Group 1 - The core viewpoint of the article highlights the expected implementation of a new round of stable growth work plans in key industries, including petrochemicals, which will promote structural adjustments and the elimination of outdated production capacity [2] - The Ministry of Industry and Information Technology is set to release specific work plans for ten key industries, focusing on optimizing supply and eliminating backward production capacity [2] - The "anti-involution" policy is anticipated to accelerate the supply-side reform in the chemical industry, particularly in sub-industries such as refining, PTA/PX, fertilizers, pigments, organic silicon/industrial silicon, soda ash, and chlor-alkali/PVC [2] Group 2 - In the refining sector, strict control of production capacity and low operating rates of local refineries are expected to improve the profitability of major refineries [3] - As of July 17, the operating rate of local refineries in Shandong was only 47.31%, indicating a historical low, which is expected to maintain due to the peak demand trend for refined oil [3] - The government aims to keep domestic crude oil processing capacity below 1 billion tons by 2025, with a target utilization rate of over 80% for major products [3] Group 3 - The urea industry is projected to see a gradual reduction in supply, which, combined with potential export opportunities, is expected to improve industry conditions [5] - By 2025, the new urea production capacity is estimated to be 4.93 million tons, accounting for only 6.5% of the current total capacity of 76.07 million tons, indicating limited future supply growth [5] Group 4 - The demand for soda ash and PVC is expected to recover due to increased infrastructure needs, with significant new production capacities planned for 2025-2026 [6] - The planned new soda ash capacity for 2025-2026 is 8.68 million tons, representing 20% of the total capacity in 2024, while the PVC capacity increase is projected to be 5 million tons, or 17% of the 2024 total capacity [6] - The "anti-involution" policy is likely to facilitate ongoing supply-side reforms in the soda ash and PVC industries, leading to improved supply conditions and increased industry concentration [6]

Investment Rating - The report maintains an "Accumulate" rating for the basic chemical industry [5] Core Views - The chemical industry is expected to undergo a new round of supply-side reforms, driven by the government's initiatives to eliminate outdated production capacity and improve industry structure [1][21] - The "anti-involution" policy is anticipated to support the exit of old capacities, benefiting leading companies in sub-industries such as refining, fertilizers, pigments, organic silicon, soda ash, and chlor-alkali/PVC [1][21] Summary by Sections Refining - Strict control of refining capacity and low operating rates of local refineries in Shandong are expected to improve the profitability of major refineries [2][24] - As of 2024, China's refining capacity is projected to be 934 million tons, with a target to keep crude oil processing capacity below 1 billion tons by 2025 [24][25] Urea - Future supply is expected to decrease, with only 493,000 tons of new urea capacity projected by 2025, representing 6.5% of the current total capacity [2][26] - The industry is likely to benefit from supply reductions and potential export opportunities, particularly for leading companies capable of upgrading their facilities [26] Soda Ash and PVC - Increased demand from infrastructure projects is expected to drive recovery in the soda ash and PVC markets [3][27] - New soda ash capacity planned for 2025-2026 is estimated at 868,000 tons, accounting for 20% of the total capacity in 2024 [28] - The PVC industry is also expected to see limited new capacity, with a projected increase of 500,000 tons by 2025-2026, representing 17% of the total capacity in 2024 [29] Investment Recommendations - The report suggests focusing on leading companies in various sub-industries, including: - Refining: China Petroleum, Sinopec, Hengli Petrochemical, Rongsheng Petrochemical, Dongfang Shenghong [4] - Fertilizers: Hualu Hengsheng, Chuanheng Co., Hubei Yihua, Salt Lake Potash, Yara International, Sinochem Fertilizer [4] - Pigments: Qicai Chemical, Baihehua, Xinkai Technology, Zhejiang Longsheng, Runtu Co. [4] - Chlor-alkali/PVC: Yangmei Chemical, Chlor-alkali Chemical, Xinjiang Tianye [4] - Organic Silicon/Industrial Silicon: Hoshine Silicon, Xin'an Chemical, Silbond Technology [4] - Soda Ash: Sanyou Chemical, Boyuan Chemical, Shandong Haihua [4]

Market Overview - On March 28, 2025, A-shares closed with all three major indices declining, with the Shanghai Composite Index down 0.67% at 3351.31 points, the ChiNext Index down 0.79% at 2128.21 points, and the STAR 50 Index down 1.07% at 1029.48 points. The total trading volume in the Shanghai and Shenzhen markets was 1.12 trillion yuan, a decrease of 71.7 billion yuan from the previous trading day [2] - Hong Kong stocks opened high but closed lower, with the Hang Seng Index down 0.65% or 152.2 points at 23426.6 points, and a total trading volume of 229.62 billion HKD. The Hang Seng China Enterprises Index fell 0.82% to 8606.51 points, while the Hang Seng Tech Index dropped 1.48% to 5506.47 points. For the week, the Hang Seng Index fell 1.11%, the China Enterprises Index fell 1.55%, and the Tech Index fell 2.36% [2] - On the same day, U.S. stocks saw all three major indices rise, with the S&P 500 up 1.59% at 5954.5 points, the Nasdaq Composite up 1.63% at 18847.28 points, and the Dow Jones Industrial Average up 1.39% at 43840.91 points [2] New Stock Offerings - Two new stocks are available for subscription today: Taihe Co., Ltd. (Code: 301665) with an issue price of 10.27 yuan per share and a price-to-earnings ratio of 13.4 times, primarily engaged in the research, production, and sales of pesticide products and functional chemicals [3] - The second stock, Xinkai Technology (Code: 001335), has an issue price of 12.8 yuan per share and a price-to-earnings ratio of 14.38 times, focusing on the research, production, and sales of organic pigments and acid dyes, with applications in inks, coatings, and plastics [3] Important News - On March 30, 2025, four major banks in China, including Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank, announced plans to issue A-shares to introduce strategic investment from the Ministry of Finance, with a total amount of 500 billion yuan. Specifically, Bank of China plans to raise up to 165 billion yuan, China Construction Bank up to 105 billion yuan, Bank of Communications up to 120 billion yuan, and Postal Savings Bank up to 130 billion yuan [4][5] - The China Securities Regulatory Commission (CSRC) has announced a ban on investors participating in IPO strategic placements from lending shares during the lock-up period, aiming to strengthen the management of listed companies and ensure compliance with regulations [5] Industry Insights - The Vice Minister of Industry and Information Technology, Xin Guobin, stated on March 29, 2025, that the ministry will focus on several key areas to address "involution" in the automotive industry, including enhancing technological breakthroughs, accelerating the industrialization of autonomous driving, and promoting digital transformation across the entire industry chain [6][7] - The ministry plans to compile a new growth plan for the automotive industry, implement policies to stabilize and expand automotive consumption, and support the development of intelligent connected vehicles, including conditional approval for L3 autonomous driving vehicle production [7]