Zhi Tong Cai Jing·2025-12-17 00:24Core Viewpoint - The petrochemical industry has been in a downturn for approximately 3.5 years, with capital expenditure continuing to decline and outdated overseas capacity exiting the market, leading to a low growth phase for industry capacity. The industry is expected to see a cyclical turning point due to favorable supply-side factors and rapid growth in demand from sectors like new energy [1][2]. Group 1: Industry Performance - The chemical price index and profit margins are currently at low levels, with a 10.3% decline in China's chemical product price index from early 2025, placing it at the 10.4% percentile since 2012. The profit margin for chemical raw materials and products was only 4.14% from January to October 2025, the lowest since 2017 [1]. - The capital expenditure of petrochemical companies is projected to decrease by 18.3% in 2024 and 10.1% in the first three quarters of 2025, with construction projects down by 13.2% year-on-year in Q3 2025 [2]. Group 2: Supply and Demand Dynamics - The exit of outdated overseas capacity, particularly in Europe and Japan, is expected to alleviate global supply-demand imbalances for related products [2]. - The demand growth for bulk chemical products remains resilient, with expectations that the real estate sector will have a diminishing impact on chemical product demand growth by 2026 [2]. Group 3: Key Segments and Future Outlook - Early-cycle products such as chemical fibers are expected to see rapid consumption growth from 2020 to 2024, with chemical fibers projected to be among the fastest-growing bulk chemical products by 2026 [3]. - The industry is anticipated to experience a turning point in the capacity cycle, driven by favorable supply-side factors and rapid growth in demand for materials in the new energy sector [3]. - The company is optimistic about leading chemical firms with low valuations and expects significant profit growth in the chemical fiber supply chain, as well as in sectors like lithium battery materials and emerging industries related to AI and robotics [3].