Supply-Demand Pattern Reshaped, Related Chemical Prices May Rise Significantly, Focus on Petrochemical ETF (159731) Long-Term Configuration Value

As of 2:25 PM on March 17, the Petrochemical ETF (159731) decreased by 1.43%. Among the holdings, China National Petroleum Eagle, Guangwei Fucai, and Wanhua Chemical saw the largest gains. In terms of liquidity, the Petrochemical ETF had a turnover rate of 8.64% during the trading session. The latest shares outstanding are 1.613 billion, with a current scale of 1.696 billion yuan.

The Middle East is a major force in global urea supply and trade, with Iran’s urea capacity accounting for about 3%-4% of the global capacity. Escalating US-Iran tensions are likely to reduce this capacity’s supply, pushing up international urea prices. Additionally, since many Middle Eastern urea plants use gas-based processes, soaring natural gas prices will further increase production costs, affecting international urea prices. Moreover, sulfur prices influence phosphate fertilizer costs, and rising freight costs disrupt the potash fertilizer market.

Founder Securities believes that, based on the evolution of the Russia-Ukraine conflict in 2022, geopolitical conflicts will prompt governments worldwide to focus on stabilizing and securing food supplies, thereby raising valuation levels for the fertilizer sector.

Everbright Securities suggests that under the backdrop of US-Iran conflict, food prices are rising in tandem, placing food security in an important strategic position within the “14th Five-Year Plan” outline, highlighting the importance of agricultural safety. Amid significant increases in oil and gas prices and reshaped supply-demand dynamics, prices for related chemical products may see substantial rises.

The Petrochemical ETF (159731) and its linked funds (017855/017856) closely track the CSI Petrochemical Industry Index. According to Shenwan’s first-level industry distribution, basic chemicals account for 61.18%, and oil and petrochemicals account for 31.59%. A new cycle of industry prosperity is beginning, with profit recovery for downstream chemical products expected.

Daily Economic News

(Editor: He Chong)

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