“反内卷”势在必行，化工行业新一轮供给侧改革呼之欲出

Summary of Conference Call on Chemical Industry Industry Overview - The chemical industry is facing an inevitable supply-side reform due to the failure of traditional market clearing mechanisms, with large leading enterprises having strong risk resistance capabilities, resulting in price declines not triggering a wave of bankruptcies [1][6][8] - The chemical sector currently has low allocation from investors, and attention should be paid to upcoming new policies that may adjust investment strategies towards leading enterprises with technological advantages and strong cost control capabilities [1][7] Core Points and Arguments - In the first half of 2025, the chemical industry experienced a supply-demand imbalance, with product prices dropping to historical lows, yet there was no large-scale bankruptcy among midstream manufacturing enterprises, indicating limitations in the traditional demand-driven model [1][8] - Historical cycles show that effective policy intervention and structural adjustments can lead to industry recovery, as seen in the successful supply-side reforms in steel and coal industries in 2015, which serve as a reference for the current chemical industry [1][10][11] - The Producer Price Index (PPI) has shown negative growth for 33 consecutive months, indicating a severe economic environment that requires structural adjustments and policy support for recovery [1][12] Key Data and Insights - Current construction projects have decreased by 5% year-on-year, and fixed asset investment has slowed, suggesting that the peak of capacity pressure has passed, but the digestion of new capacity will take time [5] - Industrial silicon prices fell to 7,000 RMB/ton in the first half of 2025, significantly below the historical minimum of 10,000 RMB/ton, reflecting the pressure on product prices despite stable oil and coal prices [5] - The chemical industry’s market share in global chemical product sales has reached 43%, with some products having market shares as high as 70%-90%, but trade barriers and anti-dumping measures limit further expansion [8] Investment Strategy Recommendations - Investors should increase allocation to the chemical sector, focusing on leading enterprises with strong product lines and those close to cyclical turning points, such as the polyester filament industry [7][18] - Short-term price increases are expected in products like glyphosate, organic silicon, industrial silicon, and soda ash, which are influenced by futures markets [18] - Traditional industries with significant potential for capacity reduction, such as soda ash, chlorine alkali, and carbon black, are currently experiencing severe losses but have substantial room for improvement as price regulations are implemented [18] Future Outlook - The chemical industry’s future development relies on supply-side reforms to reduce excess capacity and restore normal profitability levels, with low stock valuations indicating significant upside potential once positive stimuli occur [9][16] - Historical cycles suggest that effective policy interventions can lead to industry recovery, and the chemical sector has long-term investment potential due to its broad scope and numerous sub-industries [11][16] Government Policies - Since 2024, the Chinese government has implemented measures to address issues of excessive competition in various sectors, including chemical, with policies aimed at eliminating outdated capacity and improving energy consumption standards [15] - Upcoming policies are expected to target coal chemical, synthetic ammonia, and methanol industries first, gradually expanding to other sub-industries [16] Conclusion - The chemical industry is at a critical juncture, with potential for recovery through supply-side reforms and strategic investments in leading companies. Investors are encouraged to monitor policy developments and adjust their strategies accordingly to capitalize on emerging opportunities [7][17][20]