Guojin Securities: Decoding How the Israel-Iran Situation Reshapes Coal Chemical Industry Value - What Are the Related Targets?

On February 28, the United States and Israel jointly launched strikes against Iran, significantly disrupting oil transportation in the Middle East. Iran has closed the Strait of Hormuz to prevent all ships from passing, and Middle Eastern oil-producing countries such as Saudi Arabia, Iraq, Qatar, and the UAE are temporarily unable to export oil. Following the conflict between Israel and Iran, oil prices once again reached $90 per barrel. As oil prices continue to rise, the economics of coal chemical industry become more attractive. After oil prices broke $90, why is coal chemical industry considered a safe haven? What is the recent tracking situation of the coal chemical chain? What investment directions are emphasized in the coal chemical sector? What related stocks are there? This article will provide answers.

Guojin Securities Research Institute continues to bring you insights on coal chemical industry and share investment opportunities in related fields!

Why is coal chemical industry considered a safe haven after oil prices break $90?

Coal chemical industry mainly involves three directions: coal-to-olefins, coal-to-oil, and coal-to-natural gas. In China’s resource environment rich in coal but poor in oil, the economic viability of coal chemicals is highly correlated with oil prices. For example, when crude oil prices are above $80 per barrel, coal-to-oil projects in Xinjiang become economically viable. After the Iran-Israel conflict, oil prices again reached $90. We believe that recent years have seen significant oil price fluctuations, and the strategic importance of coal chemical projects may outweigh their economic benefits, leading to faster approval processes.

What is the recent tracking situation of the coal chemical chain?

Due to the impact of the Iran conflict and related overseas factors, oil and gas prices have surged. Domestic coal prices have risen slightly, but product categories have shown differentiation. Prices of methanol and olefins have improved, but synthetic ammonia remains limited due to government controls on fertilizer production. The long-term outlook for coal chemicals is also positive, providing a boost.

What investment directions are emphasized in the coal chemical sector? What related stocks are there?

Summary of “seller” type stocks in the sector:

1. Donghua Technology, a subsidiary of China National Chemical Corporation, has undertaken multiple EPC projects including Xinjiang Tianli Acetone & Butanone, Tianying Ethylene Glycol, and Tianye Ethylene Glycol. According to its performance forecast, by 2025, revenue will reach 10 billion yuan, a 13% increase; net profit attributable to parent company will be 533 million yuan, nearly 30% growth.

2. China Energy Construction, which has built the Jilin Songyuan Green Hydrogen-Ammonia Integration Project Phase I, expected to start operation by the end of 2025. This is currently the world’s largest green hydrogen-ammonia integrated project.

3. China National Chemical + Sinopec Refining & Chemical Engineering, formerly part of the Ministry of Chemical Industry’s nine design institutes.

4. Sanwei Chemical, with core technology in sulfur recovery. Its independently developed “Online-Free Sulfur Recovery Process Technology” is at the domestic leading and international advanced level.

5. Explosive materials companies following the “coal chemical -> coal mine -> explosive” logic, including Snow Peak Technology, E-Power, Jiangnan Chemical, Guangdong Hongda, and Kailong Co.

6. Qinglong Pipe Industry, where water resources are a prerequisite for coal chemical projects. The company is deeply engaged in the Xinjiang market.

7. Other notable companies include Wujin Stainless (requiring stainless steel pipes for equipment and utilities), Beifang Shares (driving demand for large open-pit coal mine unmanned mining trucks), among others.

(Source: Guojin Securities)