the effectiveness of sanctions against Russia, while OPEC+ is inclined to slightly increase production in December [2] - The EIA inventory data provided positive support, alleviating concerns over trade tensions [2] - As of October 31, 2025, the prices for Brent and WTI crude oil were $65.07 and $60.98 per barrel, respectively [2][14] Chemical Sector Summary - Chemical prices generally declined, with significant narrowing of price differentials [2] - Polyolefins showed stable price movements, while EVA continued to weaken with noticeable price drops [2] - Benzene prices faced downward pressure due to high invisible inventory levels, leading to slight price fluctuations [2] Polyester & Nylon Sector Summary - Demand for polyester filament yarn has rebounded, with inventory levels decreasing significantly [2] - The government has introduced policies to optimize the supply structure, improving medium to long-term supply-demand expectations [2] - The average prices for polyester filament yarn were reported as follows: POY at 6439.29 CNY/ton, FDY at 6675.00 CNY/ton, and DTY at 7725.00 CNY/ton [2][87] Major Refining Companies Performance - The stock price changes for six major refining companies as of October 31, 2025, were as follows: Rongsheng Petrochemical (+2.62%), Hengli Petrochemical (+6.40%), Dongfang Shenghong (-1.18%), Hengyi Petrochemical (-4.15%), Tongkun Co. (-0.49%), and Xin Fengming (+1.53%) [2][137]

Summary of the Conference Call for Rongsheng Petrochemical Company Overview - **Company**: Rongsheng Petrochemical - **Industry**: Petrochemical Key Points and Arguments Financial Performance - In Q3 2025, Rongsheng Petrochemical achieved a revenue of **792 billion CNY** and a net profit attributable to shareholders of **2.86 billion CNY**, showing improvements both year-on-year and quarter-on-quarter [3][6][5] - For the first three quarters of 2025, total revenue reached **227.8 billion CNY** with a net profit of **8.88 billion CNY** [6][5] - The company’s cash flow from operating activities increased by **20%** year-on-year, amounting to **236 billion CNY** [6][5] Shareholder Returns - The company completed a share repurchase of **1.998 billion CNY** in July 2025 and the controlling shareholder initiated a buyback plan totaling nearly **3 billion CNY** [3][4] - These actions reflect the management's confidence in the company's long-term value [3][4] Industry Dynamics - The petrochemical industry is currently in a cyclical downturn, but there are signs of recovery due to policy support and market adjustments [3][4] - The Ministry of Industry and Information Technology issued a plan in September to stabilize growth in the petrochemical sector, focusing on technological innovation and investment optimization [4][3] Operational Strategy - The company is focusing on high-end materials and international cooperation to enhance global competitiveness [4][3] - Plans to optimize capital expenditure by concentrating on differentiated and high-return new materials [4][3] Market Conditions - International oil prices fluctuated between **65-70 USD** per barrel in Q3, with OPEC+ canceling voluntary production cuts [7][6] - The company exported **235,000 tons** of refined oil, with a total refined oil production of **12 million tons** in the first three quarters [10][7] PTA and Polyester Segment - PTA processing fees are at historical lows, averaging less than **200 CNY** per ton in Q3, down from **300 CNY** in Q2 [18][19] - The company has reduced PTA production loads in response to market conditions, collaborating with other leading firms to stabilize the market [21][22] Future Outlook - The company anticipates a gradual recovery in the petrochemical sector, with potential improvements in profitability as the industry adjusts to reduced capacity and market demands [42][43] - Upcoming projects include high-performance materials and new energy materials, with expected production starting in **2026** [49][50] Risk Management - The company has a diversified and compliant global procurement strategy, focusing on stable sources like Saudi Arabia to mitigate geopolitical risks [14][15] - The impact of international sanctions on the industry is acknowledged, but the company maintains a strong position due to its resource integration capabilities [16][14] Conclusion - Rongsheng Petrochemical is navigating a challenging market environment with strategic initiatives aimed at enhancing operational efficiency and shareholder value. The focus on high-end materials and international collaboration positions the company well for future growth as the industry recovers from cyclical lows [3][4][42][43]

