The chemical sector continued its upward trend today (December 22), with the Chemical ETF (516020), reflecting the overall performance of the sector, trading in positive territory after opening and rising nearly 1% intraday. As of the latest update, it gained 0.61%.
Among constituent stocks, shares in petrochemicals, fluorochemicals, and lithium battery sectors led the gains. Rongsheng Petrochemical and Hengyi Petrochemical both surged over 4%, while Enjie Co. rose more than 3%. Other stocks like Do-Fluoride, Kingfa Sci & Tech, and Salt Lake Co. followed with increases exceeding 2%.
On the news front, Wanhua Chemical Group Co.,Ltd., a leading player in the chemical industry, recently signed an investment agreement with Laizhou City for the "Wanhua Laizhou Green Power Industrial Park" project during the Shandong Green and Low-Carbon High-Quality Development Conference. This industrial park represents a key strategic move by Wanhua Chemical in the new materials sector. According to the plan, Wanhua will invest in constructing an annual 650,000-ton lithium iron phosphate (LFP) project in Laizhou.
Incomplete statistics show Wanhua Chemical's planned LFP capacity has exceeded one million tons. The first phase of its 50,000-ton LFP integrated project in Meishan, Sichuan, has already commenced production. In August, Wanhua disclosed an environmental impact assessment for expanding its LFP capacity from 50,000 to 120,000 tons annually. Additionally, the company announced a 30,000-ton LFP retrofit project.
From a valuation perspective, the chemical sector remains attractively priced. Data shows that as of the previous trading day (December 19), the price-to-book ratio of the Chemical ETF (516020)'s benchmark index stood at 2.44x, near the 44.71% percentile over the past decade, highlighting its long-term investment appeal.
Looking ahead to 2026, Guohai Securities noted that the chemical industry's valuation is at a historical low, with Chinese chemical-listed companies expected to significantly improve dividend payouts, offering high potential yields. The firm believes the sector is entering an attractive investment phase, driven by global supply restructuring and AI-driven demand cycles.
Dongxing Securities pointed out that China's chemical industry is poised for a bottom-up recovery. While the chemical price index may see slight fluctuations in 2025, the sector remains in a low-activity phase. However, declining global energy costs, slower supply-side investment growth, and policy-driven capacity rationalization are expected to improve conditions. Demand is projected to recover modestly in traditional sectors, with emerging industries providing incremental growth, alongside signs of inventory replenishment. The firm is optimistic about supply-demand improvements in titanium dioxide, pesticides, chemical fibers, and refrigerants.
For investors seeking exposure to the chemical sector's rebound, the Chemical ETF (516020) offers an efficient option. The ETF tracks the CSI Segmented Chemical Industry Index, covering various sub-sectors. Nearly half of its holdings focus on large-cap leaders like Wanhua Chemical and Salt Lake Co., while the remainder targets niche segments such as phosphate fertilizers, fluorochemicals, and nitrogen fertilizers. Off-exchange investors can also participate through the ETF's feeder funds (Class A: 012537 / Class C: 012538).
Source: SSE, SZSE, as of December 22, 2025.
Risk Disclosure: The Chemical ETF passively tracks the CSI Segmented Chemical Industry Index (base date: December 31, 2004; launch date: April 11, 2012). Index constituents are adjusted per its rules, and past performance does not guarantee future results. Mentioned stocks are for illustrative purposes only and do not constitute recommendations. All information provided is for reference, and investors bear responsibility for their decisions. Views expressed do not constitute investment advice, and no liability is accepted for losses arising from reliance on this content. Investors should review fund documents to assess risks and suitability. The fund is rated R3 (moderate risk) and suitable for balanced (C3) or higher-risk investors. Fund registration does not imply regulatory endorsement of its value or prospects. Invest with caution.
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