Core Viewpoint - The company is progressing as planned with its projects, including the annual production of 100,000 tons of thionyl chloride and 60,000 tons of chlorosulfonic acid, with some facilities already operational [2]. Project Progress - The company confirmed that the construction of the first phase, which includes an annual production of 50,000 tons of thionyl chloride and 60,000 tons of chlorosulfonic acid, is advancing according to the established schedule [2]. - Some of the facilities have already been completed and are operating well [2]. - The company is focusing its resources to ensure the construction progress and aims to achieve the expected production targets on time and with high quality [2].

Group 1 - The company has confirmed that its produced product, round grapefruit ketone, possesses excellent mosquito-repelling capabilities [2] - The core advantages of the round grapefruit ketone include being safe, non-toxic, environmentally friendly, and having a long-lasting mosquito-repelling effect [2] - The company utilizes synthetic biotechnology to convert glucose into high-purity round grapefruit ketone through a fully fermented process, achieving ton-level production without the involvement of heavy metals [2]

Core Viewpoint - The company has made significant progress in the field of terpene biosynthesis, establishing an innovative platform for synthetic biology and focusing on high-value products like Valencia orange oil [2] Group 1: Research and Development - The company has built a synthetic biology innovation platform through independent research and collaboration with academic and research institutions [2] - Key technologies mastered include strain modification, fermentation process optimization, and product separation and purification [2] - The company is developing non-grain bio-based materials, food ingredients, and daily chemical fragrances derived from terpenes [2] Group 2: Project Status - The high-value fragrance products, such as Valencia orange oil, have completed pilot-scale process validation [2] - The company is exploring industrial production solutions and focusing on cost reduction and efficiency improvement [2] - The company aims to strengthen its technological advantages and market presence in the field of biosynthesis [2]

Investment Rating - The report maintains an "Outperform" rating for the chemical industry [2] Core Insights - The chemical industry is expected to benefit from anti-involution policies aimed at curbing disorderly competition and eliminating outdated production capacity, which may lead to a recovery in industrial product prices and positively impact PPI and CPI [6][11][17] - The report highlights the significant influence of the energy and chemical sectors on PPI, with their price fluctuations directly affecting overall industrial inflation levels [16] - The industry is under pressure from declining product prices and reduced capacity utilization, leading to a strong demand for anti-involution measures [17] - The current valuation of the chemical industry is at a historical low, providing substantial upside potential as the sector is expected to recover from its cyclical bottom [17][19] Summary by Sections 1. Importance of Inflation Recovery - The report emphasizes that the chemical sector is a crucial lever for inflation recovery, as evidenced by the PPI's continuous decline and the need for policy intervention to combat deflationary pressures [6][11] 2. Reasons to Focus on Chemicals - The energy and chemical sectors account for 25%-30% of PPI, making their price recovery vital for overall inflation [16] - The industry faces significant profitability challenges, with nearly 25% of chemical companies reporting losses in 2024 [17] 3. Paths for Anti-Involution in Chemicals 3.1. Active Approach: Industry Self-Regulation - Certain sub-industries, such as polyester filament and sucralose, are attempting to improve profitability through supply-side collaboration, benefiting from high concentration and low profitability [27][29] - The report identifies key chemical products likely to benefit from self-regulation, including polyester filament, polyester bottle chips, and organic silicon [29][31] 3.2. Passive Approach: Policy-Driven Industry Improvement - The report outlines a dual-track policy framework focusing on optimizing existing capacity and strictly controlling new projects to enhance the competitive landscape [27][31] - Historical experiences suggest that effective policy measures will include phasing out outdated facilities and enforcing stricter environmental regulations [27][31]

Group 1 - Acesulfame is widely used in various industries such as food and beverage, pharmaceuticals, and cosmetics due to its superior performance [1][2] - The domestic acesulfame market is primarily export-oriented, with a low apparent consumption level influenced by differences in domestic and overseas consumption habits [1][7] - The no-sugar beverage market is the main application area for acesulfame, which has seen rapid growth due to increased national health awareness [1][7] Group 2 - The production capacity of acesulfame in China is expected to reach 33,500 tons by 2024, with a projected output of 23,180 tons, imports of 15 tons, and exports of 19,356 tons [1][10] - By 2025, the estimated production capacity will be around 24,640 tons, with imports of approximately 17 tons and exports of about 20,618 tons [1][10] - The domestic demand for acesulfame is projected to increase from 3,839 tons in 2024 to approximately 4,039 tons in 2025 [1][10] Group 3 - The acesulfame industry in China is characterized by a duopoly between Jinhe Industrial and Vine Chemical, which together account for over 80% of the market capacity [21][24] - The market participants include companies such as Nantong Acetic Acid Chemical Co., Anhui Jinhe Industrial Co., Jiangsu Weido Co., Shandong Yabong Chemical Technology Co., and Suzhou Nut Food Technology Co. [18][21] - The industry is currently in a growth phase, with increasing competition and pressure on costs [23][24] Group 4 - Acesulfame was discovered in 1967 and has undergone extensive safety testing, leading to its approval for use in various countries [16] - The market for acesulfame is expected to continue expanding, driven by health-conscious consumer trends and supportive food policies [23][24] - The sales revenue for the acesulfame manufacturing industry is projected to be 906 million yuan in 2024, with an expected increase to 973 million yuan in 2025 [10][12] Group 5 - The main production methods for acesulfame include the Aminosulfonyl Fluoride-Diethylene Ketone method, Acetoacetamide-Sulfur Trioxide method, and others [3][4] - The acesulfame industry supply chain includes raw materials such as aminosulfonic acid and diethylene ketone, with food and beverage being the largest application market [14][18] - The market for acesulfame is expected to reach 265 million yuan by 2031, reflecting the growing demand for low-sugar and no-sugar products [23][24]

