This week (12.12-12.18) the crude oil market continued to fluctuate and consolidate. The prices of phosphate fertilizers, caprolactam, soda ash, glyphosate, organic silicon, titanium dioxide and other varieties led the rise, and the prices of early-stage hot varieties such as PVC fell. In terms of investment, we recommend the fertilizer, pesticide, and organic silicon industries to deploy low- and low-value high-growth stocks in new chemical materials.

market performance: down 1.95%, stronger than the market

Leading stocks include Jinniu Chemical, Inlite, Gudi Technology, etc. The core reasons driving the rise are product price increases, equity transfers, corporate mergers and acquisitions, etc.; this week's leading stocks include Hongda New Materials, Shiming Technology, Black Cat Shares, etc., the main factors are the return of valuation and the lifting of the ban.

Industry news and brief comments: 70% of the listed companies’ annual reports are expected to be happy, and the chemical industry boom is greatly improved. The current annual report performance of chemical industry companies is mainly divided into two situations. The first situation mainly relies on the reorganization of company assets; the second type of company , The growth of performance is more derived from the growth of main business, among which downstream demand pull, industry concentration increase, and product structure optimization are the main reasons leading to the price increase of chemical products. The overall prosperity of the chemical industry is rising. Under the influence of multiple positives, we expect the chemical sector to remain strong in the future.

Analysis of product price changes: oil prices fluctuated, chemical fertilizers rebounded, the Federal Reserve raised interest rates, oil price increases were limited, and oil prices fluctuated this week; combined production restrictions, phosphate fertilizer prices rose sharply, which is good for Yuntianhua and Xinyangfeng; raw material pure benzene prices increase, The market has responded enthusiastically. The price increase of caprolactam and adipic acid is good for Hualu Hengsheng, *ST Tianli, Luxi Chemicals, etc.; strict environmental protection, tight supply, downstream procurement, soda ash is in short supply, and prices are rising, which is good for Shandong Haihua and Sanyou Chemicals; raw material glycine companies stop production, and during peak consumption seasons, glyphosate prices continue to rise, which is good for XX Group and Xin'an.

Investment Viewpoint: Redistribution of Agrochemicals

In December, contrary to the experience of previous years, even in the off-season, the chemical industry is still booming, and prices are generally rising. The core driving forces are coal and oil prices, rising costs, and stricter environmental protection, which inhibits industry start and tight supply. In terms of investment, it is recommended to allocate prosperous varieties with improved supply and demand, recommend chemical fertilizers, pesticides (glyphosate, etc.), organic silicon, TDI industries, and pay attention to Hualu Hengsheng, Yuntianhua, Xin'an shares, XX Group, Jinzhengda, Stanley, Xinyang Feng, Si Erte, *ST Cangda. At the same time, continue to be optimistic about new chemical materials, the industry will continue to replace imports, frequent policies, and catalyze the market. Key recommendations: (1) Electronic chemicals: import substitution + technological innovation brings new demand, recommend Kangdexin, Dinglong shares, Wanrun shares. (2) Other new materials: continue to replace foreign-funded products and grow rapidly. Highly and Guoci materials are recommended.

Risk reminder: 1. Environmental protection and safety accident risk;

2. Market development risk.