A-shares oscillating and adjusting, chemical sector remains active

On March 17, the A-share market experienced sideways consolidation in the morning, with the decline widening in the afternoon. By the close, the Shanghai Composite Index was at 4,049.91 points, down 0.85%; the Shenzhen Component Index was at 14,039.73 points, down 1.87%; the ChiNext Index was at 3,280.06 points, down 2.29%; and the STAR Market Index was at 1,699.05 points, down 2.47%. The combined trading volume of Shanghai and Shenzhen was 2.2078 trillion yuan, about 120 billion yuan less than the previous day.

In the market, chemical stocks continued their strong momentum, with sector enthusiasm spreading along the industrial chain, gradually expanding from upstream oil and gas resources to mid- and downstream specialized chemicals.

Sanfangxiang hit the daily limit again yesterday, marking four consecutive days of upward movement. Data shows that Sanfangxiang’s main business focuses on the production and sales of bottle-grade polyester chips (bottle chips) and PTA, supplemented by PBT engineering plastics and thermal power. On the futures market, Zhengzhou Commodity Exchange’s main contract for bottle chips reached a high of 9,282 yuan/ton on March 16, setting a new record high, with a cumulative increase of about 40% since March.

Guosheng Securities research report states that the ongoing escalation in the Middle East has led to rising crude oil prices, which are accelerating the transmission along the polyester industry chain (naphtha—PX—PTA—PET). Data from Baichuan Yingfu shows that from March 6 to 12, the spot price of polyester bottle chips was 7,990 yuan/ton, up 23% month-on-month. Market demand for procurement is tense, and with the peak demand season for PET in March and April, along with industry joint production control to counteract “involution,” profit margins at the bottle chip stage are showing marginal improvement.

In a recent risk warning announcement, Sanfangxiang stated that due to geopolitical tensions and international energy prices, prices of major chemical products and company products have fluctuated significantly. However, the company’s main business has not undergone major changes, and there is no obvious impact on profitability or gross profit margins. Investors are advised to be aware of investment risks.

“Each price uptrend cycle follows the rotation order of ‘industrial products—energy chemicals—agricultural products,’” said Wang Jun, Chief Strategy Analyst at Bank of China Securities, in a research report. Since 2025, commodities such as non-ferrous metals have led the rally. The turmoil in the Middle East combined with the current global re-inflation macro environment provides a cyclical foundation for rising chemical prices. The performance-driven upward trend of cyclical stocks is expected to spread to the chemical sector. Additionally, the upcoming peak season for domestic construction and the “counter-involution” policy orientation also lay a solid foundation for the industry’s earnings growth.

Another highlight of yesterday’s market was the large financial sector, with banks, insurance companies, brokerages, and futures firms all rebounding against the trend, supporting the Shanghai Composite Index’s relative resilience. Among individual stocks, Aijian Group hit the daily limit, Nanhua Futures rose over 6%, and CITIC Bank, New China Insurance, and Guoxin Securities all gained more than 3%.

Zhang Gang, Deputy Director of the Zhongyuan Securities Research Institute, stated in a report that the core pressure on the current A-share market mainly comes from overseas. The escalation of the Middle East situation has triggered turbulence in global capital markets. Concerns about stagflation caused by soaring oil prices have delayed the Federal Reserve’s rate cuts and increased fluctuations in U.S. Treasury yields, putting valuation pressure on global equity assets, especially high-valuation tech growth stocks.

“Considering that China’s macro policy tone has become clearer, providing a solid bottom support for the market. The central bank has explicitly stated it will flexibly use tools like reserve requirement ratio cuts and interest rate reductions to maintain ample liquidity; at the same time, supporting China Investment Corporation to play a quasi ‘stabilization fund’ role has boosted market confidence for the future. It is expected that the Shanghai Composite Index will likely remain in a slight consolidation, and investors should closely monitor macroeconomic data, overseas liquidity changes, and policy developments,” Zhang Gang said.