Group 1 - Jiangsu Province has revised its chemical industry adjustment directory, targeting pesticide production, which may benefit leading companies like Yangnong Chemical, Jiangshan Chemical, and Limin Chemical [1] - Titanium dioxide companies have announced price increases, with Longbai Group raising prices by 500 RMB/ton for domestic customers and 70 USD/ton for international customers starting August 18, 2025 [1] - Over 20 titanium dioxide manufacturers have followed suit with price hikes, marking the first industry-wide increase in five months [1] Group 2 - The "anti-involution" policy is showing initial effects, as indicated by July's PMI, PPI, and CPI data, suggesting a positive macroeconomic environment for the chemical sector [2] - The macroeconomic outlook is improving, with expectations of a recovery in chemical cycles supported by reduced tariffs and better external conditions [2] Group 3 - Key investment themes include: 1. Macro expectations and earnings recovery for resilient companies like Wanhua, Hualu, Huafeng, and Luxi [3] 2. Industries with favorable supply-demand dynamics, such as polyester filament and caustic soda, with companies like Tongkun and Xinfonming [3] 3. Domestic anti-involution and the exit of overseas capacity in refining and ethylene, focusing on Hengli, Rongsheng, and Sinopec [3] 4. Domestic sectors facing severe losses, particularly state-owned enterprises in soda ash and PVC, with attention on Zhongtai Chemical and Sanyou Chemical [3] Group 4 - The chemical sector has seen significant capital inflow, with the chemical ETF experiencing a net inflow of 21.54 billion RMB over eight days, averaging 2.69 billion RMB daily [4] - As of July 31, 2025, the top ten weighted stocks in the CSI Chemical Industry Index accounted for 43.54% of the index, including Wanhua Chemical and Yanhai [4]

Group 1 - The chemical sector is experiencing a rise in opening prices, with institutions indicating that the "anti-involution" trend may lead to a recovery in chemical industry prosperity, benefiting leading companies [1] - Key factors for potential investment opportunities in the chemical industry include stricter new project approvals, the positive impact of old facility renovations, attempts at industry self-discipline, and rising energy consumption standards [1] - As of August 21, 2025, the CSI Sub-Industry Chemical Theme Index (000813) increased by 1.25%, with notable stock performances including: Nucor Titanium (002145) up 8.76%, Rongsheng Petrochemical (002493) up 5.24%, and Dongfang Shenghong (000301) up 3.24% [1] Group 2 - The Chemical ETF (159870) closely tracks the CSI Sub-Industry Chemical Theme Index, which consists of seven sub-indices reflecting the overall performance of listed companies in related sub-industries [2] - As of July 31, 2025, the top ten weighted stocks in the CSI Sub-Industry Chemical Theme Index (000813) accounted for 43.54% of the index, including companies like Wanhua Chemical (600309) and Yilong Co. (000792) [2]

Investment Rating - The report maintains a "Buy" rating for key companies in the chemical industry, specifically recommending Shengquan Group, Hailide, Zhuoyue New Energy, and Ruile New Materials [4][5]. Core Insights - The report emphasizes the importance of identifying companies with strong performance in the first half of 2025, particularly those benefiting from AI capital investments and macroeconomic stability [1]. - The phosphate fertilizer export window is expected to open, with high demand anticipated to continue, suggesting a focus on large phosphate chemical companies like Yuntianhua [2]. - Safety incidents in the chemical industry are prompting increased scrutiny, which may lead to a rise in the agricultural chemicals sector as non-compliant capacities are phased out [3]. Summary by Sections Key Companies and Performance - Shengquan Group is highlighted as a major supplier of electronic resins for AI servers, with expected performance improvements due to rising server shipments, projecting an EPS of 1.53 in 2025 [4]. - Hailide, a leader in industrial polyester yarn, is also recommended, with an EPS forecast of 0.37 for 2025 [4]. - Zhuoyue New Energy is noted for its capacity growth and new product launches, with an EPS of 3.16 expected in 2025 [4]. - Ruile New Materials anticipates a 69.93% increase in net profit for the first half of 2025, driven by growth in its pharmaceutical segment [1][4]. Market Trends - The chemical industry index rose by 2.46% this week, outperforming the Shanghai Composite Index [11]. - Key chemical products such as liquid chlorine, lithium carbonate, and lithium hydroxide saw significant price increases, with liquid chlorine prices rising by 92% [20][18]. Sub-industry Analysis - The polyester filament market is experiencing price fluctuations, with an average price of 6,735 CNY/ton for POY and 7,050 CNY/ton for FDY [22]. - The tire industry shows a slight increase in operating rates, with full steel tire rates at 60.06% and semi-steel tire rates at 69.11% [31]. - The refrigerant market remains stable, with R22 prices holding firm between 39,500 and 40,500 CNY/ton [40].

