Investment Rating - The report rates the chemical industry as "Outperform" [1] Core Views - The report suggests focusing on undervalued leading companies in the industry, the impact of "anti-involution" on supply in related sub-industries, and the increasing importance of self-sufficiency in electronic materials companies and certain new energy materials companies amid price increases [1][9] Industry Dynamics - As of December 22-28, 2025, among 100 tracked chemical products, 34 saw price increases, 32 saw declines, and 34 remained stable. 55% of products had month-on-month average prices rising, while 35% fell, and 10% remained unchanged [8][27] - International oil prices remained stable, with WTI crude futures closing at $56.74 per barrel (up 0.14%) and Brent crude at $60.64 per barrel (up 0.28%) [28] - MDI prices slightly decreased, with pure MDI averaging 18,100 CNY/ton (down 4.23% week-on-week) and polymer MDI at 14,300 CNY/ton (down 2.39%) [29] - Acetic acid prices increased to 2,496 CNY/ton (up 2.93% week-on-week) [30] Investment Recommendations - As of December 27, 2025, the SW basic chemical industry P/E ratio (TTM excluding negative values) is 25.60, at the 76.58% historical percentile, while the P/B ratio is 2.33, at the 61.10% historical percentile. The SW oil and petrochemical industry P/E ratio is 13.17, at the 37.56% historical percentile, and the P/B ratio is 1.28, at the 36.98% historical percentile [9] - Recommendations include focusing on undervalued leading companies, the impact of "anti-involution" on supply, and the importance of self-sufficiency in electronic materials and certain new energy materials companies [9] - Long-term investment themes include expected demand recovery supported by policies, continuous optimization of supply, and the potential for performance and valuation improvements for leading companies [9] - Recommended stocks include Wanhua Chemical, Hualu Hengsheng, Satellite Chemical, and others [9]

Market Performance - The basic chemical index decreased by 2.19% from December 6 to December 12, while the CSI 300 index fell by only 0.08%, indicating that the basic chemical sector underperformed the CSI 300 by 2.12 percentage points, ranking 26th among all sectors [1][2] - The top-performing sub-industries included rubber additives (4.50%), adhesives and tapes (2.95%), non-metallic materials III (1.04%), synthetic resins (0.68%), and other rubber products (0.37%) [1][2] Chemical Price Trends - The top five products with the highest weekly price increases were hydrogen peroxide (14.67%), R125 (13.33%), hydrochloric acid (Shandong) (12.50%), domestic vitamin E (8.33%), and raw salt (5.77%) [3] - The top five products with the largest weekly price declines were liquid chlorine (-33.33%), NYMEX natural gas (-22.31%), R22 (-13.89%), hydrochloric acid (Jiangsu) (-12.50%), and R134a (-8.33%) [3] Industry Dynamics - The Ministry of Ecology and Environment announced the issuance of production, use, and import quotas for ozone-depleting substances and hydrofluorocarbons (HFCs) for 2026, with a total production quota of 797,800 tons, a slight increase of 5,963 tons from 2025 [4] - The production quotas for R134a, R245fa, R32, and R125 will increase by 3,272, 2,918, 1,171, and 351 tons respectively, while R143 and R227ea will see reductions of 1,255 and 517 tons [4] - The high demand for third-generation refrigerants is expected to continue, with prices remaining elevated; as of December 12, the market prices for R32, R125, and R134a in East China were 63,300, 45,000, and 57,500 yuan per ton, respectively [4] - The production of air conditioners and automobiles in China showed growth, with cumulative production from January to October 2025 reaching 230 million units and 27.325 million vehicles, representing year-on-year increases of 3% and 11% respectively [4] Price Adjustments in the Industry - Several leading companies in the light stabilizer sector have announced price increases of approximately 10% to address long-standing issues of irrational price competition [5] - The price adjustments were initiated by major players such as Lianlong and followed by others like Suqian Liansheng and Tiangang Additives [5] Investment Recommendations - Focus on the refrigerant sector, as the supply-demand balance is expected to improve, with price levels likely to rise; recommended companies include Jinshi Resources, Juhua Co., Sanmei Co., and Yonghe Co. [6] - Attention is also suggested for the chemical fiber sector, with recommended companies being Huafeng Chemical, Xin Fengming, and Taihe New Materials [6] - Other quality targets include Wanhua Chemical, Hualu Hengsheng, Luxi Chemical, and Baofeng Energy [6] - The tire sector is highlighted with recommendations for Sailun Tire, Senqilin, and Linglong Tire [6] - In the agricultural chemicals sector, recommended companies include Yara International, Salt Lake Co., Xingfa Group, Yuntianhua, and Yangnong Chemical [6] - Quality growth targets include Blue Sky Technology, Shengquan Group, and Shandong Heda [6] Industry Rating - The basic chemical industry maintains an "overweight" rating [7]

