Core Viewpoint - The chemical industry ETF, E Fund (516570), has shown significant growth in both scale and share, indicating a positive trend in the chemical sector driven by various market factors [1][2]. Group 1: Market Performance - As of February 11, 2026, the China Securities Petrochemical Industry Index (H11057) rose by 2.22%, while the E Fund chemical industry ETF increased by 2.17%, with a turnover of 43.92 million yuan [1]. - Over the past two weeks, the E Fund chemical industry ETF has seen a scale increase of 1.051 billion yuan and a share increase of 96.8 million shares, reflecting substantial growth [1]. - In the last five trading days, there were net inflows of funds into the E Fund chemical industry ETF for three days, totaling 87.65 million yuan [1]. Group 2: Industry Insights - As of the end of January 2026, the CCPI-raw material price difference was 2631, which is in the 15th percentile since 2012, showing an increase from 2500 at the end of 2025, influenced by geopolitical conflicts affecting oil prices and pre-Spring Festival inventory demand [1]. - Price increases in January were primarily driven by expectations of growth in lithium battery storage, rising oil prices, and winter cold waves in the Northern Hemisphere [1]. - The industry is expected to improve profitability as supply-side adjustments accelerate under policy guidance, with the chemical sector's profitability likely to recover [1]. Group 3: Investment Opportunity - The E Fund chemical industry ETF includes leading companies in the petrochemical and basic chemical sectors, employing a "dumbbell strategy" that balances high dividend and high growth components [2]. - The management and custody fee rates for the E Fund chemical industry ETF are 0.15% and 0.05% per year, significantly lower than similar ETF products in the petrochemical sector, providing a cost-effective investment option [2]. - The domestic chemical industry is anticipated to benefit from increased demand driven by economic growth in Asia, Africa, and Latin America, with exports becoming a crucial growth engine [1].

Investment Rating - The report maintains a "Positive" rating for the basic chemical industry [2][3]. Core Viewpoints - The energy price center is expected to decline year-on-year in 2024, but terminal demand remains weak, leading to a bottoming out of chemical price spreads. The average price of Brent crude oil in 2024 is projected to be $80.93 per barrel, down 2% year-on-year [2][3]. - In Q1 2025, oil prices stabilized, and post-holiday terminal replenishment demand improved, leading to a recovery in basic chemical profitability. The report highlights a "V"-shaped bottom reversal in market conditions [2][3]. - The report emphasizes that while terminal demand was weak in 2024, certain sectors like chlor-alkali, compound fertilizers, and nylon saw significant performance improvements [2][3]. Summary by Sections 1. Industry Overview - The chemical sector experienced a "W"-shaped trend in 2024, with construction projects peaking and then declining. The overall revenue for the chemical sector in 2024 was 2.81% higher year-on-year, while net profit decreased by 2.68% [2][3][36]. - In Q1 2025, the chemical sector's revenue reached 496.9 billion yuan, a 6% increase year-on-year, with net profit rising by 9% to 32.8 billion yuan [2][3][41]. 2. Sector Performance - The report identifies specific sectors with improved profitability in Q1 2025, including fluorochemicals, food and feed additives, pesticides, potassium fertilizers, and compound fertilizers [2][3]. - The report notes that the overall asset-liability ratio for the chemical industry is 49.3%, indicating a historical low, and highlights a significant slowdown in capital expenditure growth [2][3][43]. 3. Investment Opportunities - The report suggests focusing on traditional cyclical companies with strong fundamentals, such as Wanhua Chemical, Hualu Hengsheng, and Baofeng Energy, as well as specific sectors like fluorochemicals and agricultural chemicals [2][3][4]. - It also highlights growth opportunities in semiconductor materials and panel materials, emphasizing companies with low valuations and strong performance potential [4][5].