Group 1 - The chemical sector experienced a volatile upward trend on August 18, with the Chemical ETF (516020) opening high and fluctuating in positive territory, rising over 1% at one point and closing up 0.59% [1] - Key stocks in the sector included lithium battery and fluorochemical companies, with notable gains from Xinzhou Bang and Kaisa Bio, both up over 6%, and other companies like Juhua Co. and Lianhong Xinke rising over 4% [1][2] - The chemical ETF's underlying index had a price-to-book ratio of 2.11, indicating a low valuation at the 29.22 percentile over the past decade, suggesting attractive long-term investment opportunities [3] Group 2 - Analysts predict that the chemical industry will see a stabilization in domestic demand due to the implementation of various expansion policies, although competition on the supply side may lead to weaker product prices and lower capacity utilization [1][3] - The chemical market is expected to undergo a phase of recovery, particularly in sub-sectors like pesticides, organic silicon, and polyester filament, as the industry addresses issues of overcapacity and excessive competition [3] - The Chemical ETF (516020) provides a diversified investment approach, covering various sub-sectors and concentrating nearly 50% of its holdings in large-cap leading stocks, which allows investors to capitalize on strong market trends [4]

Group 1 - The chemical sector experienced a volatile upward trend on August 18, with the chemical ETF (516020) opening high and fluctuating in the red, showing a rise of 0.59% at the time of reporting [1] - Key stocks in the lithium battery and fluorochemical sectors saw significant gains, with companies like Xinzhou Bang and Kaisa Bio rising over 6%, while others like Juhua Co. and Lianhong Xinke increased by over 4% [1] - The chemical ETF (516020) tracks the sub-index of the chemical industry, which has a price-to-book ratio of 2.11, indicating a low valuation compared to the historical average [3] Group 2 - Analysts from Zhongyuan Securities suggest that the ongoing rectification in the chemical industry will alleviate issues of redundant capacity and excessive competition, leading to a phase of improved market conditions [4] - Huazhong Securities notes a clear differentiation in chemical product prices, with expectations for gradual recovery as global chemical industries adjust to energy structure transformations and macroeconomic policies [4] - The chemical ETF (516020) provides an efficient way to invest in the chemical sector, with nearly 50% of its holdings concentrated in large-cap leading stocks, allowing investors to capitalize on strong market leaders [5]