Investment Rating - The industry investment rating is "Outperform the Market" [2][45] Core Views - The report highlights the decline in international oil prices and methionine prices, while TDI prices have increased. It suggests focusing on undervalued industry leaders, the impact of "anti-involution" on supply in related sub-industries, and the importance of self-sufficiency in electronic materials and certain new energy materials companies amid price increases [2][10]. Industry Dynamics - In the week of December 8-14, 2025, among 100 tracked chemical products, 42 saw price increases, 37 saw declines, and 21 remained stable. The average price of TDI rose by 2.49% week-on-week, while methionine prices fell by 2.45% [29][31][32]. - The average cost of TDI was 11,819 CNY/ton, down 0.92% from the previous week, with an average gross profit of 2,766.71 CNY/ton, up 31.79% week-on-week [31]. - The report notes that the SW basic chemical industry P/E ratio (TTM excluding negative values) is 24.14, at the 71.18% historical percentile, while the oil and petrochemical industry P/E ratio is 12.85, at the 35.15% historical percentile [10][29]. Investment Recommendations - The report recommends focusing on undervalued industry leaders and suggests a long-term investment strategy that includes sectors like semiconductor materials, OLED materials, and new energy materials, which are expected to have significant growth potential [10][29]. - Specific stock recommendations include Wanhua Chemical, Hualu Hengsheng, Satellite Chemical, Juhua Co., New Chemical, China Petroleum, China National Offshore Oil Corporation, China Petrochemical, and others [10][29].

Industry Overview - The chemical sector's overall performance ranked 9th this week (2025/11/10-2025/11/14) with a change of 2.61%, outperforming the Shanghai Composite Index by 2.79 percentage points and the ChiNext Index by 5.62 percentage points [1] - The chemical industry is expected to continue its differentiated trend in 2025, with a focus on synthetic biology, pesticides, chromatography media, sweeteners, vitamins, light hydrocarbon chemicals, COC polymers, and MDI [1] Synthetic Biology - The arrival of a pivotal moment in synthetic biology is anticipated, driven by the adjustment of energy structures, which may disrupt fossil-based materials and favor low-energy products [1] - Traditional chemical companies are expected to compete on energy consumption and carbon tax costs, with successful firms leveraging green energy and integrated advantages to reduce costs [1] - The demand for bio-based materials is projected to surge, leading to potential profitability and valuation increases for companies in this sector, such as Kasei Bio and Huaheng Bio [1] Refrigerants - The implementation of quota policies is expected to usher in a high-growth cycle for third-generation refrigerants, with supply entering a "quota + continuous reduction" phase starting in 2024 [2] - The demand for refrigerants is anticipated to grow due to the development of heat pumps, cold chain markets, and the expansion of the air conditioning market, particularly in Southeast Asia [2] - Companies with a high quota share, such as Juhua Co., Sanmei Co., Haohua Technology, and Yonghe Co., are expected to benefit significantly [2] Electronic Specialty Gases - Electronic specialty gases are critical to the electronics industry, characterized by high technical barriers and added value [3] - The domestic market faces a mismatch between rapid upgrades in wafer manufacturing and insufficient high-end electronic specialty gas capacity, presenting opportunities for domestic replacements [3] - Companies like Jinhong Gas, Huate Gas, and China Shipbuilding Gas are positioned to capitalize on this demand [3] Light Hydrocarbon Chemicals - The trend towards light raw materials in the global olefin industry is becoming more pronounced, with a shift from heavy naphtha to lighter low-carbon alkanes like ethane and propane [4] - Light hydrocarbon chemicals are favored for their low carbon emissions, low energy consumption, and low water usage, aligning with global carbon neutrality goals [4] - Companies in the light hydrocarbon sector, such as Satellite Chemical, are expected to see a revaluation of their worth [4] COC Polymers - The industrialization of COC/COP (cyclic olefin copolymer) is accelerating in China, driven by domestic companies overcoming previous R&D challenges [5] - The shift of downstream industries like consumer electronics and new energy vehicles to domestic production is enhancing the demand for COC/COP materials [5] - Companies like Acolyte are recommended for their potential in the COC polymer production segment [5] Potash Fertilizers - Potash fertilizer prices are expected to