The supply side is affected, domestic pure MDI rises sharply

Market review of this issue, the CSI 300 Index rose by 1.87%, the CITIC Basic Chemicals Index rose by 1.28%, and 8 of the 23 CITIC Basic Chemicals third-level sub-industries outperformed Industry Index. In this issue, the top five sub-industries with the highest increases and decreases are fluorochemicals, daily chemicals, viscose, pesticides and silicones; the bottom five sub-industries with the highest increases and decreases are nylon, soda ash, inorganic salts, spandex and Compound fertilizer. In terms of individual stocks, the top five stocks with the highest increase and decrease were Sanonda A, Tianci Materials, Shida Shenghua, Yinglite and Keheng; the bottom five with the highest increase and decrease were Evergrande High-tech, Jiangsu Thorpe, and Guofa Co., Ltd., Changjiu Biochemical and Ssangyong Co., Ltd.

Industry and company tracking The China Plastics Association submitted an application to the National Development and Reform Commission to investigate abnormal fluctuations in TDI prices. The petrochemical and chemical industry development plan released eight major tasks. Lianhua Technology: Released the third quarter report of 2016 Cangzhou Mingzhu: Announced the price changes of major products in the third quarterly report of 2016. In this issue, among the 58 chemical products we focus on, 16 have increased in price and 8 have decreased in price. The top five products with the largest increase and decrease were pure MDI, yellow phosphorus, DMC, butadiene and PTA; the top five products with the largest decrease were propylene oxide, compound fertilizer, acetone, DAP and ethylene glycol.

Investment Strategy In this period, pure MDI has risen sharply. The main reason is that an accident occurred during the maintenance of Wanhua Yantai Industrial Park, which affected the supply side. However, we believe that pure MDI will rise sharply in the short term. The large increase in the price does not rule out the factors of artificial speculation. After Wanhua Equipment resumes production, the price may fall. Investors are reminded to pay attention to the risks. From a fundamental perspective, we continue to be optimistic about sub-sectors such as lithium-ion battery materials, agrochemicals, and new chemical materials.

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