Chemical sector is expected to appear strong market

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China Drying Network News After many chemical products have undergone a long period of adjustment, the destocking process has almost completed, and its prices have also risen significantly. Analysts believe that there are many types of chemical products and their applications are relatively extensive. Therefore, there are differences in the business cycle between different products. Investors need to focus on sub-sectors where the economy is bottoming out, and related stocks will also show good investment opportunities. But at the same time, it should also be noted that due to the overcapacity of the entire industry, the increase in product prices will lead to a quick return to the previous production cuts. This is a potential risk that can not be ignored if there is little room for expansion of overall demand.

The overall performance of the A-share chemical sector this year was flat. The SWC Chemical Industry Index fell slightly by 0.33% during the year. Since the sub-sectors of the chemical industry are divided according to products, there are many sub-industries, and there are more than 30 sub-sectors in the chemical sector.

Because of the large number of sub-sectors, the homogeneity of chemical stocks is extremely low, and market differentiation is also very obvious. From the perspective of the market performance of subdivided industries during the year, carbon black, phosphate fertilizers, phosphates, and pesticides saw a larger increase, rising by 30.56%, 28.54%, 28.51%, and 22.26%, respectively; Synthetic leather, soda ash and fluorine chemical workers fell by 22.58%, 18.79%, 18.74% and 13.79%, respectively.

In general, since the financial crisis in 2008, prices of chemical products have mostly experienced deep adjustments. At the same time, many chemical companies have experienced a drop in capacity utilization and high inventory levels. After that, they have been long and painful to go through the inventory process. In the process of destocking, the profitability of many manufacturers has dropped sharply or even led to losses, resulting in the continued weakness of related stocks. However, in 2012, the boom in some chemical products rebounded, which also stimulated related stocks to move out of the strong market. A typical example is glyphosate, which has seen a significant increase in the price of glyphosate products this year due to the end of the destocking process. Affected by this, the company's share price of 5 companies producing glyphosate in the A-share market changed, with leading stocks in Jiangshan shares rising more than 60% in July.

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