rebound as the industry enters a destocking cycle, with supply reductions from major players like Canpotex and Nutrien [6] - The termination of the Black Sea Grain Export Agreement has led to increased prices for wheat and corn, boosting the demand for potash fertilizers [6] - Companies such as Yara International, Salt Lake Potash, and Zangge Mining are highlighted as key players in this sector [6] MDI Market - The MDI market is characterized by oligopoly, with demand steadily increasing due to the expansion of polyurethane applications [7] - Major global manufacturers, including Wanhua Chemical, BASF, Covestro, Huntsman, and Dow, control over 90% of MDI production capacity [7] - Despite current price pressures, MDI is expected to maintain profitability, with a positive outlook as demand recovers [7] Chemical Price Tracking - The top five price increases this week included dimethylcyclosiloxane (DMC) at 18.18%, sulfur at 8.96%, and NYMEX natural gas at 5.82% [8] - The top five price decreases included butadiene at -7.89% and hydrofluoric acid at -4.27% [8] Supply Side Tracking - This week, 164 chemical enterprises reported production capacity changes, with 11 new repairs and 5 restarts noted [9]

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - In November, the macro environment enters a vacuum period, and major asset classes lack further positive drivers. The market needs to digest previous gains, so major assets may enter a short - term shock period. However, the overall allocation strategy for the fourth quarter remains unchanged, and the macro environment is still favorable for risk assets. It is recommended that investors allocate major asset classes evenly in the fourth quarter, hold long positions in stock indices, non - ferrous metals (copper, lithium carbonate, aluminum, tin), and precious metals, and increase positions appropriately if there is a correction in the fourth quarter [8]. 3. Summary by Sections 2.1 Macro Highlights - **Overseas Macro**: This week, the global macro focus is on changes in US dollar liquidity. Although there is a short - term tightening trend, it is not expected to have a significant impact on major asset prices. There are two factors that may improve US dollar liquidity: marginal easing of monetary policy and the normal release of funds in the TGA account once the US government resumes work [8]. - **Domestic Macro**: In October, China's export volume growth was weaker than expected and the previous value, and the month - on - month performance was also weaker than the seasonal average. However, more positive information was found in the October inflation data. Additionally, there is a possibility that the October consumption data may slightly exceed expectations [8]. 2.2 View Highlights Financial - **Stock Index Futures**: Driven by technology events, the growth style is active. With the congestion of small - cap funds, it is expected to fluctuate and rise [9]. - **Stock Index Options**: The overall market trading volume has slightly declined. With the option market liquidity falling short of expectations, it is expected to fluctuate [9]. - **Treasury Bond Futures**: The bond market continues to be weak. Considering factors such as policy, fundamental recovery, and tariffs, it is expected to fluctuate [9]. Precious Metals - **Gold/Silver**: With the easing of geopolitical and trade tensions, precious metals are in a phased adjustment. Affected by the US fundamentals, Fed's monetary policy, and global equity market trends, it is expected to fluctuate [9]. Shipping - **Container Shipping to Europe**: As the peak season in the third quarter fades, there is pressure on loading and a lack of upward drivers. Pay attention to the rate of freight decline in September, and it is expected to fluctuate [9]. Black Building Materials - **Steel**: In the off - season, demand is under pressure, and the futures price has fallen from a high level. Pay attention to the progress of special bond issuance, steel exports, and molten iron production, and it is expected to fluctuate [9]. - **Iron Ore**: The pressure of inventory accumulation is released in advance, and the supply - demand relationship is expected to improve. Affected by overseas mine production and shipment, domestic molten iron production, weather, port inventory, and policy, it is expected to fluctuate [9]. - **Coke**: Three rounds of price increases have been implemented, and a fourth round is proposed. Pay attention to steel mill production, coking costs, and macro sentiment, and it is expected to fluctuate [9]. Non - ferrous Metals and New Materials - **Copper**: Due to the tight US dollar liquidity, the copper price is in a short - term adjustment. Affected by supply disruptions, domestic policies, Fed's policy, and domestic demand, it is expected to fluctuate [9]. - **Aluminum**: With the linkage between stocks and futures, the aluminum price is expected to fluctuate and