Shenwan Hongyuan Group: 25Q3 Off-season Overlapping Cost Increases, Periodic Price Gap Decline, Chemical Industry Profit Seasonal Pressure

Shenwan Hongyuan Group released a research report stating that in the third quarter of 2025, the downstream traditional off-season, chemical prices fell from their highs, while oil and coal prices rose on a month-on-month basis. However, high demand in industries such as agrochemicals supported performance. In the traditional off-season of Q3, downstream operations reduced, overall in destocking mode, coupled with the bottom rebound in energy prices, some cyclical products' price differentials fell from their highs, putting pressure on performance on a month-on-month basis. According to Wind statistics, the average price of Brent spot in Q3 was $69.29 per barrel, with month-on-month and year-on-year changes of -14% and +2% respectively. NYMEX natural gas futures price was $3.08 per million British thermal units, with month-on-month and year-on-year changes of +38% and -12% respectively. Qinhuangdao port's 5500 kcal power coal average price was 673 yuan per ton, with month-on-month and year-on-year changes of -21% and +5% respectively. Although coal prices weakened significantly year-on-year, there was still a rebound month-on-month, with cost pressures increasing. According to tracked mainstream chemical companies' profit forecasts for Q3 2025, the weighted average EPS is expected to be 0.25 yuan, with month-on-month and year-on-year changes of +24.93% and -0.08% respectively. The month-on-month performance weakened slightly due to seasonality, but showed a significant improvement year-on-year. The sub-industries with the largest year-on-year increase in net profit in Q3 2025 are mainly agrochemicals, phosphorous chemicals, potassium fertilizer, fluorine chemicals, civilian explosives, semiconductor materials, display materials, catalytic materials, modified plastics, etc. The sub-industries with significant month-on-month increase in net profit in Q3 2025 are mainly phosphorous chemicals, potassium fertilizer, tires, semiconductor materials, display materials, modified plastics, etc. Among them, the agrochemical sector, including sub-industries such as agrochemicals, phosphorous chemicals, and potassium fertilizers, has strong demand support, coupled with the issuance of export quotas for phosphorus and nitrogen fertilizers, showing good performance. Key targets: MDI price differentials fluctuate, TDI price differentials bottom out, with an expected net profit of 3.00 billion yuan in Q3 2025 for Wanhua Chemical Group (+3% YoY, -1% QoQ, net profit attributable to parent company, the same below). Coal prices rose month-on-month, putting pressure on profits of coal chemical companies, with expected net profits of 8.00 billion yuan in Q3 2025 for Shandong Hualu-Hengsheng Chemical (-3% YoY, -7% QoQ); 2.80 billion yuan for Luxi Chemical Group (-31% YoY, -20% QoQ); and 32.00 billion yuan for Ningxia Baofeng Energy Group as the Inner Mongolia project begins to bear fruit in Q3 2025 (+160% YoY, -2% QoQ). Spandex price differentials narrow but adipic acid profits improve, major companies have strong scale advantages, with an expected net profit of 4.80 billion yuan in Q3 2025 for Huafon Chemical (-3% YoY, flat QoQ). Phosphate rock remains high, with significant premiums from phosphate fertilizer exports, with expected net profits of 19.00 billion yuan in Q3 2025 for Yunnan Yuntianhua (+20% YoY, +29% QoQ); 6.00 billion yuan for Hubei Xingfa Chemicals Group (+18% YoY, +44% QoQ); 2.85 billion yuan for Shenzhen Batian Ecotypic Engineering (+428% YoY, flat QoQ); 1.80 billion yuan for Chengdu Wintrue Holding (-16% YoY, -30% QoQ); 4.00 billion yuan for YONFER Agricultural Technology (+7% YoY, -8% QoQ); and 1.90 billion yuan for Stanley Agriculture Group (+23% YoY, -40% QoQ). Fluorine chemicals: Strong support from the supply side, refrigerant industry continues to improve, with a possible reduction in shipments in the off-season of Q3. Expected net profits of 12.50 billion yuan in Q3 2025 for Zhejiang Juhua (+196% YoY, +1% QoQ); 5.95 billion yuan for Zhejiang Sanmei