Summary of Key Points from the Conference Call on the China Chemical Sector Industry Overview - The conference call focused on the China Chemical Sector, specifically discussing carbon fibre, MDI (Methylene Diphenyl Diisocyanate), electrolytes, and silicone products for the year 2026. Carbon Fibre (CF) - **Capacity Projections**: China's new carbon fibre capacity planned for 2026 is estimated at 110,000 tons, bringing the total capacity to 280,000 tons. However, the actual capacity expected to come online is between 220,000 to 230,000 tons due to uncertainties with smaller enterprises and industrial parks [2][2]. - **Demand Drivers**: Wind turbine blades are projected to remain the primary application, accounting for 40% of CF demand in 2025, with potential growth in 2026-2028. The mass production of China's homegrown aircraft is expected to further increase demand for high-performance carbon fibre in the aerospace sector [2][2]. - **Price Trends**: Prices for high-performance carbon fibre products (>T800) are expected to remain stable, while lower-end products (T300) may face price pressures due to sufficient capacity [2][2]. MDI (Methylene Diphenyl Diisocyanate) - **Supply Outlook**: New MDI capacity in Asia for 2026-2027 is anticipated from expansions at Wanhua Fujian (700,000 tons per annum), BASF Shanghai (160,000 tons per annum), and Kumho in South Korea (100,000 tons per annum), with most expected to launch in the second half of 2026 [3][3]. - **Demand Growth**: MDI demand is expected to grow by 4-5% in 2026, with domestic demand remaining resilient despite weaker exports to the US in 2025. A mild recovery in exports is anticipated year-over-year [3][3]. - **Price Stability**: MDI prices are expected to stabilize with potential increases of RMB 500-1,000 per ton in the first half of 2026, with a focus on peak-season demand and new capacity launches in the second half [3][3]. Electrolytes - **Price Forecast**: Electrolyte prices are projected to rise to RMB 32,000 per ton in 2026 from RMB 22,000 per ton in 2025, with a midpoint forecast of RMB 33,000-36,000 per ton for 2027-2030 [4][4]. - **Demand Growth**: China's electrolyte demand is expected to grow by 24% in 2026 and 30% in 2027, driven by increasing shipments of power and energy storage batteries [4][4]. - **Capacity Utilization**: Overall electrolyte capacity utilization is expected to improve in 2026 compared to 2025, with attention needed on how new LiPF6 capacity launches will impact supply-demand dynamics in the second half of 2026 [4][4]. Silicone - **Profitability Outlook**: The average selling price (ASP) of Silicone DMC is expected to increase to RMB 12,570 per ton in 2026 from RMB 12,113 per ton in 2025, with profits likely to rise by approximately RMB 300 per ton to RMB 680 per ton [5][5]. - **Capacity Management**: No new DMC capacity is expected in 2026, and industry self-discipline efforts have led to coordinated production cuts among mainstream producers to balance supply and demand [5][5]. - **Utilization Rates**: Industry capacity utilization is projected to be 60.5% in 2026, down 1.5 percentage points from 2025, as producers aim to defend prices through production control [5][5]. Risks and Considerations - **Market Risks**: The chemical sector faces risks including large price fluctuations due to volatile international oil prices, potential demand risks from macroeconomic uncertainties, and the possibility of new capacity coming online faster than expected, which could weaken chemical fundamentals [7][7].