Core Viewpoint - The China Securities report indicates a 4.51% increase in the CITIC Basic Chemical Industry Index for July 2025, ranking 13th among 30 CITIC primary industries, with a recommendation to focus on pesticide, organic silicon, and polyester filament industries in August 2025 [1][2][5] Market Review - In July 2025, the CITIC Basic Chemical Industry Index outperformed the Shanghai Composite Index by 0.77 percentage points and the CSI 300 Index by 0.96 percentage points, with a year-on-year increase of 41.50%, surpassing the Shanghai Composite Index by 13.06 percentage points and the CSI 300 Index by 16.24 percentage points [2] Sub-industry and Stock Performance - Among 33 CITIC tertiary sub-industries in July 2025, 26 experienced gains, with modified plastics, polyurethane, and civil explosives leading the way with increases of 16.69%, 14.01%, and 12.09% respectively. Conversely, nylon, fluorochemicals, and lithium battery chemicals saw declines of 3.99%, 1.26%, and 1.25% respectively [3] - Out of 523 stocks in the basic chemical sector, 310 rose while 211 fell, with the top gainers being Xinwei New Materials (1083.42%), Dongcai Technology (84.92%), and Honghe Technology (58.84%). The largest declines were seen in Jiyuan Group (-26.23%), Keheng Co. (-25.78%), and Zhongyida (-23.69%) [3] Product Price Tracking - In July 2025, international oil prices continued to rise, with WTI crude increasing by 6.37% to $69.26 per barrel and Brent crude by 7.28% to $72.53 per barrel. Among 319 tracked products, 103 saw price increases, with TDI, trichloromethane, and coking coal leading the gains at 43.29%, 32.79%, and 32.56% respectively. However, 177 products experienced price declines, with the largest drops in methyl acrylate (-24.08%) and butyl acrylate (-10.61%) [4] Industry Investment Recommendations - The industry maintains a "market perform" investment rating, anticipating a potential improvement in certain sub-industries as the chemical industry's anti-involution policies take effect, particularly in the pesticide, organic silicon, and polyester filament sectors for August 2025 [5]

Core Viewpoint - The chemical industry is transitioning from a focus on market share to profitability, indicating a potential new cycle as production expansion comes to an end and policies are gradually implemented [1][7]. Industry Challenges - Since 2022, the chemical industry has faced price declines and increased competition, leading to many companies experiencing revenue growth without profit [2]. - Despite domestic demand stabilization from various policies, supply-side competition has intensified, resulting in lower product prices and utilization rates, which has kept overall profit levels low [2][3]. Current Industry Position - The bottom position of the industry appears to be well-defined, with high concentration in most sub-industries limiting further optimization through concentration increases [3]. - The driving force of the chemical market is shifting from demand stimulation to supply-side reform, necessitating a focus on optimizing supply-demand dynamics for high-quality development [3]. Self-Regulation and Policy Coordination - The current phase of the chemical industry's anti-involution process is at the initial stage of policy and industry assessment, with industry associations promoting self-regulation among companies [4]. - Historical experiences suggest that self-regulation effects are often short-lived, and temporary production cuts can lead to a rebound in operating rates, returning to a supply surplus situation [4]. Specific Industry Insights - The polyester filament industry is entering a period of slow capacity growth, with profitability improvements driven by policies to eliminate about 10% of outdated capacity and joint production cuts by leading companies [5]. - The viscose staple fiber industry has seen no new capacity in the past five years, maintaining a stable supply-demand balance, with strict carbon emission policies curbing new capacity as a driving factor [5][6]. Future Industry Outlook - The anti-involution direction for the chemical industry is clear, with a shift towards profitability through capacity elimination and enhanced self-regulation [7]. - The industry is currently in a policy vacuum, but as more policies are implemented, the issues of internal competition are expected to improve [7]. - Investment opportunities are anticipated in major sectors like petrochemicals and coal chemicals, with a focus on leading companies in these areas [7][8].

Investment Rating - The report maintains an investment rating of "in line with the market" for the basic chemical industry [7][5]. Core Viewpoints - The basic chemical industry index rose by 4.51% in July 2025, outperforming the Shanghai Composite Index and the CSI 300 Index by 0.77 and 0.96 percentage points, respectively [10][7]. - The report suggests continued focus on the pesticide, organic silicon, and polyester filament sectors, which are expected to benefit from the anti-involution policies [5][7]. Summary by Sections Market Review - The basic chemical industry index has increased by 41.50% over the past year, ranking 14th among 30 major industries [10][7]. - In July 2025, 26 out of 33 sub-industries saw an increase, with modified plastics, polyurethane, and civil explosives leading the gains at 16.69%, 14.01%, and 12.09%, respectively [11][10]. Product Price Tracking - The report indicates a continued downward trend in chemical product prices, with 177 products showing a decrease in July 2025 [7][11]. - Notable price increases were observed in TDI, trichloromethane, and coking coal, with respective rises of 43.29%, 32.79%, and 32.56% [7][11]. Industry and Company News - The report highlights the launch of a three-year action plan by the China Pesticide Industry Association to combat issues like hidden additives and illegal production in the pesticide sector [29][30]. - A significant investment of 2.32 billion yuan by Shandong Haihua in Inner Mongolia's largest natural soda ash mine is noted, aimed at optimizing product structure and expanding development space [34][35].

