Zheshang: Q1 profit has been repaired, optimistic about the opportunities for the recovery of chemical industry demand.

Zheshang released a research report stating that export pressure is increasing, domestic demand is expected to recover, and structural opportunities are promising. 1) With the increase in external demand pressure, it is expected that the government will continue to increase fiscal stimulus, and domestic demand is expected to further recover. Key focus areas include real estate infrastructure, and consumer industry chains, including civilian explosives, polyurethane, soda ash, titanium dioxide, refrigerants, etc. 2) Since the peak of prosperity in some industries, product inventory continues to be reduced, and currently product prices are still at historical lows. Optimistic about vitamins, lysine, polyester filament yarn, viscose, pesticides, fertilizers, etc. where there is potential for supply-demand improvement. 3) With the intensification of global trade friction, optimistic about chemical new materials companies benefiting from import substitution and self-controlled, including semiconductors, OLED, etc. Zheshang's main points are as follows: Industry overview: the chemical industry's revenue is recovering and improving, Q1 performance is expected to gradually recover According to data from the National Bureau of Statistics, the chemical raw materials and products industry achieved a revenue of 1.3529 trillion yuan in January and February 2025, a year-on-year increase of 5.0%, with growth continuing since Q4 of 24. Total profit was 41.94 billion yuan, a cumulative year-on-year decrease of 1.5%, a significant narrowing of the decline. As for inventory, as of February 2025, the year-on-year growth rates of inventory and finished goods inventory of chemical raw materials and products were 1.4% and 1.9% respectively, indicating the industry's destocking trend is nearing completion. Investment growth in chemical raw materials and products remains at a high level, with fixed asset investment growth rates of chemical raw materials and products and chemical fibers in January and February 2025 at +6.0% and +16.0% respectively. As for the chemical price index, the price of crude oil is expected to decrease in Q1 due to increased supply, with the Chinese Chemical Products Price Index (CCPI) decreasing by 1.89% as of April 7, 2025 compared to the end of December 24. In February 2025, the month-on-month year-on-year changes of chemical raw materials and products, chemical fibers, and rubber and plastic PPI were -4.0%, 0%, and -1.4% respectively. Chemical products: Q1 price differentials for major chemical products have shown differentiation Based on Baichuan Yingfu and Wind data, as of April 7, 2025, the proportion of major chemical products in Q1 2025 with average prices rising, remaining unchanged, and falling are 43%, 3%, and 54% respectively. Among them, the top five varieties with the highest price increases are petroleum coke, R142b, sulfur, folic acid, and sulfuric acid, with increases of 50.2%, 38.5%, 33.0%, 31.4%, and 21.2% respectively. Additionally, as of April 7, 2025, the proportion of major chemical products in Q1 2025 with average price differentials rising, remaining unchanged, and falling are 35%, 0%, and 65% respectively. The top five varieties with the highest price differentials are methyl acrylate, ethyl acrylate, R134a, R125, and R32, with increases of 40.1%, 26.1%, 26.0%, 23.4%, and 19.3% respectively. Risk warning Risk of fluctuating raw material prices, risk of demand falling short of expectations, risk of safety incidents. (Note: The translation is slightly shortened for clarity and conciseness.)