CITIC Securities: The chemical industry is gradually entering its peak season. Focus on sectors and individual stocks with quarter-on-quarter improvements in the third quarter.

CITIC Construction Investment Securities research report points out that the chemical sector is gradually entering its peak season, and attention should be paid to sectors and individual stocks that show quarter-on-quarter improvements in the third quarter. After a destocking period for downstream sectors in April and May, current downstream inventories are relatively low. As the transition from destocking to normal procurement occurs, apparent demand will improve, while real demand in September and October is expected to be relatively high. However, considering that oil prices are still at a high level and experiencing significant volatility, the willingness of downstream sectors to restock will not be very strong, maintaining the view of weak restocking this autumn. In the long term, leading companies in the chemical sector have already demonstrated excellent earnings at the bottom of the cycle, presenting substantial value, but in the short term, they still face risks of quarter-on-quarter performance declines due to high base levels in the second quarter and weak restocking in the third quarter. It is recommended to focus on industries and individual stocks that are likely to see further upward performance in the third quarter, including: overseas refined oil products with high prosperity, fluorochemical refrigerants with rising volume and price, potash fertilizers with continuously increasing new capacities, and tires with significantly declining costs.