2025-09-17 01:51Summary of Global Chemicals Conference Call Industry Overview - The conference call focused on the Global Chemicals industry, particularly the impact of China's anti-involution measures and global supply-demand dynamics in the chemical sector [1][3][10]. Key Themes and Insights 1. Global Supply Growth Projections: - The compound annual growth rate (CAGR) for global supply from 2024 to 2028 is expected to be lower than from 2020 to 2024, with estimates of 3.1% in a bear case (no Chinese closures) and 2.0% in a bull case (all capacities over 20 years old closed) [1][21][52]. - The previous CAGR from 2020 to 2024 was 3.9%, indicating a more disciplined supply growth moving forward [21][52]. 2. Impact of China's Anti-Involution Measures: - China's government is focusing on closing older capacities (over 20 years) to address oversupply issues in the refining and chemical markets [10][12]. - The anticipated recovery in the chemical sector is expected to be more meaningful from mid-2026 onwards, contingent on the execution of these measures [13][23]. 3. Investor Interest Reignited: - The potential for anti-involution measures in China, combined with overseas chemical players closing plants due to high production costs, has rekindled investor interest in the chemical sector [3][10]. 4. Product-Specific Capacity Growth: - Capacity CAGRs for major products typically range from 1.0% to 6.4% (without Chinese closures) and 0.8% to 4.0% (with closures) [8][54]. - Specific products like ethylene and polyethylene are expected to see significant capacity additions in the upcoming years [65]. 5. Profitability Trends: - Major A-share chemical stocks have rallied approximately 10% since the announcement of anti-involution measures on July 18, 2025 [17]. - Despite a decline in profitability for major A-share companies in the first half of 2025, a seasonal recovery is expected in the second half [19][20]. Stock Recommendations - China: - Upgrade for Wanhua to Overweight (OW) with a price target of Rmb80 due to expected benefits from volume growth and product spread expansion [25]. - Upgrade for Rongsheng to Equal-weight (EW) with a price target of Rmb10.6, anticipating quarterly earnings improvement [26]. - Europe: - Top pick is Akzo, with additional recommendations for Syensqo, BASF, and AKE [27][28]. - India and Southeast Asia: - Favorable outlook for PTTGC and Petronas Chemicals due to potential upside from China's anti-involution efforts [31]. Risks and Challenges - Potential risks include ineffective supply-side reforms, worsening demand due to trade tensions, and unfavorable inventory cycles [33]. Conclusion - The global chemicals industry is poised for a more disciplined growth phase, influenced by China's anti-involution measures and external market dynamics. The focus on closing older capacities and the potential for improved profitability in the coming years present both opportunities and risks for investors in this sector [1][10][20].