Core Viewpoint - Rongsheng Petrochemical is a leading domestic petrochemical enterprise with significant investment value, possessing a full industry chain advantage in the refining and chemical sector [1] Group 1: Business Performance - In Q3 2025, Rongsheng Petrochemical achieved a revenue of 227.81 billion yuan, ranking 3rd in the industry, but still trailing behind China National Petroleum and Sinopec [2] - The net profit for the same period was 2.63 billion yuan, placing it 4th in the industry, below the industry average of 18.05 billion yuan [2] Group 2: Financial Ratios - As of Q3 2025, the company's debt-to-asset ratio was 75.45%, slightly down from 75.93% year-on-year, but higher than the industry average of 62.74% [3] - The gross profit margin was 12.91%, an increase from 12.16% year-on-year, yet still below the industry average of 13.42% [3] Group 3: Executive Compensation - The chairman, Li Shui Rong, received a salary of 4.72 million yuan in 2024, a decrease of 44,000 yuan from 2023 [4] - The general manager, Xiang Jiong Jiong, earned 2.18 million yuan in 2024, down by 157,100 yuan from the previous year [4] Group 4: Shareholder Information - As of September 30, 2025, the number of A-share shareholders decreased by 14.14% to 73,700, while the average number of circulating A-shares held per shareholder increased by 14.80% [5] - The top circulating shareholder, Hong Kong Central Clearing Limited, increased its holdings by 17.06 million shares [5] Group 5: Future Outlook - The company is expected to benefit from the "anti-involution" policy and has several new projects underway, including a high-performance resin project that is 75% complete [5] - Revenue projections for 2025-2027 are 308.1 billion, 315.6 billion, and 324.0 billion yuan, with net profits of 1.40 billion, 2.88 billion, and 3.89 billion yuan respectively [5] - Analysts have noted that the company's performance in Q3 2025 exceeded expectations, with potential for significant recovery in refining profitability [6]

Core Insights - The refining and trading sector saw a slight increase of 0.12% on October 31, with Heshun Petroleum leading the gains [1] - The Shanghai Composite Index closed at 3954.79, down 0.81%, while the Shenzhen Component Index closed at 13378.21, down 1.14% [1] Sector Performance - Heshun Petroleum (603353) closed at 21.58, up 5.58% with a trading volume of 97,600 shares and a transaction value of 211 million yuan [1] - Hengtong Co. (603223) closed at 9.91, up 3.77% with a trading volume of 101,000 shares and a transaction value of 98.88 million yuan [1] - International Long (000819) closed at 18.07, up 3.26% with a trading volume of 96,800 shares and a transaction value of 173 million yuan [1] - Other notable performers included Runbei Aerospace (001316) up 2.57%, Bohai Chemical (600800) up 1.86%, and Wanbangda (300055) up 1.68% [1] Fund Flow Analysis - The refining and trading sector experienced a net inflow of 176 million yuan from main funds, while retail investors saw a net outflow of 85.98 million yuan [2] - Notable stocks with significant fund flow included Guanghui Energy (600256) which saw a net outflow of 2.23% [2]

Core Viewpoint - The chemical industry is entering a downward cycle due to high costs and weak supply-demand dynamics, despite maintaining high capital expenditure and supply growth since the peak in 2021. However, there are "long-termist" companies capable of navigating through the cycle, providing substantial returns to investors through growth and dividends [1][2]. Group 1: Industry Overview - The chemical industry has experienced high capital expenditure and significant supply growth since the peak in 2021, but demand recovery remains relatively weak, leading to a high-cost and weak supply-demand environment [1]. - Long-termist companies in the chemical sector are characterized by strong shareholder backgrounds, excellent management capabilities, reasonable industry chain layouts, continuous R&D investment, and a strong sense of social responsibility, enabling them to achieve stable growth and sustainable development [2]. Group 2: Oil and Gas Sector - The "three major oil companies" (China National Petroleum, Sinopec, and CNOOC) are expected to maintain high capital expenditure and enhance natural gas market development, aiming for long-term growth despite oil price fluctuations [3]. - The domestic oil service companies are benefiting from high upstream capital expenditure, with improved operational quality and international competitiveness, particularly in the context of the Belt and Road Initiative [3]. Group 3: Refining and Chemical Fiber Industry - The refining and chemical fiber industry is anticipated to recover, with the refining expansion nearing completion and supply-demand dynamics expected to improve, leading to high-quality development in the sector [4]. - The polyester sector is seeing limited new capacity, with structural optimization accelerating, which is expected to enhance the market share and competitiveness of leading companies [4]. Group 4: Coal Chemical Industry - The coal chemical industry is projected to improve profitability due to a gradual easing of coal supply and demand, alongside a decline in coal prices. The transition towards modern coal chemical processes is seen as essential for traditional coal enterprises [5]. - The average prices for various coal types have decreased, with main coking coal, thermal coal, and anthracite prices showing declines of -10.5%, -2.0%, and -16.0% respectively compared to the beginning of the year [5]. Group 5: Investment Recommendations - The report suggests focusing on leading companies in the upstream oil and gas sector and oil service companies, including China National Petroleum (601857.SH), Sinopec (600028.SH), CNOOC (600938.SH), and others [6]. - For the refining and chemical fiber sector, companies like Hengli Petrochemical (600346.SH) and Rongsheng Petrochemical (002493.SZ) are recommended due to their potential benefits from industry optimization and upgrades [7]. - In the coal chemical sector, companies such as Hualu Hengsheng (600426.SH) and Baofeng Energy (600989.SH) are highlighted for their expected improvement in profitability [7]. - The report also suggests monitoring cyclical leading companies like Wanhua Chemical (600309.SH) and Satellite Chemical (002648.SZ) as demand recovers and supply-demand dynamics improve [7].

