Basic Chemicals: Seasonal price increase is worth attention

In September, the demand for chemical products entered the traditional peak season, and high oil prices pushed prices of some products to rebound recently. Excessive production capacity led to less sustained improvement in demand, maintaining the industry neutral rating. The pesticide industry is greatly affected by environmental protection and the demand is steadily increasing. The focus is on the limited production capacity. The spandex industry will have no new production capacity next year. Consumption upgrades will increase the demand growth rate. In the third quarter of the spandex season, prices are expected to remain strong. It is recommended that investors focus on them. The government has stepped up the transformation of the city's gas pipeline network, and the demand for PE gas pipelines is expected to increase substantially, with the focus on the industry’s leading Pearl of Ganzhou.

Spandex dyes continue to be strong and hot spots for new materials are frequent. The basic chemical index fell by 0.24% last week, and the relative return rate was 0.96%. The rising blocks are mainly daily chemicals, new materials, spandex and tyres, with yields of 7.3%, 6.2%, 6% and 5.1% respectively. The high growth of the GEM has driven the popularity of new materials-related stocks. September entered the peak season for demand for chemical products, and price performance of varieties such as spandex and dyes continued to be strong. Dragged by Yizheng Chemical Fiber Co., Ltd., the polyester plate segment was among the top decliners, while the potash fertilizer and polyurethane segment continued to decline, falling by 3.5%, 3.5% and 1.7% respectively.

Looks good at *** and spandex. In September, the demand for chemical products entered the traditional peak season, and high oil prices pushed prices of some products to rebound recently. Excessive production capacity led to less sustained improvement in demand, maintaining the industry neutral rating. Severe environmental protection policies have a greater impact on the supply of pesticides and dyes, and the demand is steadily increasing. The focus is on recommending limited capacity production. The price increase is more persistent and more space-consuming. The spandex industry will have no new production capacity next year. Consumption upgrades will increase the demand growth rate. In the third quarter of the spandex season, prices are expected to remain strong. It is recommended that investors focus on them. The government has stepped up the transformation of the city's gas pipeline network, and the demand for PE gas pipelines is expected to increase substantially, with the focus on the industry’s leading Pearl of Ganzhou. In the medium to long term, new materials are still the future direction of chemical development, and they are relatively optimistic about the display materials, lithium batteries and photovoltaic materials industry.

International fertilizer stocks fell, pesticide stocks rose slightly. Last week, the international chemical fertilizer company fell, pesticide companies micro-Zhang, fine chemicals rose among the top. The larger chemical stocks were Dow (5%), WACKER (4.8%), Satellit (3.2%), Arkema (2.9%) and Daikin (2.8%). The larger declines in chemical stocks were TERRA (-3.9%), Hitachi Chemical (-3.6%), Stella (-2.4%) and Mesa (-2.3%). The PE averages of the tracked international chemical stocks for 2012-2014 were 16.7/21.2/15 times respectively and the average PB was 2.7 times.

Risk Warning: The economic recovery is lower than expected, the risk of commodity price fluctuations, and environmental risks.