Group 1 - The chemical sector continues to rebound, with the Chemical ETF (516020) opening high and experiencing a maximum intraday increase of 1.79%, closing with a gain of 1.48% [1][7] - Key stocks in the sector include Zhejiang Longsheng, which surged by 9.5%, and Tongcheng New Materials, which rose by 4.86%, along with several others exceeding 3% gains [1][7] - The Chemical ETF tracks a specialized index that includes popular stocks in sectors like new energy, which are expected to benefit significantly from the ongoing growth in electric vehicle sales [9][10] Group 2 - According to Zhongyuan Securities, the ongoing anti-involution policies are expected to strengthen supply-side constraints in the industry, benefiting certain sub-sectors such as chlor-alkali, pesticides, and polyester filament [10] - Guohai Securities notes that the anti-involution measures may lead to a revaluation of the Chinese chemical industry, with potential for increased cash flow and dividend yields as capacity expansion slows [10] - The Chemical ETF (516020) is suggested as an efficient way to capitalize on the rebound in the chemical sector, covering themes like AI computing power and new energy [10][11] Group 3 - Recent data from the Ministry of Commerce indicates that as of February 5, 2026, there were 335,000 applications for the vehicle trade-in subsidy, driving new car sales to 53.77 billion yuan, which supports market development and resource recycling [8][9] - The average price of new cars participating in the trade-in program exceeded 160,000 yuan, showing a significant increase compared to the previous year, while the number of scrapped vehicles reached 659,000, a year-on-year increase of 50.2% [8][9]

Investment Rating - The report rates the industry as "Outperform" [8] Core Insights - The domestic spandex consumption is expected to reach 1.088 million tons by 2025, with a significant year-on-year growth of 7.55%, and a compound annual growth rate (CAGR) of 13.68% from 2022 to 2025 [1][30] - The spandex industry is currently experiencing a price and margin bottoming out, with prices as of January 23, 2026, at 23,000 yuan per ton, marking a historical low since 2010 [1][7] - The demand for spandex is driven by the growth of high spandex content apparel, particularly in sportswear and underwear, as consumer preferences shift towards comfort and quality [30][68] Summary by Sections 1. Spandex Product Overview - Spandex, known as polyurethane fiber, is characterized by its exceptional elasticity, capable of stretching 400%-800% and maintaining a recovery rate of over 95% even after being stretched five times [2][14] - The production process is dominated by dry spinning technology, which accounts for over 80% of the total production [19][25] 2. Supply and Demand Balance - The spandex production capacity in China is projected to reach 1.498 million tons by the end of 2025, with a significant concentration of production in the western regions due to energy cost advantages [30][49] - The demand for spandex is expected to grow steadily, driven by the increasing proportion of spandex in high-content apparel, particularly in sportswear and underwear [30][56] 3. Price and Cost Analysis - Current spandex prices and margins are at historical lows, with expectations for recovery as supply expansion approaches its end and demand continues to grow [7][28] - The main raw material costs account for over 40% of production costs, impacting overall profitability [21][30] 4. Related Companies - Key players in the spandex industry include Huafeng Chemical, Xinxiang Chemical Fiber, and Taihe New Materials, with significant market shares and production capacities [44][51]

Market Overview - As of February 6, 2026, the China Petroleum Industry Index (H11057) rose by 2.00%, with key stocks such as Zhejiang Longsheng up 6.18%, Hengyi Petrochemical up 5.01%, and Rongsheng Petrochemical up 4.93% [1] - The Petrochemical ETF (159731) increased by 1.82%, with a latest price of 1.0 yuan and a turnover rate of 10.86% during the trading session [1] - The Petrochemical ETF attracted a total of 1.447 billion yuan in inflows over the past 20 trading days [1] Key News - The previous trading day saw fuel oil prices fluctuate upwards, closing above the moving average. In the Singapore fuel oil spot market, PetroChina and BP purchased three ships of 20,000 tons each of 380cst high-sulfur fuel oil from Sinopec, Shell, and Canon for loading between February 19-23 [2] - The PVC main contract fell by 2.18%, with spot prices decreasing by 40-50 yuan/ton. The price trend and inventory depletion speed depend on the recovery of demand post-Spring Festival. If downstream projects like infrastructure can effectively start, inventory pressure may gradually ease [2] - As of the end of January 2026, domestic PVC social inventory was 1.2064 million tons, a week-on-week increase of 2.45% and a year-on-year increase of 60.54% [2] Global Refining Activity - As of the week ending February 6, global refinery shutdowns totaled approximately 5.4 million barrels per day, a decrease of about 880,000 barrels per day from the previous week, primarily driven by the resumption of activities in Asia [3] - Future global refinery shutdowns are expected to slightly decrease to just above 5 million barrels per day, largely dependent on the restart timing of the Dangote refinery, a key uncertainty in Africa [3] Geopolitical Focus - The situation in Iran is under market scrutiny, with plans for continued negotiations and a significant decrease in the probability of U.S. actions against Iran, leaving Iranian oil supply and the Strait of Hormuz unaffected [3] - The Russia-Ukraine situation shows no significant progress in ceasefire agreements, with ongoing negotiations under pressure from sanctions and reduced Indian purchases affecting Russia's financial position [3] Institutional Insights - CICC believes that the next expected turning point in the oil market may be the production peak of U.S. shale oil, with potential for substantial improvement in market oversupply in the second half of the year, which could provide marginal cost guidance and upward price movement opportunities [4] Popular ETFs - The Petrochemical ETF (159731) and its linked funds (017855/017856) track the China Petroleum Industry Index, focusing on "big energy" security logic. They not only share profits from downstream chemical products but also secure upstream resource value through high allocations to leading refining companies, demonstrating stronger performance resilience during oil price upcycles [5]

