【Industry Spotlight Report】Geopolitical Conflicts Continue to Impact Energy Costs; Chemical Industry Poised for Strategic Window Period

The three major A-share indices all declined today. By the close, the Shanghai Composite fell 0.85%, the Shenzhen Component dropped 1.87%, and the ChiNext Index declined 2.29%. The combined trading volume of the Shanghai, Shenzhen, and Beijing markets exceeded 2.2 trillion yuan, a decrease of over 100 billion yuan compared to yesterday. Most industry sectors closed lower, with insurance, chemical fibers, and real estate services leading gains. The sectors with the largest declines included communication equipment, electronic chemicals, components, power equipment, non-metallic materials, marine equipment, batteries, and aerospace equipment. In individual stocks, fewer than 900 stocks rose, with over 50 hitting the daily limit.

According to media reports, conflicts in the Middle East continue, and concerns over shipping disruptions through the Strait of Hormuz have intensified, pushing international oil prices above $100 per barrel at times and directly increasing raw material costs for the chemical industry. China Post Securities statistics show that most chemical prices rose last week, with notable increases in nitro-chlorobenzene and liquid chlorine, indicating a positive shift in supply and demand dynamics**.**

Additionally, global chemical giants are raising prices. BASF in Germany announced twice within a week that prices for coatings additives and plastic additives could increase by up to 25%. Companies like Dow and Covestro are also adjusting prices, affecting the entire industry chain. Moreover, geopolitical conflicts are rapidly transmitting to the commodities market. Leading domestic PVA company Wanhua High-tech recently issued a price adjustment notice, stating that due to rising raw material costs, all PVA product prices will be increased by 2,000 yuan per ton. Besides PVA, prices for chromium chemicals, polyurethane, amino acids, and dyes have also risen. This suggests that cost pressures driven by oil prices are broadly spreading within the chemical industry.

Fangzheng Securities states that the current Middle East conflict has caused a surge in European energy costs, which may accelerate the clearing of chemical production capacity, reinforcing the narrative of the east rising and the west declining. Bank of China Securities points out that the cyclical rotation of commodities, supported by rising crude oil prices and ongoing improvements in supply and demand, forms the core logic for the upward trend in China’s chemical sector.

Fangzheng Securities: Energy Price Fluctuations Under US-Israel-Iran Conflict May Strengthen the East Rising, West Falling Narrative in Chemicals

Energy prices may fluctuate more under the US-Israel-Iran conflict, potentially strengthening the narrative of the east rising and the west declining in the chemical industry. The conflict has already revealed supply risks for crude oil and natural gas, with the possibility of oil prices remaining volatile at high levels or rising further. China’s resource endowment of abundant coal and limited oil and gas gives it an advantage in responding to this oil price shock; meanwhile, the conflict has caused European energy costs to surge, which may accelerate capacity clearing in the chemical sector, reinforcing the east rising, west falling story.

Bank of China Securities: Cyclical Resource Prices Expected to Expand from Nonferrous Metals to Chemicals Within the Year

The cyclical rotation of commodities, supported by rising crude oil prices and ongoing supply-demand improvements, is the core logic behind the upward trend in China’s chemical industry. In the medium term, the rotation from industrial products to energy chemicals and agricultural products is being reinforced, supported by domestic demand during peak seasons. Long-term, policies aimed at reducing internal competition (“anti-involution”) are improving supply-demand dynamics, with leading companies expected to see market share growth and profit recovery. The cyclical resource price rally is expected to gradually extend from nonferrous metals to the chemical sector within the year.

Tianfeng Securities: Chemical Industry Entering a Strategic Window Period

The chemical industry is entering a strategic window period, driven by industry restructuring, value revaluation, and supply-demand reversal. Industry restructuring involves the exit of high-cost marginal capacity overseas, promoting a reorganization of the global chemical order. Value revaluation is driven by the reshaping of supply and demand and upgrades in industry attributes, leading to reassessment of traditional chemical companies, resource values, and product properties. Regarding supply-demand reversal, the policy and capital expenditure inflection point has emerged by 2025. In agrochemical sectors, pesticides are a key focus. Additionally, the escalation of geopolitical conflicts in the Middle East has caused rapid increases in international crude oil prices, significantly raising costs and prices for many chemicals such as phthalic anhydride and acrylic acid, with weekly gains exceeding 2,000 yuan, indicating an upward trend.

Guotou Securities: Structural Price Spread Arbitrage Continues to Strengthen

Against the backdrop of geopolitical conflicts, the cost advantages of alternative energy routes such as coal chemical, gas-based chemical, calcium carbide PVC, and natural alkali have significantly expanded, broadening profit margins. Routes like coal-to-olefins and coal-to-methanol are particularly economical, while ethane-to-ethylene and natural gas-based ethylene glycol benefit from low raw material prices, boosting profit elasticity. The gross margin of calcium carbide-based PVC has turned positive, reaching 237 yuan per ton, and the unit cost of natural alkali is about 300–500 yuan lower than that of soda ash, reinforcing the structural arbitrage logic.

CICC: Chemical Industry Expected to See Profit Growth and Revaluation

Policies are gradually shifting from dual control of energy consumption to emphasizing total and intensity-based carbon emission controls, with petrochemical and chemical industries being key sectors. As energy consumption controls tighten, supply-side restrictions are expected to intensify, potentially replicating the cooling-off logic, leading to profit growth and valuation revaluation.

Southwest Securities: Chemical Industry Already at the Starting Point of a New Boom Cycle

From a global perspective, the chemical industry is at the beginning of a new boom cycle. Raw material prices for upstream energy sources like crude oil, natural gas, and coal have limited downward potential. Focus should be on resource-based chemicals and those with high potential for sudden growth (“black horse” chemicals in the real estate chain).

(This article does not constitute investment advice. Investors operate at their own risk. The market carries risks; please invest cautiously.)

(Article source: Eastmoney Research Center)