Chemical Industry Poised to Usher in New Round of High Growth, Hubei Yihua Hits Daily Limit Up

On March 23, the phosphor chemical sector surged in the afternoon, with Hubei Yihua (000422.SZ) hitting the daily limit, and Liuguo Chemical (600470.SH), Xingfa Group (600141.SH), Chuanfa Longmang (002312.SZ), Chuanjinnuo (300505.SZ), and Chuanheng Co., Ltd. (002895.SZ) also rising.

On the news front, ongoing Middle East geopolitical conflicts continue to ignite the crude oil market. Last week, the main US crude oil futures contract price decreased by 0.40% overall, while Brent crude futures increased by 8.77%. Since the conflict erupted, US crude futures have risen by over 46%, and Brent crude futures have approached a 55% increase.

As a core raw material in the chemical industry, the high oil prices directly drive up costs across the entire industry chain. Domestic chemical companies like Wanhua Chemical (600309.SH) have begun adjusting prices. From upstream basic chemicals to downstream terminal products, a wave of price adjustments is spreading, highlighting the industry’s cost transmission effects. Looking back at the spot market last week, domestic phosphoric acid prices remained high, with a strong wait-and-see sentiment. For wet-process purified phosphoric acid, high sulfur prices continued to push up costs, while downstream iron phosphate demand remained steady, and company inventories stayed low. As of last Friday, the hot phosphoric acid market showed a reversal, with raw material yellow phosphorus prices stopping their decline and rebounding, which increased inquiry activity within the market.

BOC Securities believes that by 2026, the current round of chemical industry capacity expansion is nearing its end. Measures such as “anti-involution” are expected to catalyze a bottoming out of industry profits. Meanwhile, new materials benefiting from rapid downstream demand are likely to usher in a new wave of high growth.