Investment Rating - The report provides a standard investment rating for the chemical industry, indicating a positive outlook for specific sectors within the industry [5]. Core Insights - The report highlights the impact of the explosion at Kanto Denka's facility in Japan, which is expected to create opportunities for domestic electronic gas suppliers as Kanto Denka holds a 90% market share in nitrogen trifluoride production in Japan [6][13]. - The first World Humanoid Robot Games held in Beijing is seen as a catalyst for the robotics industry's development, showcasing technological innovation and attracting talent [6][14]. - The report emphasizes the structural optimization of supply in the chemical sector, suggesting a focus on sectors with significant elasticity and competitive advantages, such as organic silicon and membrane materials [6][15]. Industry Performance - The report notes that during the week of August 11 to August 15, 2025, the CSI 300 index rose by 2.37%, while the Shenwan Basic Chemical Index increased by 2.46%, outperforming the market slightly [6][18]. - The top-performing sub-sectors included modified plastics (up 12.29%) and fluorochemicals (up 5.81%), while the worst performers were civil explosives (down 3.02%) and compound fertilizers (down 1.81%) [6][19]. Price Trends - Key products that saw price increases included hydrochloric acid (up 15.38%) and propylene (up 4.00%), while notable declines were observed in butanone (down 7.16%) and liquid ammonia (down 5.89%) [6][26]. - The report tracks price differentials, with significant increases in the propylene-propane differential (up 33.47%) and decreases in the bisphenol A-phenol differential (down 26.57%) [6][28]. Investment Recommendations - The report suggests focusing on sectors that may benefit from supply-side reforms, particularly organic silicon, membrane materials, and dye sectors, with recommended companies including Hoshine Silicon Industry and Zhejiang Longsheng [6][15]. - It also highlights the growing demand for health additives and sugar substitutes driven by new consumer trends, recommending companies that emphasize technological and product differentiation [6][16][17].

Investment Rating - The report maintains a "Recommended" rating for the basic chemical industry [1] Core Insights - The report highlights the price increases of lithium carbonate and photoinitiators, suggesting a potential recovery in the chemical industry driven by anti-involution trends [1] - The basic chemical sector has shown strong relative performance, with a 39.4% increase over the past 12 months compared to the 25.7% increase in the CSI 300 index [3] Summary by Sections Recent Trends - The report notes a decline in the Guohai Chemical Prosperity Index to 92.75 as of August 14, 2025, down 0.11 from August 7, 2025 [4] Investment Recommendations - Key opportunities identified include: 1. Low-cost expansion in companies such as Wanhua Chemical, Satellite Chemical, and others [5] 2. Improvement in industry prosperity for chromium salts, phosphate rock, and various chemical sectors [6] 3. Focus on new materials with high growth potential and low domestic substitution rates [7] 4. High dividend opportunities in state-owned enterprises like China Petroleum and Sinopec [8] Price Analysis of Key Products - Industrial-grade lithium carbonate price increased by 9.93% to 83,000 CNY/ton [10] - Photoinitiator (TPO) price rose by 5.56% to 95 CNY/kg [10] - Polyester filament price increased by 2.16% to 7,100 CNY/ton [10] Company Performance Tracking - Notable companies such as Zhenhua Co. reported a 10.17% increase in revenue for the first half of 2025 [13] - Wanhua Chemical's pure MDI price was reported at 17,900 CNY/ton, with a slight increase [11] Market Observations - The report indicates a potential inventory replenishment cycle in the chemical sector due to anticipated fiscal policy support in China and the US [29]

