CITIC Securities: A new inventory cycle may have started.

According to the research report of CITIC Securities, since the second half of 2025, the growth rate of China's PPI has bottomed out and rebounded, and the inventory cycle has also entered an upward channel afterwards. Historically, there is a strong synchronous relationship between PPI and the growth rate of industrial enterprise inventories, with PPI leading actual inventories by about 10 months. After the supply shock caused by the recent US-Iran conflict subsides, concerns about the stability of the supply chain may drive a new wave of restocking demand in the petrochemical-related industries. It is worth noting that China's past seven inventory cycles have been mainly driven by demand-side improvements, while this cycle is primarily driven by supply-side factors, similar to 2021-2022. Looking ahead, changes in demand may have a decisive impact on the form of this inventory cycle. We expect short-term inventories to continue to rise, but the height and duration of medium-term inventories will depend on domestic demand trends. In terms of macroeconomic performance, fiscal revenues continued to improve in March, with spending focusing on investment in people. The market this week is attentive to the release of documents by the Central Office and the State Council to strengthen the dual carbon policy, and next week it is advisable to pay attention to China's PMI in April and possible political bureau meetings.