Chemical Stock Cycle Outlook (2025-2026)

Market Review

• Since April 2025, phosphate chemicals up >50%, fluorochemicals up ~70%, outperforming tech stocks.
• Leading companies: Tianji +500%, Do-Fluoride +200%, Tianci Materials +40%.

Key Drivers

1. Lithium Battery Demand Recovery:
2. • Phosphate chemicals: phosphate ore → lithium iron phosphate cathode → lithium batteries
   • Fluorochemicals: fluorite/fluorosilicic acid → HF/LiPF6 → key lithium battery intermediates
   • LiPF6 price: <50k RMB/t in July → 180k RMB/t in Nov, +260% in 3 months
   • Domestic energy storage battery shipments: 430GWh (+100% YoY), full-year forecast 580GWh
3. Supply Constraints:
4. • LiPF6 capacity concentrated among top players, new supply limited short-term
   • Domestic old chemical capacity exiting, international high-cost capacity shrinking
5. Traditional vs Emerging Demand:
6. • Real estate & ICE vehicle demand weak, while EVs, PV, energy storage, AI demand strong
   • Crude oil & coal prices relatively low, potential upside

Global Signal

• Buffett’s $9.7B acquisition of OxyChem signals US chemical industry may be at cycle bottom
• Global capex declining, supply tightening, industry outlook improving

Risks

• Phosphate & fluorochemical valuations already reasonable or high
• Future rallies may carry accumulated risks
• Focus on next potential sector tailwinds rather than chasing highs