Oil prices surge; why is it actually a good time to buy into the chemical industry? The higher oil prices go, the more it seems worth investing in chemicals?

International oil prices have continued to rise recently. While this may seem to increase costs for the chemical industry and squeeze profit margins, it is actually a good time to position in the chemical sector.

In the short term, with oil prices staying high, downstream processing and manufacturing companies have abandoned the idea of “waiting until prices drop before buying.” They have instead stepped up procurement to replenish inventories, directly boosting demand for traditional chemical products. In the long term, the energy supply pressure caused by rising oil prices will further drive the stricter implementation of dual-carbon policies, eliminate outdated chemical production capacity, and once supply contraction is realized, the overall industry fundamentals for chemical sector business conditions will become even more solid.

The Chemical Industry ETF of E Fund (516570), which tracks the CSI Petrochemical Industry Index, has a traditional chemical exposure of over 90% in the industry breakdown of its constituent stocks. Within that, basic chemicals account for 61.2%, and the petroleum and petrochemicals segment accounts for 31.6%, fully benefiting from the uptrend in traditional chemical industry business conditions.

Compared with similar indices, the CSI Petrochemical Industry Index uniquely includes oil and gas sector targets such as oil extraction and refining. Among them, China National Petroleum, Sinopec, and CNOOC—collectively known as the “Three Oils”—are unique constituent stocks of this index, with a combined weight of 19.0%. This means the index has a stronger linkage to oil prices and directly benefits from the current rise in international oil prices.

Overall, the CSI Petrochemical Industry Index’s characteristics are highly aligned with the current market main theme of rising oil prices and the recovery in traditional chemical industry business conditions. The Chemical Industry ETF of E Fund tracking this index (516570; fund of funds A/C: 020104/020105) has an latest scale of about RMB 2.66 billion, and the management fee rate is only 0.15% per year, making it the lowest tier among ETFs.

Risk warning: Funds involve risk; invest with caution.