Geopolitical conflicts are indeed introducing uncertainty into global energy and resource supply, while simultaneously altering the supply-demand dynamics and pricing logic for certain chemical products. The firm has specifically analyzed the core investment rationale for four key commodities—sulfur, crude oil, strontium carbonate, and methanol—within the current environment.
Sulfur is emerging as a long-term bullish commodity following geopolitical conflicts. As a by-product of oil refining, short-term supply-side variables are centered on attacks on Russian refineries. According to China United Metals, these attacks are expected to impact 1 million tonnes of Russian sulfur supply in Q4, with a full recovery unlikely before the first half of 2026. Long-term structural adjustments in global refining capacity, driven by peaking gasoline and diesel demand and rising carbon costs, suggest sulfur supply growth will gradually plateau. On the demand side, China's lithium iron phosphate production is projected to exceed 3.6 million tonnes in 2025, an increase of 1.1 million tonnes from 2024, corresponding to an additional 1.06 million tonnes of sulfur demand. Furthermore, Indonesia is set to commission approximately 658,000 tonnes of MHP capacity in 2026, requiring an incremental 6.58 million tonnes of sulfur, thereby intensifying supply tightness. The convergence of solid-state battery technology towards sulfide electrolytes, where lithium sulfide constitutes 82% of the cost, potentially unlocks significant long-term growth potential for sulfur. Overall, sulfur is projected to face supply deficits of -0.3 million, -5.13 million, and -4.05 million tonnes from 2025 to 2027, respectively, with prices potentially testing historical highs. Investors are advised to focus on three sulfur sources: ① Pyrite: firms like Yuegui Shares, Liuguo Chemical, Chuanjin Luo, Huilong Shares, and Sierte; ② Large-scale Refining: such as Sinopec, PetroChina, Rongsheng Petrochemical, and Hengli Petrochemical; ③ Sulfur Recovery: including Sanwei Chemical and Zhenhai股份.
Crude oil is caught in a tug-of-war between geopolitical risk premiums and fundamentally loose market conditions. The fundamental oversupply is expected to persist into 2026, primarily driven by production growth from non-OPEC+ countries (e.g., Brazil, Guyana) and sluggish global oil demand growth. Despite this loose backdrop, geopolitical conflicts (e.g., in the Middle East, potential U.S. military intervention in Venezuela) inject significant risk premiums, causing prices to deviate sharply from fundamentals in the short term. The bank believes that while the surplus may persist, it is likely to moderate, with oil prices potentially bottoming out and recovering. Key supply-side factors to watch include the actual implementation of OPEC+ production increases and output growth from U.S. shale. On the demand side, China's inventory replenishment rhythm is crucial. Suggested stocks to watch include Sinopec, PetroChina, and CNOOC.
Strontium carbonate is an elastic commodity highly sensitive to U.S.-Iran geopolitical tensions. China's strontium ore supply is heavily import-dependent, with 70% originating from Iran. Geopolitical risks significantly amplify supply uncertainty. Given sustained U.S. pressure on Iran, short-term supply uncertainty for celestite, the raw material for strontium carbonate, has surged. Further escalation could severely restrict maritime exports, potentially creating a substantial shortage of celestite in China. Downstream consumption is primarily divided into strontium ferrite (66.0%), metallurgy (6.9%), electronic components (3.3%), pyrotechnics (2.1%), and other strontium salts (21.7%). Due to its excellent conductivity, stability, and properties as an additive that enhances the refractive index, light transmittance, and UV resistance of glass, strontium carbonate shows potential in manufacturing high-quality optical glass and even glass substrates for advanced packaging. The bank anticipates a trend towards smarter, higher-end applications for strontium carbonate, which could accelerate demand growth. Recommended stocks include Jinrui Mining and Hongxing Development.
Methanol faces significantly amplified supply risks due to geopolitical disturbances involving Iran. China maintains a high import dependence on Iranian methanol. From January to November 2025, China imported 814,700 tonnes of methanol from Iran, accounting for 6.4% of total methanol imports; when including transshipments via countries like the UAE, Iranian methanol constitutes about 34% of China's total methanol imports. Historical precedent shows that instability in Iran has a pronounced pass-through effect on domestic methanol prices. For instance, during the Iran-Israel conflict in June 2025, Iran cut gas-based chemical feedstock supply for two weeks, directly driving up Chinese port methanol prices by 300 RMB/tonne, breaching the 2,700 RMB/tonne mark. Amid the current escalation of tensions in Iran, port methanol prices have already demonstrated relative strength. Stocks to watch include Jinniu Chemical, Huayi Group, CNOOC Chemical, and China XLX Fertiliser.
Risk warnings include macroeconomic downturn risks, significant raw material price fluctuations, weaker-than-expected downstream demand, risks from substantial capacity expansion, production safety and environmental risks, corporate operational risks, and policy uncertainty risks.
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