Industrial: "Anti-internal-loop" is expected to bring a new transformation to the chemical industry, seize the opportunity to upgrade industrial supply.

Industrial's report states that under the "anti-industrialized" trend, the industrial prosperity of the chemical industry is expected to improve, and leading enterprises are likely to benefit fully. In summary, the specific downward direction of the potential grasp of the chemical industry's "anti-industrialized" from top to bottom may be the continuous promotion of carbon emission dual control, the requirement to improve energy consumption levels, and the clearing of old and backward production capacity. Meanwhile, the opportunity for industry self-discipline after the improvement of industry concentration from the bottom up can also be considered. It is suggested to grasp investment opportunities in the chemical industry from the following four aspects: 1) stricter approval of new projects may bring about a slowdown in the increase in production capacity. 2) Potential supply-side positive changes brought about by the transformation of old equipment. 3) Attempts at anti-industrialization through industry self-discipline. 4) The continuous improvement of supply-side energy consumption standards is expected to promote the overall optimization of the industry's supply structure. The main points of Industrial are as follows: The continuous promotion of the "anti-industrialized" policy deployment, with an increasing importance The concept of preventing "industrialized" malignant competition was first proposed at a meeting of the Political Bureau of the CPC Central Committee in July 2024, marking the beginning of the series of anti-industrialized policies. This round of anti-industrialized policies takes "promoting the construction of a unified national market" as the core task, while emphasizing the "orderly exit of backward production capacity" and "green technology transformation" synchronously. Based on the characteristics of the supply pattern, various sub-sectors of the chemical industry have responded to the call of the anti-industrialized policy through different ways such as following policy guidance, coordinated production reduction, and industry meetings. Review: Each supply constraint has brought about an increase in the prices of chemical products The supply-side reforms that began at the end of 2015 opened the curtain for the recovery of chemical product prices and profit repair at the time. As related policies were implemented in the petrochemical and chemical industry, the clearance of backward production capacity was driven, and the industry prosperity gradually improved. The supply reduction brought about by the dual control of energy consumption in 2021 will push the chemical industry, which was already in an upturn phase, to a climax, with prices and price differentials of multiple products reaching new highs in recent years. Therefore, if there are policy-end supply constraints in the future, chemical product prices may rise as a result. Current situation: The chemical industry is currently in a bottom region, and the "anti-industrialized" policy may lead to an increase in chemical product prices On the demand side, China and the United States have preliminarily reached an agreement, and the international trade environment is still within a controllable range. From the perspective of the PMI index, the global manufacturing PMI is approaching the boom-bust line from the bottom in 2025, indicating a slowing downward trend in the manufacturing industry. Investments and consumption at home and abroad are showing signs of stabilizing and rebounding. On the supply side, the pace of new domestic production capacity release is slowing down, and the implementation of the anti-industrialized policy is also expected to help inventory clearance, thus promoting the repair of supply and demand relationships and bringing about an improvement in industry prosperity. Risk warning: Risks of sharp fluctuations in crude oil prices; risks of the anti-industrialized policy being less effective than expected; risks of continued escalation of trade frictions; risks of disorderly expansion of production capacity.