Investment Rating - The report maintains a "Buy" rating for key companies in the chemical industry, specifically recommending Shengquan Group, Hailide, and Zhuoyue New Energy [4]. Core Insights - The report emphasizes the importance of identifying companies with strong performance in the first half of the year, particularly those expected to exceed earnings forecasts in Q2 2025. It highlights Shengquan Group's role as a major domestic supplier of electronic resins for AI servers, benefiting from increasing server shipments. Hailide is noted for its leadership in the polyester industrial yarn sector, which is expected to benefit from U.S. tariff conflicts. Zhuoyue New Energy is recognized for its capacity growth and new product launches, which are anticipated to elevate its performance [1][2][4]. Summary by Sections Chemical Industry Overview - The chemical industry index closed at 3727.14 points, down 1.46% from the previous week, outperforming the CSI 300 index by 0.29% [10]. - Key chemical products such as TDI, epoxy chloropropane, lithium hydroxide, formic acid, and phosphoric acid saw significant price increases [21]. Key Sub-Industry Tracking - **Phosphate Fertilizers**: The report indicates a peak export window for phosphate fertilizers, with exports expected to alleviate domestic overcapacity and maintain profitability for large phosphate chemical companies like Yuntianhua [2]. - **Pesticides**: Following a chemical safety incident, the report anticipates a nationwide safety inspection that may lead to the elimination of non-compliant production capacities, potentially boosting the pesticide industry's outlook [3]. - **Polyester Filament**: The report notes a slight increase in polyester filament prices, driven by rising production costs and a modest uptick in demand, although overall market conditions remain weak [24][25]. Company Performance Forecasts - Shengquan Group is projected to have an EPS of 1.03 in 2024, with a PE ratio of 31, while Hailide's EPS is expected to be 0.35 with a PE of 16. Zhuoyue New Energy is forecasted to achieve an EPS of 1.24 with a PE of 35 [4].

Group 1: Macro Economic Insights - The US non-farm payrolls for July showed a significant drop, with only 73,000 jobs added, far below the expected 110,000, and previous months' data was revised downwards by 258,000 jobs [2][3] - The unemployment rate rose to 4.25%, while hourly wages increased year-on-year to 3.91%, indicating a mixed labor market scenario [2][3] - Market expectations for interest rate cuts have increased, with traders anticipating three cuts totaling 75 basis points by December 2025, reflecting concerns over economic weakness [6][8] Group 2: Chemical Industry Insights - The polyester filament industry is experiencing a concentration of production capacity, with leading companies increasing their market share, resulting in a more orderly supply environment [19][22] - Demand for polyester filament remains stable, with a seasonal uptick expected in the second half of the year as inventory levels are low [20][22] - The cost pressures from raw materials are expected to ease, with oil price fluctuations influencing the cost structure of polyester filament production [21][22] Group 3: Pharmaceutical Industry Insights - The pharmaceutical sector is witnessing a recovery in public fund holdings, with a notable increase in the market value of heavy holdings, indicating a structural rebound [25][28] - Recent policy changes in drug procurement are expected to favor quality over price, potentially stabilizing profit margins for innovative drug and device companies [26][28] - The medical device market is showing signs of recovery, with significant growth in tendering activities, particularly in medical imaging and rehabilitation equipment [27][28] Group 4: North Exchange Market Insights - The North Exchange market has seen a decline in trading activity, with the average daily turnover dropping to approximately 251 billion yuan [31][32] - The overall market valuation remains high, with the North Exchange's price-to-earnings ratio at around 50.9 times, indicating potential for long-term investment value [32][34] - The introduction of new indices and steady progress in IPOs are expected to maintain a high level of market interest and activity [34]