【Market Trend Report】Prices of multiple key chemical products rise significantly, and the prosperity of the chemical sector is expected to gradually confirm.

The three major A-share indices opened lower today but ended higher. By the close, the Shanghai Composite Index rose by 0.63%, the Shenzhen Component Index increased by 1.13%, and the ChiNext Index gained 0.71%. The combined turnover of the Shanghai, Shenzhen, and Beijing markets exceeded 1.8 trillion yuan, continuing to shrink by nearly 100 billion from yesterday. Most industry sectors saw gains, with energy metals, chemical pharmaceuticals, medical services, agricultural chemicals, small metals, biological products, rare earths, chemical raw materials, non-ferrous metals, and precious metals leading the increases, while the insurance and banking sectors saw significant declines. In terms of individual stocks, the number of rising stocks exceeded 4,300, with nearly a hundred hitting the daily limit.

According to media reports, the escalation of geopolitical conflicts in the Middle East has disrupted shipping in the Strait of Hormuz, pushing international crude oil prices higher. At the same time, according to data from the business community and industry reports, prices of key chemical products have significantly increased, with methanol prices in the southwest market rising by about 38.9% since the end of February, bromine prices increasing by over 50% within the month, and fertilizer products such as urea and potash also seeing general price hikes since March.

Additionally, chemical giant BASF recently announced that it will raise prices for its general amine product line in Europe, with increases of up to 30%, and some products potentially seeing even higher increases. This price adjustment is effective immediately and may be implemented under existing contract terms. It is reported that the price increase affects products including ethanolamines, ethyleneamines, isopropanolamines, and dimethylformamide, which will have a comprehensive impact on the electronics, agricultural chemicals, and pharmaceutical industries. Notably, this is BASF’s fifth price increase announcement on its official website since the start of the conflict in the Middle East nearly a month ago. The company also reiterated in the announcement that this price increase is primarily due to the significant rise in raw material, energy, and logistics costs caused by the military conflict in the Middle East.

Industrial Securities believes that the geopolitical conflict is reshaping the global chemical supply landscape, with leading Chinese companies demonstrating resilience through cost and integration advantages. Guojin Securities points out that persistently high oil and gas prices are exceeding expectations, with linked impacts beginning to gradually manifest. The sustained high oil and gas prices are likely to continue for the foreseeable future, making it difficult for the chemical industry to quickly recover, and the duration of this impact is expected to be significantly prolonged.

Industrial Securities: Leading Chinese companies demonstrate resilience through cost and integration advantages

The geopolitical conflict is reshaping the global chemical supply landscape, with leading Chinese companies demonstrating resilience through cost and integration advantages. In the medium to long term, as the growth rate of projects under construction declines, coupled with policy changes and a rate-cutting cycle, sub-sectors such as PTA and soda ash are expected to experience profit recovery, while opportunities lie in overseas expansion and new demand sectors.

Guojin Securities: The impact of high oil and gas prices on the chemical industry is difficult to eliminate in the short term

Persistently high oil and gas prices are exceeding expectations, and linked impacts are gradually becoming apparent. The sustained high oil and gas prices are likely to continue for the foreseeable future, making it difficult for the chemical industry to quickly recover, and the duration of this impact is expected to be significantly prolonged. The focus of this local conflict is gradually shifting towards the passage through the Strait of Hormuz, where transportation restrictions have led to significant cost increases, Middle Eastern product exports being suppressed, and rising oil and gas prices forcing production cuts, with the impact further magnifying as the halt extends.

Founder Securities: The chemical sector’s recovery validation is expected to gradually arrive

From this year’s price increase rhythm, the cyclical price increase trades have started to become active, and the price increase chain at least has short-term monthly level opportunities for momentum. Attention can be given to basic chemicals and other pro-cyclical directions. The overarching policy backdrop for the chemical sector is “anti-involution,” while on the industry side, there is structural high growth in emerging demand industries, and on the supply side, there are factors such as domestic capital expenditure contraction and European capacity exit, hence recovery validation is expected to gradually arrive.

Kaiyuan Securities: Profitability of chemical products is expected to improve

Geopolitical fluctuations and strengthened supply constraints are expected to open up new opportunities for Chinese chemicals. From a mid-term perspective, the global destocking is nearing its end, and a rebound in restocking and demand can be expected. The current energy crisis has significantly reduced the operating rates of global chemical companies; however, end-user rigid demand has not disappeared, and the industry is undergoing a large-scale global destocking cycle. After the geopolitical conflict eases, the global chemical industry is expected to welcome a certain restocking cycle, combined with market expectations of a rebound in end-user demand, which is likely to improve the profitability of chemical products.

Galaxy Securities: Bromine prices are likely to rise subsequently

With the escalation of geopolitical conflicts in the Middle East, there is a possibility that some bromine production facilities in Israel may experience temporary reductions in capacity or shutdowns, leading to supply gaps for bromine. On the other hand, transportation costs for bromine exports from Israel and Jordan will significantly rise, and there is considerable uncertainty in bromine transport cycles, which is likely to raise the price center of bromine.

Guohai Securities: Chemicals enter a favorable zone

Chemicals are entering a favorable zone, with optimism about the global supply “anti-involution” mega cycle and the global AI demand mega cycle. With the peak season for chemicals approaching, upward demand will become a key marginal variable, enhancing the profitability of chemical companies. At this time, investment opportunities that focus on demand, value, and supply should be prioritized.

(This article does not constitute any investment advice. Investors act at their own risk. The market has risks, and investment requires caution.)

(Source: Dongfang Caifu Research Center)