East Money Information Co.,Ltd. Securities released a research report stating that, from a top-down perspective, the domestic macroeconomy is stabilizing with marginally strengthening fixed asset investment. Following three interest rate cuts in the United States, signs of marginal improvement in commodity consumption have emerged. Europe's manufacturing PMI remains above the expansion-contraction line, presenting an optimistic outlook for terminal demand in the chemical sector. On the supply side, the year-on-year growth rate of chemical projects under construction has further declined, reducing new capacity additions. Overseas capacity adjustments are ongoing, with continued phase-outs of facilities in Europe, Japan, and South Korea. Concurrently, following the domestic anti-involution trend in the chemical industry since the second half of 2025 and the escalation of the US-Iran conflict since March 2026, the supply side has been impacted to varying degrees. Overall, chemical supply is exhibiting a trend of marginal tightness.
The main views of East Money Information Co.,Ltd. Securities are as follows:
Oil prices fluctuate at high levels amid geopolitical disturbances, while domestic demand gradually stabilizes. By the fourth quarter of 2025, the average CCPI was 3878.72 points, a year-on-year decrease of 11.26%. Subsequently, it bottomed out and began to rise from the first quarter of 2026, with the average climbing to 4302.89 points. Influenced by the Middle East situation in March, crude oil prices rose sharply, followed by the CCPI. By the end of April 2026, the average CCPI had recovered to 5224 points, reaching its highest level since 2012. From a meso perspective, investment is marginally strengthening. In the first quarter of 2026, against a complex backdrop of ongoing global geopolitical conflicts and the spillover effects of monetary policy adjustments in major economies, China's economic indicators gradually improved, and the fundamentals continued to show positive trends.
Petroleum and petrochemical industry: Revenue and net profit declined year-on-year in 2025, but Q1 2026 net profit increased year-on-year. The petroleum and petrochemical industry achieved operating revenue of 7561.915 billion yuan in 2025, a year-on-year decrease of 5.91%, and net profit attributable to shareholders of listed companies of 333.316 billion yuan, a year-on-year decrease of 11.50%. In the first quarter of 2026, operating revenue was 1900.942 billion yuan, a year-on-year decrease of 2.68%, while net profit attributable to shareholders of listed companies was 120.826 billion yuan, a year-on-year increase of 15.27%. Profit margin data for the first quarter also improved compared to the previous year, with both gross and net profit margins rising compared to the same period last year and the full year 2025.
Basic chemical industry: Revenue and net profit continued to grow in 2025 and Q1 2026. The basic chemical industry achieved operating revenue of 2763.700 billion yuan in 2025, a year-on-year increase of 5.66%, and net profit attributable to the parent company of 131.501 billion yuan, a year-on-year increase of 9.11%. In Q1 2026, operating revenue was 742.455 billion yuan, a year-on-year increase of 17.07%; gross profit was 139.463 billion yuan, a year-on-year increase of 26.55%; and net profit attributable to the parent company was 52.411 billion yuan, a year-on-year increase of 38.04%. Looking at sub-sectors, 20 industries including lithium battery chemicals, membrane materials, and potash fertilizer achieved year-on-year growth in net profit attributable to the parent company, while 13 industries such as viscose, carbon fiber, and nylon experienced year-on-year declines.
Industry capital expenditure slows, with growth rates for projects under construction in some segments turning negative. In 2025, projects under construction in the petroleum and petrochemical industry amounted to 688.891 billion yuan, a year-on-year decrease of 7.50%. In Q1 2026, these projects totaled 710.326 billion yuan, a year-on-year decrease of 4.62%. The net fixed assets of the basic chemical industry in 2025 were 1749.853 billion yuan, a year-on-year increase of 13.02%, with the growth rate slowing by 0.60 percentage points year-on-year. In Q1 2026, the industry's fixed assets grew 11.82% year-on-year, a deceleration of 5.24 percentage points. The net value of projects under construction in the basic chemical industry in 2025 was 350.716 billion yuan, a year-on-year decrease of 20.12%, with the growth rate slowing by 23.80 percentage points year-on-year. In Q1 2026, the net value of industry projects under construction was 355.846 billion yuan, a year-on-year decrease of 14.38%, indicating a continued decline in the year-on-year growth rate, suggesting the peak of industry supply growth may be nearing its end. Examining sub-sectors, capital expenditure on projects under construction slowed year-on-year in 18 industries, including polyester fiber, potash fertilizer, and other plastic products. Considering the fixed asset situation, previous capital expenditures are gradually converting into fixed assets, while new investment amounts are progressively decreasing.
Allocation Recommendations: 1) From a medium to long-term perspective, considering demand, as marginal improvements in demand occur, leading companies in specific segments have room for profit recovery. Focus on Wanhua Chemical, Hualu Hengsheng, Huafon Chemical, Zhejiang NHU Company, Meihua Group, and Boyuan Chemical. 2) With limited new capacity additions on the supply side, awaiting marginal demand improvement, focus on specific segments such as refrigerants, polyester filament, PVC, and caustic soda. Monitor targets like Juhua Co., Ltd., Sanmei Chemical, Xinfengming Group, Tongkun Group, Zhongtai Chemical, Xinjiang Tianye, Sanyou Chemical, Jiahua Energy, Beiyuan Group, and Junzheng Group. With the phase-out of some overseas facilities, segments like oil refining and ethylene are expected to rebound. Focus on Hengli Petrochemical, Rongsheng Petrochemical, Baofeng Energy, Satellite Chemical, and Eastern Shenghong. 3) From a short to medium-term perspective, considering the closure of the Strait of Hormuz and damage to Middle Eastern facilities caused by the US-Iran conflict, focus on related targets in LNG, methanol, and ethylene glycol. Monitor Jiufeng Energy, ENN Ecological Holdings, Wankai New Materials, and Jiangsu Sopo. Additionally, phosphate fertilizer is significantly affected by rising sulfur prices, and exports during the off-season for agricultural demand are expected to be partially relaxed. It is recommended to monitor Yuntu Holdings, Yuntianhua, Xingfa Group, and Hubei Yihua.
Risk Warning: Risks of continued geopolitical deterioration; risks of significant price fluctuations in chemical products; risks of disorderly capacity expansion.
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