Industrial Securities: Chemical Industry Cycle Inflection Point Nears, Emerging Demand Drives Upgrade

Stock News12-16

Industrial Securities Co.,Ltd. released a research report stating that the chemical industry will witness dual opportunities of cyclical recovery and industrial upgrading in 2026. Chemical product prices have remained at cyclical lows for three years, with declining growth in industry construction projects and new capacity expansions nearing completion. Looking ahead to 2026, China's pro-growth policies during the initial year of the 15th Five-Year Plan, coupled with the Federal Reserve's interest rate cut cycle, are expected to drive a moderate recovery in traditional chemical demand. The "anti-involution" trend may accelerate the cyclical inflection point, benefiting core chemical assets with global competitive advantages through profit and valuation recovery.

Key takeaways from Industrial Securities Co.,Ltd. include: 1. **Supply Optimization via "Anti-Involution"**: Sub-sectors like silicones, PTA, polyester filament, caprolactam, spandex, soda ash, PVC, glyphosate, and urea—currently at profit troughs—are implementing self-discipline measures (e.g., price controls, output cuts) to restore margins. Further supply-demand rebalancing could improve earnings. 2. **Pesticide Sector Recovery**: Global pesticide channel inventories are normalizing after prolonged destocking, with selective price hikes signaling a cyclical rebound. Over the next two years, capacity rationalization will favor cost-leading players, while R&D-driven innovators gain pricing power in patented pesticides. 3. **Tire Industry’s Global Shift**: Escalating trade barriers (e.g., U.S. tariffs, EU anti-dumping probes on Chinese tires) may create pricing opportunities in 2026. Tire giants with overseas production bases could capture demand gaps and benefit from volume-price synergies. 4. **Emerging Green & Tech-Driven Demand**: Sustainable aviation fuel (SAF), bio-based plastics, CCUS, electronic resins, liquid cooling materials, and lithium battery materials thrive under Europe’s Green Deal and AI-driven computing needs. China’s "dual-carbon" policies may further catalyze growth.

**Risks**: Volatile crude oil prices, lax environmental enforcement, prolonged trade tensions, chemical price fluctuations, and无序产能扩张.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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