rise. However, it is affected by macro risks, supply disruptions, and demand [9]. - **Lithium Carbonate**: The resumption of production is uncertain, and there is a risk of significant price fluctuations. Affected by demand, supply, and new technologies, it is expected to fluctuate [9]. Energy and Chemicals - **Crude Oil**: Supply pressure persists, and geopolitical risks remain. Affected by OPEC+ production policies and the Middle East geopolitical situation, it is expected to fluctuate [11]. - **LPG**: Supply is still in surplus. Pay attention to the cost side, such as crude oil and overseas propane, and it is expected to fluctuate [11]. - **Low - Sulfur Fuel Oil**: With the strength of refined oil products, it may run strongly. Affected by crude oil prices, it is expected to fluctuate and rise [11]. Agriculture - **Pig**: There is a game between supply and demand, and the pig price is expected to fluctuate and fall. Affected by breeding sentiment, epidemics, and policies [11]. - **Natural Rubber**: The futures price rebounds strongly, and its sustainability needs attention. Affected by production area weather, raw material prices, and macro changes, it is expected to fluctuate and fall [11]. - **Cotton**: The price fluctuation range is limited. Affected by demand and inventory, it is expected to fluctuate [11].

Investment Rating - The report maintains an "Outperform" rating for the chemical industry [3] Core Views - The macroeconomic data indicates a decline in the PMI to 49.0%, a decrease of 0.8 percentage points from the previous month. The main raw material purchasing price index also decreased by 0.7 percentage points [5][27] - The report highlights the need for the chemical industry to focus on high-end, green, intelligent, and circular development as emphasized in the recent policy recommendations from the Communist Party of China [5][51] - Investment strategies suggest focusing on sectors such as coal chemical, fluorochemical, phosphate and phosphorus chemical, and potassium fertilizer [5][61] Summary by Sections Macroeconomic Data - The October PMI is at 49.0%, down 0.8 percentage points from last month. The main raw material purchasing price index is at 52.5%, down 0.7 percentage points [27] - The PPI for September shows a year-on-year decline of 2.3%, with the decline narrowing by 0.6 percentage points from the previous month [5][27] - Fixed asset investment in the chemical raw materials and chemical products manufacturing sector saw a year-on-year decline of 5.6% in September, widening from the previous month [27] Downstream Industry Performance - In September, the export value of textile yarns and fabrics increased by 6.4% year-on-year, while the export value of household appliances decreased by 9.6% [42] - The production of new energy vehicles decreased by 2.4% year-on-year, while automobile production increased by 3.2% [42] Investment Recommendations - The report suggests focusing on the SW coal chemical, SW fluorochemical, SW phosphate and phosphorus chemical, and SW potassium fertilizer sectors for potential investment opportunities [61][62] - Recommended ETF: Penghua CSI Sub-Sector Chemical Industry Theme ETF (159870.SZ) [62]

Investment Rating - The report maintains an "Overweight" rating for the basic chemical industry [1][9]. Core Viewpoints - The basic chemical index outperformed the CSI 300 index by 2.93 percentage points, with a weekly increase of 2.50% compared to a decrease of 0.43% for the CSI 300 [3][15]. - Key sub-industries showing significant gains include potassium fertilizer (10.66%), fluorochemicals (7.24%), phosphorus fertilizer and phosphorus chemicals (6.60%), organic silicon (5.85%), and non-metallic materials III (3.75%) [16][19]. - The report highlights a positive trend in the vitamin market, with prices for Vitamin A and E increasing due to proactive price hikes by major producers, leading to heightened market activity [6][9]. Summary by Sections Market Trends - The basic chemical index increased by 2.50% over the past week, outperforming the CSI 300 index [15]. - The top-performing sub-industries included potassium fertilizer, fluorochemicals, and phosphorus chemicals [16]. Chemical Product Price Trends - The top five products with the highest weekly price increases were hydrochloric acid (Shandong) at 57.14%, NYMEX natural gas at 24.85%, concentrated nitric acid at 9.68%, and domestic vitamins E and A at 8.70% and 6.67% respectively [24][28]. - The products with the largest weekly price declines included POM (injection) at -14.06%, international butadiene at -11.64%, and coal tar at -7.29% [24][25]. Investment Recommendations - The report suggests focusing on several key sectors: refrigerants, chemical fibers, tire manufacturing, and agricultural chemicals, with specific companies highlighted for potential investment [9][45]. - Notable companies to watch include Jinshi Resources, Juhua Co., and Wanhu Chemical among others [9][45].

