Zhejiang Merchants Securities: Q3 2025 Chemical Industry Volume Increases and Price Decreases, Overall Profitability Divergence

According to the report released by Zhejiang Merchants Securities, based on data from the National Bureau of Statistics, the chemical raw materials and products industry achieved revenue of 5.95 trillion yuan in the first eight months of 2025, with a cumulative year-on-year growth of 0.9%, and the growth rate has continued to decline since the beginning of the year; the total profit reached 246.1 billion yuan, a cumulative year-on-year decline of 5.5%; the profit margin was 4.14%, down 0.35 percentage points compared to the same period in 2024, reaching a historical low; inventory stood at 1.02 trillion yuan, a year-on-year increase of 2.2%, of which finished goods inventory was 470 billion yuan, a year-on-year increase of 5.1%. The real estate downturn and weak recovery in domestic demand, along with tariff impacts on external demand, have led to an increase in chemical product volume but a decrease in price. Under the overall pressure of overcapacity, significant differentiation is evident among different chemical sub-industries. In Q3 2025, the price differentials of major chemical products showed some divergence. The main viewpoints of Zhejiang Merchants Securities are as follows: Overall Industry: Volume increases, prices decrease, overall profitability declines in Q3 According to data from the National Bureau of Statistics, the chemical raw materials and products industry achieved revenue of 5.95 trillion yuan in the first eight months of 2025, with a cumulative year-on-year growth of 0.9%, and the growth rate has continued to decline since the beginning of the year; the total profit reached 246.1 billion yuan, a cumulative year-on-year decline of 5.5%; the profit margin was 4.14%, down 0.35 percentage points compared to the same period in 2024, reaching a historical low; inventory stood at 1.02 trillion yuan, a year-on-year increase of 2.2%, of which finished goods inventory was 470 billion yuan, a year-on-year increase of 5.1%. The real estate downturn and weak recovery in domestic demand, along with tariff impacts on external demand, have led to an increase in chemical product volume but a decrease in price. As of September 30, 2025, the China Chemical Product Price Index (CCPI) was 3958 points, down 8.1% from the beginning of the year and down 10% year-on-year. In August 2025, the year-on-year changes in the PPI for chemical raw materials and products, chemical fibers, rubber, and plastics were -5.7%, -9.3%, and -2.6%, respectively. The industry's prosperity continues to decline, and investment growth is slowing. In August 2025, the investment growth rates for fixed assets in chemical raw materials and products and chemical fibers were -5.2% and 9.3%, respectively. Chemical Products: Overall pressure, structural differentiation Under the overall pressure of overcapacity, significant differentiation is evident among different sub-industries. Sub-industries with good price performance are mainly concentrated in those with less pressure on capacity growth, such as refrigerants, essential and supply-concentrated sub-industries like phosphate and potassium fertilizers, food and feed additives, certain small varieties of pesticides, and sub-industries focused on domestic demand or import substitution, such as modified plastics, synthetic resins, and compound fertilizers. In Q3, the price differentials of major chemical products showed some divergence. According to Baichuan Yingfu and Wind data, as of September 26, 2025, the proportions of major chemical products in Q3 2025 with average prices that increased, remained the same, and decreased were 29%, 3%, and 68%, respectively. Among them, the top five products with the highest month-on-month price increases were TDI, epoxy chloropropane, accelerator D, R32, and glyphosate, with increases of 25.7%, 21.4%, 15.6%, 15.2%, and 13.2%, respectively. Additionally, as of September 26, 2025, the proportions of major chemical products in Q3 2025 with average price differentials that increased, remained the same, and decreased were 42%, 0%, and 58%, respectively. Among them, the top five products with the highest month-on-month price increases were calcium carbide PVC, TDI, R32, glyphosate, and R134a, with increases of 62.1%, 38.7%, 24.2%, 17.9%, and 14.0%, respectively Industry Perspective: Optimistic about Sub-industries with Supply and Demand Improvement and Import Substitution New Materials Against the backdrop of declining external demand and weak but stable domestic demand, it is expected that opportunities in the chemical industry will come more from the supply side: 1. Supply-restricted categories such as resource products: phosphate fertilizer and potassium fertilizer; 2. License categories: refrigerants, civil explosives, hazardous chemicals; 3. Sub-industries with significant anti-involution potential: viscose staple fiber, polyester filament, etc.; 4. New materials, especially new materials for import substitution, with strong certainty in demand growth, optimistic about high-speed resins, fluorinated liquids, nucleating agents, etc. Risk Warning Risks of raw material price fluctuations, risks of demand falling short of expectations, risks of safety incidents