--- title: "Industrial Securities: The chemical industry is still in the bottom range, suggesting a focus on areas with relatively certain prospects" type: "News" locale: "en" url: "https://longbridge.com/en/news/240961890.md" description: "Industrial Securities released a research report indicating that the chemical industry is still at the bottom range. It is recommended to focus on relatively certain areas, including leading companies with core competitive advantages, the demand-inelastic agricultural chemical industry, and domestic substitution opportunities in new chemical materials. It is expected that leading white horse companies will maintain continuous growth in market share and profitability during the current expansion cycle. Recommended companies to pay attention to include Wanhua and HUALU-HENGSHENG" datetime: "2025-05-20T06:10:06.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/240961890.md) - [en](https://longbridge.com/en/news/240961890.md) - [zh-HK](https://longbridge.com/zh-HK/news/240961890.md) generator: "portal-rs" --- # Industrial Securities: The chemical industry is still in the bottom range, suggesting a focus on areas with relatively certain prospects According to the Zhitong Finance APP, Industrial Securities has released a research report stating that the chemical industry is still in the bottom range: from the perspective of price spreads, most chemical product prices and spreads are still bottoming out; on the demand side, the country places great importance on the economy, waiting for policies to strengthen and consolidate the economic stabilization and recovery trend, while overseas there is uncertainty under the influence of U.S. tariff policies; on the supply side, the existing capacity utilization rate overseas is limited, capital expenditure is slowing down and mostly directed towards specialty chemicals; domestically, the capacity under construction is gradually being released, and the supply growth rate has significantly slowed down. Overall, the industry is operating at the bottom, and the firm suggests focusing mainly on the relatively certain chemical sectors: 1) leading blue-chip companies with core competitive advantages; 2) rigid demand in agricultural chemicals and the civil explosives industry benefiting from western development; 3) domestic substitution opportunities in new chemical materials; 4) opportunities for price increases after some products hit bottom. ## The main points of Industrial Securities are as follows: **Stick to the long-term value of blue-chip companies, as core chemical assets are expected to welcome profit and valuation recovery** Currently, chemical product prices and spreads are at the bottom, and the valuations of leading blue-chip companies have also fallen to bottom levels. From the performance estimates of leading companies at the bottom of the cycle, this valuation has a strong safety margin. Coupled with the obvious advantages of integration, scale, and cost in the supply chain of leading blue-chip companies, and sufficient reserve projects, there is hope for maintaining market share and continuous profit growth during the current expansion cycle in the medium to long term. Key recommendations include core assets of chemical companies and leading companies in related sub-industries: Wanhua, HUALU-HENGSHENG, Huafeng Chemical, Longbai Group, Yangnong Chemical, Xinhongcheng, Satellite Chemical, Baofeng Energy, Hengli Petrochemical, Rongsheng Petrochemical, etc. **Under the background of external environmental fluctuations, the certainty of chemical sub-industries related to rigid demand/domestic demand is highlighted** (1) The agricultural chemical industry has rigid demand, with steady growth in grain planting area, and compound fertilizers entering a volume and profit recovery channel, while the long-term logic of increasing concentration among leading companies continues to be realized; overseas pesticide inventory is being reduced, and prices of segmented pesticide categories are expected to rebound from the bottom. Recommendations include: Xinyangfeng, Stanley, Yangnong Chemical, etc. (2) The civil explosives industry is driven by domestic demand, with strong incremental demand in Xinjiang, Tibet, and other regions, while the supply side is under strict constraints, and the concentration of the industry is continuously increasing, allowing leading companies to fully benefit. Recommendations include: Guangdong Hongda, Yipuli, Xuefeng Technology, etc. **Under the backdrop of trade tariffs and antitrust, the domestic substitution of new chemical materials is accelerating** (1) Adsorption separation materials have wide downstream applications, with high-end products such as chromatography media and ultra-pure water purification resins being monopolized by overseas companies. Innovative leading companies are promoting