Chemical Industry (+236% YoY, flat QoQ); 1.95 billion yuan for Zhejiang Yonghe Refrigerant (+474% YoY, +12% QoQ); Fluorite prices hit bottom and rebounded, with gradual profit from associated mineral projects, expected net profits of 1.00 billion yuan in Q3 2025 for China Kings Resources Group (+20% YoY, +69% QoQ). Tire targets: Recovery after tariff impacts, coupled with peak season in the third quarter, overall increase in sales volume. Expected net profits of 10.50 billion yuan in Q3 2025 for Sailun Group (-4% YoY, +33% QoQ); 3.50 billion yuan for Qingdao Sentury Tire (-46% YoY, +13% QoQ); 3.00 billion yuan for Shandong Linglong Tyre (-62% YoY, -42% QoQ); 1.90 billion yuan for GuiZhou Tyre (+42% YoY, +4% QoQ); 0.20 billion yuan for Jiangsu General Science Technology (-78% YoY, returning to profit QoQ); 2.50 billion yuan for Triangle Tyre (-8% YoY, +9% QoQ); 1.28 billion yuan for Quechen Silicon Chemical (+9% YoY, -7% QoQ); 1.10 billion yuan for Zhejiang Hailide New Material (+3% YoY, -29% QoQ); 0.65 billion yuan for Shandong Yanggu Huatai Chemical (+41% YoY, flat QoQ). Cyclical products sector: Improvement in supply-demand structure, increased prosperity for potassium fertilizer and agrochemicals. Soda ash: Expected net profits of 3.50 billion yuan in Q3 2025 for Inner Mongolia Berun Chemical (-41% YoY, -13% QoQ); 1.20 billion yuan for Tangshan Sanyou Chemical Industries (+79% YoY, +30% QoQ); 0.20 billion yuan for CNSIG Inner Mongolia Chemical Industry (-85% YoY, -43% QoQ). Potassium fertilizer: Expected 20.00 billion yuan in Q3 2025 for Qinghai Yanhu Industry (+115% YoY, +46% QoQ); 5.50 billion yuan for Asia-Potash International Investment (+122% YoY, +17% QoQ); 3.30 billion yuan for Qingdao East Steel Tower Stock (+73% YoY, +15% QoQ). Agrochemicals: Expected 3.20 billion yuan in Q3 2025 for Jiangsu Yangnong Chemical (+22% YoY, -14% QoQ); 3.60 billion yuan for SHANDONG WEIFANG RAINBOW CHEMICAL CO., LTD (+125% YoY, +20% QoQ); 0.80 billion yuan for ShanDong Cynda Chemical (+7900% YoY, -30% QoQ). Civilian explosives: Expected 2.00 billion yuan in Q3 2025 for Explosives CO., LTD (+16% YoY, -18% QoQ); 3.00 billion yuan for Guangdong Hongda Holdings Group (+27% YoY, -27% QoQ); 3.40 billion yuan for Anhui Jiangnan Chemical Industry (+2% YoY, +21% QoQ); 1.20 billion yuan for Xinjiang Xuefeng Sci-Tech (-43% YoY, -28% QoQ). New materials sector: Accelerated process in domestic independent and controllable process, continuous production from domestic substitute material enterprises. Domestic semiconductor industry localization steadily progressing, downstream capital expenditures continued, with expected net profits of 2.75 billion yuan in Q3 2025 for Jiangsu Yoke Technology (+20% YoY, +5% QoQ). New energy materials: expected 2.40 billion yuan in Q3 2025 for Shenzhen Capchem Technology (-16% YoY, -6% QoQ); 0.13 billion yuan for Tayho Advanced Materials Group (-62% YoY, -13% QoQ); 0.50 billion yuan for Zhejiang Xinhua Chemical (+52% YoY, -35% QoQ); Biological materials: expected 0.40 billion yuan in Q3 2025 for Anhui Huaheng Biotechnology Co., Ltd. (+100% YoY, -38% QoQ); 5.50 billion yuan for Meihua Holdings Group (+6% YoY, -27% QoQ); 2.50 billion yuan for Sunresin New Materials (+30% YoY, flat QoQ); 1.70 billion yuan for Shandong Sinocera Functional Material (+12% YoY, -13% QoQ). Lubricants and plastic additives: Expected 1.90 billion yuan in Q3 2025 for Xinxiang Richful Lube Additive (+5% YoY, +9% QoQ); 1.45 billion yuan for Rianlon Corporation (+54% YoY, +9% QoQ); 0.80 billion yuan for Gch Technology (+14% YoY, +5% QoQ). Food and feed additives: Expected 0.60 billion yuan in Q3 2025 for Anhui Jinhe Industrial (-63% YoY, -35% QoQ); 0.95 billion yuan for Shandong Bailong Chuangyuan Bio-Tech (+51% YoY, +8% QoQ); 15.00 billion yuan for Zhejiang Nhu (-16% YoY, -13% QoQ). Modified plastics: Expected 3.80 billion yuan in Q3 2025 for Kingfa Sci. & Tech. (+25% YoY, +12% QoQ); 2.70 billion yuan for Qingdao Gon Technology (+47% YoY, +15% QoQ). Key Assumptions and Risks: 1) Industry projects may not progress as expected; 2) Export disruptions leading to significant price declines for some chemical products.