Investment Rating - The report maintains an "Optimistic" rating for the chemical industry [4] Core Insights - The chemical sector's profitability is under pressure due to rising costs and impairment impacts, but a recovery is expected as capital expenditures near completion and demand stabilizes [3][4] - Key investment opportunities are identified in the agricultural chain, textile chain, export chain, and sectors benefiting from "anti-involution" policies [4] Summary by Relevant Sections Industry Overview - In Q4 2025, oil prices declined, negatively impacting demand and leading to lower chemical prices, while gas prices increased [3] - The average Brent spot price was $63.98 per barrel, down 15% year-on-year, while NYMEX natural gas futures rose 36% year-on-year [3] Profit Forecasts - The weighted average EPS for 2025 is projected at 0.90 yuan, a 15% increase year-on-year, with Q4 EPS expected at 0.20 yuan [3] - Significant profit growth is anticipated in sectors such as pesticides, compound fertilizers, potassium fertilizers, chromium chemicals, and fluorochemicals [3] Key Companies and Their Projections - Wanhua Chemical is expected to achieve a net profit of 12.16 billion yuan in 2025, with Q4 profit at 3 billion yuan [3][4] - Salt Lake Industry is projected to reach 8.5 billion yuan in 2025, with Q4 profit at 4 billion yuan [3][4] - Agricultural chemicals like Yangnong Chemical and New Hope Liuhe are expected to see substantial growth, with profits of 1.24 billion yuan and 6.72 billion yuan respectively in 2025 [3][4] Sector-Specific Insights - The textile chain is expected to benefit from high demand growth and improved supply conditions, with companies like Luhua Chemical and Tongkun Group highlighted [4] - The agricultural chain is supported by increasing planting areas and higher transgenic penetration rates, benefiting companies like Hualu Hengsheng and Baofeng Energy [4] - Export-related chemical products are expected to perform well due to low inventory levels and easing monetary policies [4] Material Growth Focus - The report emphasizes the importance of self-sufficiency in key materials, particularly in semiconductor and panel materials, with companies like Yake Technology and Dinglong Technology noted for their potential [5]

Group 1 - The chemical sector is showing strong performance, with the Chemical ETF (516020) experiencing a price increase of 3.13% as of the report time [1][2] - Key stocks in the sector, including Enjie Co., Ltd., Hongda Co., and Duofuduo, have seen significant gains, with Enjie Co. reaching the daily limit up and others rising over 8% [1][2] - The basic chemical sector has attracted substantial capital inflow, with nearly 20 billion yuan in net inflow, leading among 30 major sectors [1][3] Group 2 - Prices for mainstream refrigerants have continued to rise, with R32 long-term contract prices at 61,200 yuan per ton, up 1,000 yuan from the previous quarter, marking a 1.66% increase [3] - The outlook for the industry suggests that regulatory measures and self-discipline initiatives will strengthen supply constraints, benefiting certain sub-sectors like chlor-alkali and pesticides [3] Group 3 - The Chemical ETF (516020) tracks the CSI sub-sector chemical industry index, covering popular themes such as AI computing power and new energy [4] - Investors can also access the chemical sector through the Chemical ETF linked funds, which provide a more efficient way to invest [4]

