Guoxin Securities·2025-11-15 15:20Core Insights - The petrochemical industry is expected to recover in 2026, with a focus on resource products, anti-involution policies, and emerging industries as investment opportunities [3][27] - The industry has shown signs of stabilization and recovery since 2025, with a year-on-year increase of 10.56% in net profit attributable to shareholders in the first three quarters of 2025 [3] - Key sectors identified for investment include oil and gas, potassium fertilizer, phosphorus chemicals, fluorochemicals, sustainable aviation fuel (SAF), electronic resins, and certain anti-involution sectors [3] Industry Overview - The petrochemical industry is cyclical, with net profits in the SW basic chemical sector reaching a historical high in 2021, followed by a downturn, with 2024 profits expected to be only 52% of 2021 levels [3] - The supply side has seen a decline in fixed asset investment since June 2025, indicating the end of the current expansion cycle [3] - The "anti-involution" policy aims to address low-price competition and promote the orderly exit of outdated capacities, which is expected to alleviate the oversupply issue in the petrochemical sector [3] Demand Dynamics - Traditional demand is anticipated to recover moderately due to global central banks entering a rate-cutting cycle and fiscal stimulus [3] - Emerging demands from sectors such as new energy and AI are expected to drive growth in key chemical materials [3] - The domestic chemical industry is projected to increase its global market share as overseas capacities are cleared out [3] Investment Recommendations - Recommended companies for investment in 2026 include China Petroleum, China National Offshore Oil Corporation, Yara International, Yuntianhua, Juhua Co., Sanmei Co., Jiaao Environmental Protection, Zhuoyue New Energy, Shengquan Group, Wanhua Chemical, Baofeng Energy, and Xinhecheng [3] Sector Performance - The petrochemical sector's revenue decreased by 7.1% year-on-year in the first three quarters of 2025, while net profit fell by 11.1% [24] - The basic chemical sector showed a recovery with a 1.9% increase in revenue and an 8.9% increase in net profit [24] - The oilfield services sector was the only sub-sector to achieve growth in both revenue and net profit during this period [24] Price Trends - The China Chemical Product Price Index (CCPI) has shown a downward trend, with a reported decline of 11.5% from the beginning of the year [13] - The PPI for the chemical industry is expected to show marginal improvement in the second half of 2025, although it remains in a downward trend overall [16] Policy Impact - The "anti-involution" initiative is expected to promote a rebalancing of supply and demand in traditional chemical products, with various sectors responding positively to this policy [27] - Key meetings and documents from government bodies indicate a focus on maintaining growth and regulating new capacity in the petrochemical sector [27]