Group 1 - The core viewpoint of the report indicates that the oil and petrochemical industry in China is currently experiencing a prolonged downturn due to "involution" competition, but there is potential for a turnaround through policy measures aimed at high-quality transformation and capacity exit [1][2][3] - During the "14th Five-Year Plan" period, the industry faced significant challenges, including overcapacity in low-end products and insufficient high-end offerings, leading to a situation where production increases did not translate into profit growth [17][22] - The report forecasts that oil prices will have a strong bottom support, with Brent crude oil expected to trade in the range of $60-65 per barrel by 2026, driven by steady demand growth and OPEC+ production adjustments [1][3] Group 2 - The report highlights that the refining sector is undergoing significant changes, with leading companies expected to benefit from the exit of outdated capacities and improved profitability due to stricter tax regulations and effective price guidance [2][3] - In the PTA industry, the report notes that the market is highly concentrated, and self-regulation may lead to spontaneous production cuts, which could improve the overall supply-demand balance [3][4] - The trend towards lightweight materials and the substitution of plastics for steel is expected to drive growth in the modified plastics sector, with companies focusing on high-value specialty engineering plastics [4][3]

Core Insights - The conference highlighted the urgent need for the petrochemical industry to embrace "new growth" through innovation, green transformation, and digital empowerment in response to current economic challenges [2][3][4] Group 1: Industry Development - The petrochemical industry aims to achieve high-quality development by focusing on intelligent, green, and integrated approaches, as emphasized by industry leaders [2] - The consensus among participants is that new growth should be driven by innovation, characterized by green and low-carbon transitions, and supported by digital technologies [2][3] Group 2: Technological Innovations - Significant technological breakthroughs were showcased, such as the development of the MegaMax catalyst for CO2-to-methanol conversion, demonstrating the industry's commitment to innovation [3] - A notable collaboration between China National Petroleum Corporation and BASF on carbon footprint accounting methods was recognized as a substantial achievement in carbon management [4] Group 3: Sustainable Practices - Companies like Covestro reported a 75% reduction in carbon emissions per product through innovative processes and high renewable energy usage [5] - Ningbo's zero-carbon park initiatives achieved a 99.7% comprehensive utilization rate of solid waste, showcasing effective circular economy practices [5] Group 4: Challenges and Opportunities - The industry faces challenges in plastic circular economy related to raw material-market alignment, policy coherence, and economic viability, necessitating collaborative efforts [7] - Discussions on financial tools to support the petrochemical industry's low-carbon transition highlighted the importance of unified standards and incentive mechanisms [7] Group 5: Talent Development - The need for talent cultivation was emphasized as crucial for achieving new growth, with calls for enhanced exchanges between China and Saudi Arabia [7] - The urgency for companies to establish clear technical pathways for carbon reduction was noted, indicating a gap in current strategies [7]

Core Viewpoint - The Chinese refining industry is expected to enter a new development cycle driven by government policies aimed at eliminating inefficiencies and enhancing market competition, particularly through the "anti-involution" measures and the upcoming "14th Five-Year Plan" [1] Industry Overview - The Ministry of Industry and Information Technology and other departments have issued a "Stabilization Growth Work Plan for the Petrochemical Industry (2025-2026)", targeting an annual growth of over 5% in industry value added [2] - The plan emphasizes "controlling refining, reducing oil, and increasing chemicals", with strict controls on new refining capacity and a focus on energy-saving and carbon-reduction projects [2] - By 2025, domestic crude oil processing capacity is to be limited to 1 billion tons, with current refining capacity nearing this limit [2] Market Dynamics - The overall refining capacity is currently controlled at around 950 million tons, with approximately 4.88 million tons of small capacity (below 2 million tons) still in operation, representing about 5% of total refining capacity [3] - The industry is expected to undergo a transformation towards scale and high-end production, with potential for further capacity optimization and elimination of outdated facilities [3] Company Performance - Rongsheng Petrochemical reported a revenue of 227.815 billion yuan and a net profit of 0.888 billion yuan for the first three quarters of 2023, with a significant year-on-year increase of 1427.94% in net profit for Q3 [1] - The company is leading the trend of integrated refining and chemical production, with a capacity of 40 million tons per year and a focus on high-end chemical products [5] Profitability Outlook - Historical data indicates that fluctuations in crude oil prices significantly impact refining profitability, with margins improving when oil prices are between $40 and $80 per barrel [6] - As oil prices have trended downward, the cost structure for refining companies is expected to improve, enhancing profitability for integrated chemical refineries like Rongsheng [7] - Estimates suggest that for every $10 decrease in oil prices, Rongsheng's theoretical net profit could increase by over 5 billion yuan [7] Investment Potential - The current valuation of Rongsheng Petrochemical may be below the intrinsic value of its refining assets, indicating potential for long-term investment appreciation [7]