Investment Rating - The report maintains a positive outlook on the chemical industry, particularly focusing on heat dissipation materials and helium gas from Russia, as well as incidents affecting Zhongkun Chemical [3][4]. Core Insights - The macroeconomic judgment indicates that non-OPEC countries are expected to lead an increase in oil production, with a significant overall supply growth anticipated. Global GDP growth is projected at 2.8%, with stable oil demand despite some slowdown due to tariffs [3][4]. - The trend towards liquid cooling in AI servers is highlighted, with significant power requirements leading to increased demand for specialized cooling materials. The report suggests monitoring companies like Bayi Shikong, New Era, Dongyangguang, Yonghe Co., and Juhua Co. [3][4]. - Recent incidents affecting helium supply in Russia and a fire at Zhongkun Biotech are expected to positively impact the helium supply-demand balance, with recommendations to focus on companies like Guanggang Gas, Huate Gas, and Jinhong Gas [3][4]. Summary by Sections Industry Dynamics - Oil supply is expected to increase significantly, with non-OPEC countries leading the way. Global oil demand remains stable, but growth may slow due to tariff impacts. Coal prices are expected to stabilize at low levels, while natural gas export facilities in the U.S. may reduce import costs [4][5]. Chemical Sector Configuration - The report notes a decrease in oil prices and an increase in coal prices, with industrial product PPI showing a year-on-year decline of 3.6%. Manufacturing PMI recorded at 49.3%, indicating a slight contraction in manufacturing activity [3][5]. Investment Analysis - Traditional cyclical investments should focus on leading companies in their respective sectors, including Wanhu Chemical, Hualu Hengsheng, and Baofeng Energy. Growth sectors include semiconductor materials and OLED panel materials, with specific companies highlighted for their potential [3][4][17].

Investment Rating - The report gives an "Accumulate" rating for the sweetener industry, marking it as a first-time rating [5]. Core Insights - The sweetener market in China is poised for significant growth, with a current per capita sugar consumption of approximately 30g/day, exceeding the recommended limit of 25g/day. This indicates a substantial potential for sugar substitutes [1][9]. - The report highlights the dual demand for health and sweetness, leading to the rise of sugar substitutes. Nearly 40% of American consumers are opting for low-calorie or zero-calorie sugars to reduce calorie intake [1][17]. - The report identifies two main investment themes: the ongoing demand for artificial sweeteners like sucralose and the potential for new natural sweeteners like allulose, driven by consumer acceptance and technological advancements [3]. Market Overview - The sweetener market is characterized by a growing trend towards reduced sugar consumption, with a projected sugar consumption of 15.9 million tons in China for the 2025/26 season, reflecting a compound annual growth rate (CAGR) of about 0.5% from 2015/16 to 2025/26 [9]. - The beverage sector represents the largest share of sugar demand, with a market penetration rate for sugar-free beverages at only 7.9% in 2023, suggesting significant room for growth [20][22]. Selection Criteria - The choice of sweeteners is influenced by economic factors, taste, and safety. Artificial sweeteners generally have a higher sweetness-to-price ratio compared to natural sweeteners, which often have lower ratios [2][28]. - Safety concerns are paramount, with natural sweeteners typically having no Acceptable Daily Intake (ADI) limits, while artificial sweeteners are subject to ADI restrictions and some face safety controversies [2][40]. Product Analysis - Sucralose is identified as the largest artificial sweetener in terms of market space, with a global sales volume of approximately 20,000 tons in 2023, reflecting a 7% year-on-year growth [46]. - Erythritol, a low-calorie sugar alcohol, has seen rapid market expansion, particularly following its use in popular beverages, leading to a significant increase in production capacity [63][65]. Future Outlook - The report emphasizes the importance of consumer education and acceptance for the successful adoption of new sweeteners like allulose, which currently faces low consumer awareness [3][42]. - Investment opportunities are highlighted in companies with strong technological capabilities and financial strength, particularly those involved in the production of sucralose and erythritol [3][3].

Core Viewpoint - The leading domestic company in sucralose, Jinhui Industrial, announced a price increase for sucralose effective August 7, 2025, due to rising operational costs and the need to stabilize market prices after a period of low pricing and intense competition [2][4]. Price Adjustment Details - Jinhui Industrial's new pricing is set at 175 RMB/kg for 25 kg bulk packaging and 177 RMB/kg for 10 kg small packaging, reflecting a significant increase from previous low points [2][3]. - Other companies, including New Qian'an, Kehong Bio, and Kangbao Biochemical, also issued price adjustment notices around the same time, indicating a coordinated effort to stabilize prices in the market [3][4]. Market Conditions and Reasons for Price Increase - The price increase is attributed to several factors, including disordered competition in the industry, rising raw material costs, and a decline in downstream demand for sucralose products [4][6]. - Jinhui Industrial noted that the demand for bulk chemicals has been weak since the second quarter of 2025, impacting their sales of food additives [4][6]. Historical Price Trends - In 2024, the price of sucralose fell to 100,000 RMB/ton, leading to industry-wide losses, with an average gross loss of 16% [5][6]. - Following a series of price increases throughout 2024, the price reached 250,000 RMB/ton by January 2025, indicating a recovery from previous lows [5][6]. Industry Dynamics - The sucralose industry has seen significant capacity expansion from 12,800 tons in 2019 to 34,800 tons in 2024, driven by high demand and profitability from 2016 to 2022 [6][7]. - Analysts predict further price increases due to reduced market supply from production cuts, which have been implemented to stabilize prices [7][8]. Future Outlook - The demand for low-sugar and no-sugar products, such as Coca-Cola's no-sugar variant, is expected to support the growth of sucralose and stabilize its pricing [7][8]. - Historical data suggests that sucralose prices could have upward potential, as seen in previous peaks reaching 480,000 RMB/ton [7][8].