Investment Rating - The industry rating is Neutral (maintained rating) [5] Core Insights - In Q3 2025, the proportion of public funds' holdings in the basic chemical sector decreased both year-on-year and quarter-on-quarter, with a market value allocation of 2.66%, down by 0.94 percentage points year-on-year and 0.60 percentage points quarter-on-quarter [2][13] - The market value of basic chemical stocks in A-shares remained stable year-on-year at 3.59%, with a slight increase of 0.11 percentage points quarter-on-quarter [2][13] - The number of stocks held by public funds in the basic chemical sector increased to 161, up by 31 stocks year-on-year and 7 stocks quarter-on-quarter [3][20] Summary by Sections 1. Sector Holding Changes - The basic chemical sector's heavy stock holding ratio decreased in Q3 2025, with a market value allocation of 2.66%, reflecting a downward trend since Q1 2023 [2][13] - The allocation of public funds to basic chemical stocks peaked at 4.23% in Q1 2021, followed by fluctuations leading to the current level [13] 2. Individual Stock Changes - The top five stocks held by public funds in Q3 2025 were Juhua Co., Ltd., Hualu Hengsheng, Sailun Tire, Wanhua Chemical, and Guangdong Hongda, with no changes from Q2 2025 [4][27] - The number of companies in the agricultural chemical sector remained the highest among the top 50 holdings, with 11 companies, maintaining a 22% share [4] 3. Public Fund Preferences Analysis - Stocks with a market value of over 50 billion accounted for 32.92% of the total market value of the top 50 chemical stocks, an increase of 7.69 percentage points quarter-on-quarter [5] - The number of public fund products holding leading stocks in various sub-industries increased in Q3 2025, indicating a shift back to industry leaders [5]

Investment Rating - The report maintains an "Overweight" rating for the basic chemical industry [1][9] Core Viewpoints - The basic chemical index outperformed the CSI 300 index by 3.15 percentage points over the past two weeks, with a gain of 4.62% compared to the CSI 300's 1.47% [3][15] - Key sub-industries showing strong performance include phosphate and phosphate chemicals (12.24%), potash (7.71%), and acrylic fiber (7.22%) [16] - Recent price movements in chemical products indicate significant increases in lithium cobalt oxide (31.49%) and hydrogen peroxide (13.51%), while brown coal saw a notable decline of -31.67% [5][23] Market Trends - The basic chemical sector has shown resilience, ranking third among all sectors in terms of performance [15] - The report highlights the impact of OPEC+ decisions on oil prices, which have been declining, potentially affecting the supply side of the chemical industry [6] - The Chinese government has implemented export controls on lithium batteries and related materials, which may benefit companies with advanced technology and overseas production capabilities [7] Investment Recommendations - The report suggests focusing on several key areas: 1. Refrigerants sector, with companies like Jinshi Resources and Juhua Co. 2. Chemical fiber sector, recommending Huafeng Chemical and Xin Fengming 3. Notable companies in the tire sector include Sailun Tire and Linglong Tire 4. Agricultural chemicals, with a focus on Yara International and Salt Lake Potash [8][9][39]

Core Insights - The Penghua Chemical ETF (159870) has gained significant attention in the market due to its rapid growth and strong institutional backing, with its scale increasing from 1.486 billion to 17.434 billion RMB, a more than tenfold increase, making it the largest and most liquid chemical ETF in the market [1][2] Industry Characteristics - The chemical industry is characterized by its cyclical nature, driven by the asynchronous adjustment of supply and demand, with demand being highly variable and closely tied to macroeconomic conditions and various downstream industries [2] - Supply in the chemical industry is often lagging, with long construction cycles for new capacity and inflexible exit strategies for existing capacity, leading to prolonged periods of oversupply [2][3] Investment Opportunity - The complexity and length of the chemical industry supply chain, along with high technical barriers, create significant research challenges, making the Penghua Chemical ETF an attractive tool for investors to access leading companies across various segments of the industry [3] - The ETF is the first to track the CSI Sub-Segmented Chemical Industry Theme Index, reflecting Penghua Fund's foresight and patience in index investment [3] Market Dynamics - Global liquidity improvements and expectations of interest rate cuts by the Federal Reserve may lead to a replenishment cycle for chemical commodities, presenting opportunities for the Chinese chemical industry as developed economies face declining market shares [4] - China's chemical industry, having grown rapidly from 2011 to 2021, now accounts for 43% of the global market, positioning it as a leading player [4] - Domestic policies aimed at reducing competition may lead to improved supply-demand dynamics and profitability recovery in the chemical sector, potentially transforming it into a high-yield asset class [4] Investor Sentiment - Professional investors are increasingly recognizing the chemical sector as being at a critical juncture characterized by low valuations, policy clarity, and recovering demand, indicating solid investment logic and value [5]