1. Report Industry Investment Rating - No relevant content provided 2. Core Viewpoints - On October 28, the central bank increased net open - market injections, improving the capital situation to an overall balanced and stable state. After the positive news of the central bank's bond - buying restart was realized, the bond market was generally weak with a slight upward movement in the 10 - year treasury bond yield. The convertible bond market declined following the stock market, and most individual bonds fell. Overseas, yields of US Treasury bonds across various tenors generally decreased, while the 10 - year treasury bond yields of major European economies remained unchanged from the previous day [1] 3. Summary by Sections 3.1 Bond Market News 3.1.1 Domestic News - The full text of the "Proposal of the Central Committee of the Communist Party of China on Formulating the 15th Five - Year Plan for National Economic and Social Development" was released on October 28, setting major goals for economic and social development during the "15th Five - Year Plan" period, such as maintaining economic growth within a reasonable range, promoting the development of strategic emerging industries, and achieving breakthroughs in key core technologies in key areas. It also proposed measures for fiscal and monetary policies [3] - The "15th Five - Year Plan" proposal emphasizes the role of active fiscal policies, enhancing fiscal sustainability, and promoting a more domestic - demand - led and consumption - driven economic development model [5] - China and ASEAN signed the 3.0 - version upgrade protocol of the free - trade area on October 28, expanding cooperation in emerging fields and promoting regional trade facilitation [7] 3.1.2 International News - ADP will start releasing weekly preliminary estimates of private - sector employment data on a weekly basis, providing a four - week moving average of private - sector employment changes. The existing monthly report will still be released as usual [8][9] 3.1.3 Commodities - On October 28, international crude oil futures prices continued to fall, with WTI December crude futures down 1.89% and Brent December crude futures down 1.86%. COMEX gold futures fell 1.25%, and NYMEX natural gas prices dropped 4.30% [10] 3.2 Capital Situation 3.2.1 Open - Market Operations - On October 28, the central bank conducted 475.3 billion yuan of 7 - day reverse repurchase operations, with an operating rate of 1.40%. With 159.5 billion yuan of reverse repurchases maturing on the same day, the net injection was 315.8 billion yuan [12] 3.2.2 Capital Interest Rates - On October 28, the central bank's increased net open - market injections improved the capital situation. DR001 rose 1.58bp to 1.469%, and DR007 fell 2.38bp to 1.558% [13] 3.3 Bond Market Dynamics 3.3.1 Interest - Rate Bonds - After the news of the central bank's bond - buying restart was confirmed on October 28, the bond market was generally weak. The yield of the 10 - year treasury bond active bond 250016 rose 1.80bp to 1.813%, and the yield of the 10 - year CDB active bond 250215 rose 1.75bp to 1.8805% [16] - There were several bond - issuing tenders on October 28, with details such as issuance scale, winning bid yields, and multiples provided [18] 3.3.2 Credit Bonds - On October 28, the trading price of "H0 Baolong 04" deviated by over 10%, rising over 37% [18] - Credit - related events include the suspension of trading of 6 corporate bonds of Rongxin Group, the ineffective convening of the "20 Xingfu 01" bondholder meeting of Huaxia Holdings, and the disclosure of overdue debts of Sunshine City [19] 3.3.3 Convertible Bonds - On October 28, the A - share market declined, with the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index down 0.22%, 0.44%, and 0.15% respectively. The convertible bond market also declined, with the CSI Convertible Bond, Shanghai Convertible Bond, and Shenzhen Convertible Bond indices down 0.24%, 0.30%, and 0.16% respectively [20] - There were rating - related events such as the withdrawal of Jiangsu Zhongxing's "BBB+" international long - term issuer rating and financial - strength rating events of other companies. Some companies also announced losses, overdue reports, and other events [22] - Upcoming events include the listing of Funeng Convertible Bonds, the possible trigger of the conversion - price downward - adjustment condition for Juxing Convertible Bonds, and announcements regarding early redemption of some convertible bonds [28] 3.3.4 Overseas Bond Markets - On October 28, except for the 3 - year US Treasury bond yield remaining unchanged, yields of US Treasury bonds across other tenors generally decreased. The 2 - year yield dropped 1bp to 3.47%, and the 10 - year yield dropped 2bp to 3.99% [24] - The 10 - year treasury bond yields of major European economies remained unchanged on October 28 [27] - The daily price changes of Chinese - funded US - dollar bonds as of the close on October 28 are presented, including the top 10 daily gainers and losers [30]