the process of domestic substitution, recommendations include: Lanxiao Technology. (2) The global supply pattern of lubricant components is being reshaped, and under the backdrop of tariffs, the price increase of imported products may further accelerate domestic industrial upgrades and domestic substitution, recommendations include: Ruifeng New Materials, Lianlong, etc. (3) OLED materials and equipment benefit from the continuous increase in OLED penetration and the advancement of domestic high-generation production line construction, with domestic patented materials breaking overseas monopolies, recommendations include: Aolaide, Lite-On Optoelectronics. (4) Photoresists are important upstream raw materials for chip production, with a low domestic substitution rate for high-end photoresists. Under the context of self-control, the industry chain is ushering in development opportunities, recommendations include: Tongcheng New Materials, Dinglong Co., Ltd., Bayi Shikong **In the bottom area, it is recommended to pay attention to the price bottoming opportunities for some products after the price hits the bottom.** (1) Sub-industries where supply growth is slowing down or may be constrained by policies are expected to see improvements in profitability. For example, the organic silicon industry, where demand in emerging fields is growing rapidly and supply is nearing its end; the spandex industry, where the current round of new capacity may be nearing its end, and the industry's profitability center is expected to rebound; and chemical sub-industries such as phosphorus chemical, chlor-alkali chemical, and titanium dioxide, which are high energy-consuming and high-polluting, have good industry synergy and are continuously losing money, are likely to be constrained by policies promoting energy conservation and carbon reduction. (2) A phase adjustment and bottoming of oil prices may bring strategic layout opportunities in the petrochemical industry. Currently, both supply and demand sides are suppressing expectations for oil prices, but the cost curve of U.S. shale oil may provide some support for oil prices. It is recommended to pay attention to the phased release of oil price risks and the strategic layout opportunities in the refining and downstream polyester filament industries after hitting the bottom. **Risk Warning:** Risks of significant fluctuations in crude oil prices, risks of environmental policy enforcement being less than expected, risks of ongoing deterioration in trade frictions, risks of significant fluctuations in chemical product prices, and risks of disorderly capacity expansion ### Related Stocks - [600426.CN](https://longbridge.com/en/quote/600426.CN.md) - [600309.CN](https://longbridge.com/en/quote/600309.CN.md) - [601377.CN](https://longbridge.com/en/quote/601377.CN.md) - [900908.CN](https://longbridge.com/en/quote/900908.CN.md) - [688181.CN](https://longbridge.com/en/quote/688181.CN.md) - [SWK.US](https://longbridge.com/en/quote/SWK.US.md) - [300596.CN](https://longbridge.com/en/quote/300596.CN.md) - [000902.CN](https://longbridge.com/en/quote/000902.CN.md) - [002064.CN](https://longbridge.com/en/quote/002064.CN.md) - [300910.CN](https://longbridge.com/en/quote/300910.CN.md) - [002588.CN](https://longbridge.com/en/quote/002588.CN.md) - [002601.CN](https://longbridge.com/en/quote/002601.CN.md) - [002648.CN](https://longbridge.com/en/quote/002648.CN.md) - [002493.CN](https://longbridge.com/en/quote/002493.CN.md) - [688150.CN](https://longbridge.com/en/quote/688150.CN.md) - [600989.CN](https://longbridge.com/en/quote/600989.CN.md) - [600346.CN](https://longbridge.com/en/quote/600346.CN.md) - [600486.CN](https://longbridge.com/en/quote/600486.CN.md) - [600618.CN](https://longbridge.com/en/quote/600618.CN.md) - [300054.CN](https://longbridge.com/en/quote/300054.CN.md) - [603650.CN](https://longbridge.com/en/quote/603650.CN.md) - [603227.CN](https://longbridge.com/en/quote/603227.CN.md) - [688378.CN](https://longbridge.com/en/quote/688378.CN.md) - [300487.CN](https://longbridge.com/en/quote/300487.CN.md) - [002001.CN](https://longbridge.com/en/quote/002001.CN.md) ## Related News & Research - [Shandong Hualu-Hengsheng Chemical: Net profit jumped 49.98% YoY on higher sales and prices, with robust cash flow and dividend payout](https://longbridge.com/en/news/296366800.md) - [Bill Ackman Loves This Dividend Stock, But You Should Give It a Pass](https://longbridge.com/en/news/296545633.md) - [Money Managers Turn Bullish On China Despite Mounting Economic Woes](https://longbridge.com/en/news/296554795.md) - [Fast fashion giant Shein valued at up to US$27 billion in Hong Kong IPO](https://longbridge.com/en/news/296723161.md) - [YMTC's STAR Mkt IPO Application Accepted, w/ Plans to Raise RMB33B](https://longbridge.com/en/news/296724109.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**