Investment Rating - The report maintains a recommendation for the chemical industry, indicating a positive outlook for the sector [7]. Core Insights - The report highlights significant price increases in TDI and Vitamin D3, suggesting a focus on the TDI and organic silicon sectors [1][5]. - The chemical sector outperformed the market, with a weekly increase of 1.77%, surpassing the Shanghai A-share index by 1.08 percentage points [2][15]. - Key stocks that performed well include Dongcai Technology (+33.16%) and Cangzhou Dahua (+28.47%), while stocks like Guangxin Materials (-9.26%) and Ando A (-9.05%) saw declines [2][15]. Industry Performance - In the third week of July, 20 sub-industries within the chemical sector saw increases, with the top five being modified plastics (+7.42%) and phosphate chemicals (+7.41%) [3][19]. - The dynamic PE ratio for the chemical sector is reported at 25.83 times, which is lower than the average PE of 30.02 times since 2015 [2][15]. Price and Spread Trends - The report lists the top five products with the highest weekly price increases: liquid chlorine (+21.78%), TDI (+18.83%), and Vitamin D3 (+10%) [4][22]. - The report also notes significant changes in price spreads, with the ethylene spread increasing by 81.82% and PTA spread decreasing by 357.81% [4][43]. Inventory Changes - Notable inventory changes include an increase in epoxy propane (+11.97%) and a decrease in ethylene (-8.57%) [5][61]. Recommendations - The report suggests monitoring companies such as Cangzhou Dahua and Wanhua Chemical due to the significant rise in TDI prices [5]. - Attention is also drawn to organic silicon producers like Xin'an Chemical and Xinfeng Group, following a fire incident affecting supply [5].

Investment Rating - The report suggests a "Standard Allocation" for the basic chemical sector, indicating a high potential for structural opportunities despite a lower probability of success [4]. Core Insights - The basic chemical sector currently has a high valuation safety margin, with the PB historical percentile dropping below 9% since 2010. When the PB percentile is below 10%, the sector's cost-effectiveness for allocation becomes apparent [4]. - Supply, cost, and demand sides continue to face disturbances, impacting the overall success rate of investments in this sector [4]. Summary by Sections Investment Strategy - Focus on sub-industries with marginal changes, such as pesticides, glyphosate, and sweeteners [4]. - Pay attention to the export chain, particularly lubricating oil additives, tires, and potassium fertilizers [4]. - Look for performance certainty in sectors like refrigerants and civil explosives [4]. Market Dynamics - The chemical industry is experiencing significant internal competition, with "change" being a focal point for attention [6]. - The industry is under pressure from substantial investments, with a compounded growth rate of 14.1% for raw materials and products over the past four years [17]. - The current investment cycle is nearing its end, with potential delays in capacity realization expected over the next 1-2 years [17]. Supply and Demand Trends - The chemical sector's inventory has not shown significant cyclical changes, remaining in a low-level oscillation state [20]. - Despite a slight recovery in chemical consumption due to government stimulus, the real estate sector continues to struggle, impacting overall demand [22][23]. Price Trends - The report highlights various price movements in the chemical sector, with glyphosate prices showing a year-on-year decrease of 10.26% as of May 2025 [36]. - The report also notes the price fluctuations of several chemicals, indicating a complex pricing environment influenced by supply chain disruptions and production capacity [34][35].

Investment Rating - The report maintains a "Recommended" rating for the chemical industry, indicating a positive outlook for the sector's fundamentals and expected performance relative to the benchmark index [6]. Core Insights - The report highlights the significant impact of geopolitical tensions, particularly the conflict between Israel and Iran, which has led to a substantial increase in crude oil prices [1]. - It suggests focusing on leading companies in the compound fertilizer sector, specifically recommending Xinyangfeng as a key investment opportunity [5]. Industry Performance - In the third week of June, the chemical sector (Shenwan) experienced a slight decline of 0.01%, underperforming the Shanghai A-share index, which fell by 0.24% [2][12]. - The dynamic PE ratio for the chemical sector is reported at 24.59 times, which is lower than the average PE of 9.81 times since 2015 [2][12]. Subsector Trends - Among the 30 subsectors in the chemical industry, 18 saw an increase while 12 experienced a decline during the same period. The top five performing subsectors included textile chemical products (+8.1%) and oil trading (+7.41%) [3][16]. - Conversely, the worst-performing subsectors were daily chemical products (-5%) and fiberglass (-4.42%) [3][16]. Chemical Prices and Spreads - The report lists the top five products with the highest weekly price increases: mixed aromatics (+7.39%), WTI crude oil (+7.37%), and pure benzene (+7.34%) [4][21]. - The report also notes significant changes in price spreads, with ammonium nitrate showing a remarkable increase of 170.2% in its price spread [4][38]. Inventory Changes - Key products with notable inventory changes include polyester chips, which saw a decrease of 12.36%, and urea, which increased by 11.4% [5][59]. Industry News Recap - The report discusses the optimistic trade outlook between the US and China, which is expected to boost energy demand during the summer, alongside a continuous decline in US oil and gas drilling platforms [88].