Investment Rating - The report rates the chemical industry as "Outperforming the Market" [2] Core Views - The report emphasizes the importance of focusing on the third-quarter earnings season, undervalued industry leaders, the impact of "anti-involution" on supply in related sub-industries, and the increasing significance of self-sufficiency in electronic materials companies [2][15] - It highlights the potential for sustained high oil prices, the ongoing recovery in the oil and gas exploration sector, and the growth opportunities in new materials, particularly in semiconductor and OLED materials [15][20] Summary by Sections Industry Dynamics - During the week of October 20-26, 2025, 24 out of 100 tracked chemical products saw price increases, while 43 experienced declines, and 33 remained stable. The average price of 28% of products increased month-on-month, while 56% decreased [10][15] - International oil prices rose, with WTI crude oil futures closing at $61.50 per barrel, a weekly increase of 6.88%, and Brent crude at $65.94 per barrel, up 7.59% [10][15] - The report notes that the average price of lithium carbonate for battery-grade reached 75,700.00 CNY/ton, a 3.46% increase from October 1 [10] Investment Recommendations - The report suggests focusing on the third-quarter earnings, undervalued industry leaders, and the impact of "anti-involution" on supply in related sub-industries. It also emphasizes the importance of self-sufficiency in electronic materials [15] - Long-term investment themes include the sustained high oil prices benefiting the oil and gas sector, rapid development in downstream industries, and the recovery of demand supported by policy initiatives [15][20] Key Stocks - Recommended stocks include China Petroleum, China National Offshore Oil Corporation, China Petrochemical Corporation, and several others in the new materials and electronic materials sectors [15][20]

Group 1: Industry Trends - The "14th Five-Year Plan" emphasizes technological self-reliance and the focus on new materials and autonomous industrial chains, highlighting high-quality development as a priority [2] - The National Development and Reform Commission aims to accelerate the development of strategic emerging industries such as new energy, new materials, and aerospace, potentially creating several trillion-level markets [2] - The report indicates that the chemical new materials industry is entering a period of accelerated domestic substitution, with opportunities in semiconductor materials and high-end engineering plastics [2] Group 2: Market Performance - During the week of October 20-24, 2025, the Shanghai and Shenzhen 300 Index rose by 3.24%, while the Shenwan Oil and Petrochemical Index increased by 4.33%, outperforming the market by 1.09 percentage points [3] - The Shenwan Basic Chemical Index rose by 2.14%, underperforming the market by 1.10 percentage points, with the oilfield services and other petrochemical sectors showing the highest gains [3] Group 3: Price Movements - Key price increases for the week included hydrochloric acid (19.05%), NYMEX natural gas (7.42%), and sulfur (6.57%), while significant price drops were seen in R22 (-21.69%) and propylene (-6.62%) [4][5] Group 4: Investment Recommendations - The supply side is expected to undergo structural optimization, with a focus on sectors with elastic and advantageous products, such as organic silicon and membrane materials [5] - The report suggests that domestic chemical enterprises are rapidly filling gaps in the international supply chain, driven by cost advantages and technological advancements [5] Group 5: Consumer Trends and Technological Development - New consumer trends are driving demand for health additives and sugar substitutes, with the food additive industry expected to expand due to supportive regulations [6] - The overall self-sufficiency rate of China's chemical new materials is about 56%, indicating a significant opportunity for domestic substitution in sectors like semiconductor materials and high-end additives [6]