Group 1 - The chemical sector is showing strong performance, with the Chemical ETF (516020) experiencing a price increase of 3.13% as of the report [1][8] - Key stocks in the sector, including lithium battery, phosphorus chemical, and fluorine chemical industries, are seeing significant gains, with Enjie Co. hitting the daily limit, and Hongda Co. and Duofuduo both rising over 8% [1][8] - The basic chemical sector has attracted substantial capital, with a net inflow of nearly 20 billion yuan, leading among 30 major sectors [5][10] Group 2 - In the first quarter, the prices of mainstream refrigerants are continuing to rise, with R32 long-term contract prices expected to reach 61,200 yuan per ton, a 1.66% increase from the previous quarter [2][10] - The report suggests that with ongoing anti-involution policies, supply constraints in the industry are expected to strengthen, benefiting certain sub-sectors such as chlorine-alkali, pesticides, and polyester filament [2][10] Group 3 - The Chemical ETF (516020) tracks the CSI sub-sector chemical industry theme index, covering popular topics such as AI computing power, anti-involution, robotics, and new energy [3][11] - Investors can also access the Chemical ETF through linked funds (Class A 012537/Class C 012538) for more efficient exposure to the chemical sector [3][11]

Summary of the Conference Call on Huafeng Chemical Industry Overview - The conference call focuses on the spandex industry, specifically the expansion plans of Huafeng Chemical in the spandex production sector [1][2]. Key Points 1. **Expansion Plans**: Huafeng Chemical announced plans to invest in a project to build a 200,000-ton high-performance, low-carbon, and intelligent spandex production facility in Ruian Economic Development Zone. The project will be executed in two phases: the first phase will produce 100,000 tons per year with a construction period of approximately 36 months, and the second phase will also produce 100,000 tons per year with a construction period of about 24 months. The total investment for this project is estimated at 3.6 billion yuan [1][2]. 2. **Growing Demand for Spandex**: The spandex industry is experiencing continuous growth, with actual consumption projected to increase by 9.7% year-on-year to 1.07 million tons by 2025, according to Baichuan Yingfu statistics [4]. 3. **High-End Product Demand**: There is an increasing consumer demand for high-end fabrics and comfort in clothing. The trend is shifting towards differentiated and functional high-end spandex products, such as high elasticity, super chlorine resistance, antibacterial properties, comfort, quick-drying, and low-temperature adhesion. This trend is crucial for the future development of the spandex industry [4]. 4. **Strategic Positioning**: The expansion into high-end spandex products will enhance Huafeng Chemical's differentiation level, particularly in the mid-to-high-end product segment. The synergy of scale and quality advantages will help the company solidify its leading position in the market [4]. 5. **Market Recovery Indicators**: Recent improvements in downstream demand for spandex have been noted, with the overall industry operating rate increasing from 78% to 87.4%. Inventory levels are at a near one-year low, and the price gap for spandex has slightly widened due to the decline in raw material prices for MDI and PTMEG [5]. 6. **Price Adjustments**: As of January 20, 2026, Huafeng Chemical and Xinxiang Chemical Fiber have raised their spandex prices (20D/30D/40D) by 1,000 yuan per ton [5]. 7. **Future Projections**: It is estimated that the spandex industry operating rate will be around 82% in 2024 and is expected to maintain a high level of 87% in 2027. This indicates a potential turning point for the industry, suggesting that investors should pay attention to bottom-line opportunities in the spandex market [5]. 8. **Profit Potential**: Currently, Huafeng Chemical's bottom-line profit is approximately 2 billion yuan. If the price gap for spandex and adipic acid recovers to marginal demand levels, the company's profit could increase to 5 billion yuan, indicating significant elasticity in profit potential. Investors are encouraged to actively monitor this situation [5].

Summary of Key Points from Conference Call Records Industry Overview - The chemical industry is expected to experience a significant decline in new supply in 2026 and 2027, leading to an upward cycle due to price synergy effects and the exit of overseas capacity [1][2] - The tightening of national carbon emission targets will impact the approval of oil and infrastructure projects, pushing chemical companies towards green transformation [1][7] Core Insights and Arguments - Major chemical companies have made substantial fixed asset investments during the 14th Five-Year Plan, which are expected to translate into profits in the coming years, with some companies potentially having P/E ratios as low as 3-4 times [1][5] - The PX market is operating at high capacity utilization, with expected profits around 1,000 CNY/ton being sustainable due to the rapid digestion of new capacity [1][9] - The olefin market is projected to improve long-term, supported by national policies, with an expected upward cycle from 2027 to 2029 [1][11] Company-Specific Insights Wanhua Chemical - Fixed assets and construction projects have significantly increased, with potential profits at the bottom of the cycle estimated at 15-16 billion CNY, and central profit levels reaching around 30 billion CNY [3][20] - The company’s market cap corresponds to a P/E ratio of 8-9 times, indicating substantial profit potential as the cycle rebounds [20] Longbai Group - Fixed assets have grown significantly, with potential profits estimated at 12 billion CNY based on historical averages [21][22] - The company’s market cap corresponds to a P/E ratio of around 9 times, suggesting a favorable valuation [22] Rongsheng Petrochemical - Fixed asset investments have been significantly higher than those of Hengli Petrochemical, with potential peak profits estimated between 20 billion to 30 billion CNY [23][24] - Future profitability will depend on the market conditions for ethylene and its downstream products [24] Hengli Petrochemical - The company is seen as stable and a key indicator of product reversals, with significant overseas expansion potential [14][13] - Expected profits could reach 60-70 billion CNY if current favorable conditions persist [13] Shenghong Petrochemical - The company has not fully benefited from industry conditions but has significant upside potential, with expected profits from new energy sectors [12] Other Important Insights - The chemical industry is currently characterized by a shorter duration from the bottom of the down cycle to the upturn, aided by price synergy effects and high industry concentration [4] - The large refining industry is at the tail end of its capacity cycle, with cash flow expected to improve significantly [8] - The agricultural chemicals sector faces oversupply issues, with key signals from agricultural product prices [28] Market Trends and Future Outlook - The oil market is expected to improve in the second half of 2026, with prices potentially fluctuating between 70-80 USD per barrel [15][16] - OPEC is likely to maintain production levels, indicating a slow growth cycle for oil supply, which could stabilize prices [17] - The refrigerant market is expected to see price increases, although the rate of increase may slow down [33][34] This summary encapsulates the key points from the conference call records, highlighting the chemical industry's dynamics, company-specific insights, and broader market trends.

