The chemical sector continued its aggressive advance today (January 6th)! The Chemical ETF (516020), which reflects the overall trend of the chemical sector, experienced a rapid upward movement after the market opened, with its intraday price reaching a maximum gain of 2.36%. As of this writing, it is up 2.03%.
In terms of constituent stocks, shares in sectors such as chlor-alkali, refining and petrochemicals, and polyurethanes led the gains. As of this writing, Junzheng Group surged over 7%, Hengli Petrochemical rose over 6%, Hengyi Petrochemical gained over 5%, while Wanhua Chemical Group Co.,Ltd., Salt Lake Co., Ltd., Tongkun Group, and several other stocks followed with increases exceeding 4%.
On the news front, Wanhua Chemical has successively raised the global prices of core products like MDI/TDI since December 2025, aligning with price adjustments from international giants such as BASF and Dow. Industry-wide concentrated maintenance and rising raw material costs are driving polyurethane prices higher. Concurrently, the China Sulfuric Acid Industry Association, jointly with the Phosphate & Compound Fertilizer Industry Association, held a meeting to ensure supply and stabilize prices, explicitly prioritizing the allocation of sulfuric acid resources to phosphate fertilizer production to stabilize the supply of agricultural materials for the spring planting season.
Kaiyuan Securities pointed out that, driven by "anti-involution" policies, the chemical industry is expected to experience a dual boost in both earnings and valuations. On the supply side, the construction-in-progress for listed basic chemical companies has decreased by 10% year-on-year, indicating that capital expenditure is nearing its end. On the demand side, domestic efforts to stimulate internal demand are ongoing, and export resilience remains strong. The industry's supply-demand dynamics are improving, and the pace of recovery, propelled by "anti-involution" measures, may accelerate, potentially initiating an upward cycle in industry prosperity.
Looking ahead, China Galaxy Securities stated that since 2024, capital expenditure in the chemical industry has turned negative. With the wave of "anti-involution" and the accelerated phase-out of outdated overseas production capacity, a contraction on the supply side is anticipated. Recommendations from the 15th Five-Year Plan, which emphasize "persisting in expanding domestic demand," set the tone for the next five years. Coupled with the commencement of the US interest rate cut cycle, demand space for chemical products is opening up. The brokerage believes that a bottom in both supply and demand is essentially established, and strong policy expectations are acting as a powerful catalyst. The chemical industry may witness an upward cyclical turning point in 2026, initiating a "Davis Double Play" from valuation repair to earnings growth.
How can investors capture the rebound opportunities in the chemical sector? Utilizing the Chemical ETF (516020) might offer a more efficient approach. Public information shows that the Chemical ETF (516020) tracks the CSI Segmented Chemical Industry Theme Index, providing comprehensive coverage across various chemical sub-sectors. Nearly half of its allocation is concentrated in large-cap leading stocks, including Wanhua Chemical Group Co.,Ltd. and Salt Lake Co., Ltd., allowing investors to participate in the "strong get stronger" investment theme. The remaining half of the allocation is spread among leading stocks in sub-sectors such as phosphate fertilizers and phosphorus chemicals, fluorochemicals, and nitrogen fertilizers, offering a holistic grasp of investment opportunities within the chemical sector. Off-exchange investors can also access the chemical sector through the Chemical ETF Connect Fund (Class A: 012537 / Class C: 012538).
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