Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The H acid industry is facing tightening supply due to potential rectification of Inner Mongolia Yadong's facilities, which may impact its operating rate [5] - H acid prices have increased by 16% from 36,000 CNY/ton at the beginning of the year to 41,700 CNY/ton as of June 23, 2025, while active dye prices have risen by 15% [5] - The production of H acid involves nitration reactions, which may face stricter regulations following recent safety incidents, potentially leading to further price increases [6] Summary by Sections Industry Overview - The H acid industry is characterized by a competitive landscape with ongoing exit of backward production capacity due to stringent environmental regulations [5] Price Trends - H acid prices have shown a significant increase, currently at 41,700 CNY/ton, which is over 50% lower than the historical peak of 65,000 CNY/ton [6] Supply Chain Dynamics - The active dye price has effectively transmitted the cost pressure from H acid, indicating a healthy price transmission mechanism within the supply chain [5] Beneficiary Companies - Companies likely to benefit from the tightening supply in the H acid-active dye value chain include: - Jinchicken Co., Ltd. (0.5 million tons H acid capacity) - Runtu Co., Ltd. (10 million tons active dye capacity) - Zhejiang Longsheng (7 million tons active dye capacity) [7]