Core Viewpoint - Huafeng Chemical Co., Ltd. is investing in a new project to expand its production capacity of high-performance, low-carbon, and intelligent spandex materials, with a total investment of 3.6 billion yuan and a construction period of 60 months [2][12]. Group 1: Project Overview - The project will have an annual production capacity of 200,000 tons and will be implemented in two phases: the first phase will produce 100,000 tons over 36 months, and the second phase will also produce 100,000 tons over 24 months [7][17]. - The project is located in the Ruian Economic Development Zone and will utilize advanced technologies such as large-capacity continuous polymerization and dry spinning to create a green manufacturing line [7][17]. Group 2: Financial Projections - Upon completion, the project is expected to achieve an average annual sales revenue of approximately 4.741 billion yuan (including tax), with a static investment payback period of 5.33 years (after tax) [8][18]. - Funding for the project will primarily come from bank loans and self-raised capital [7][17]. Group 3: Industry Context and Strategic Goals - The spandex industry is undergoing a transformation towards high-end, differentiated, and functional products due to increasing consumer demand for high-elasticity, chlorine-resistant, antibacterial, and quick-drying fabrics [6][16]. - Huafeng Chemical aims to enhance its competitive edge by adopting new equipment and processes to improve production efficiency, reduce energy consumption, and optimize product structure, thereby increasing the proportion of mid-to-high-end products [8][18]. - The expansion aligns with the company's strategy of high-end, intelligent, low-carbon, and international development, positioning it as a leading high-tech fiber and new materials manufacturing base [8][18]. Group 4: Market Position and Future Outlook - The expansion project is seen as a strategic move during an industry adjustment period, allowing Huafeng Chemical to strengthen its market position in the global spandex market [9][19]. - The successful implementation of this project is expected to inject new growth momentum into the company and promote the overall transition of the Chinese spandex industry towards higher value-added and higher technology content [9][19].

Core Viewpoint - The chemical sector experienced a significant pullback on February 2, with the chemical ETF (516020) declining by 5.85% during trading, reflecting a broader downturn in the industry [1][7]. Market Performance - The chemical ETF (516020) opened lower and saw a decline of 5.85%, with a trading price of 0.917 as of the latest update [2][7]. - Key stocks in the sector, including Huafeng Chemical, Hongda Co., and Luxi Chemical, hit the daily limit down, while others like Satellite Chemical and Zhejiang Longsheng fell over 9% [1][7]. Supply Chain and External Factors - A cold wave in the U.S. Gulf Coast has led to the shutdown of several chemical plants, affecting over 30% of the chemical production capacity in Texas, which accounts for about one-third of the U.S. chemical output [3][10]. - The cold weather has increased natural gas prices, raising the costs of ethylene and polyethylene, while supply constraints are expected to strengthen the pricing outlook for chemical products [10]. Future Outlook - Analysts predict that the chemical industry will face low demand in 2025, but measures to counteract "involution" may help restore profitability by 2026, alongside growth in new materials driven by rapid downstream demand [10]. - The current low valuation of the industry presents potential opportunities for investors, particularly through the chemical ETF (516020), which tracks a specialized index covering various themes including AI and new energy [10]. Investment Strategy - Investors are encouraged to consider the chemical ETF (516020) for efficient exposure to the sector, as it tracks the CSI segmented chemical industry index and includes stocks related to trending themes [10].