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].