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 research 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 of abundant coal and scarce oil, the economics of coal chemical industry are highly correlated with oil prices. For example, when crude oil prices exceed $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 industry may outweigh its economic benefits, leading to accelerated approval of related projects.

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

Due to the impact of the Iran conflict abroad, oil and gas prices have surged, while domestic coal prices have risen slightly. However, 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 chemical industry is also positive, providing a boost.

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

Key stocks with “selling-off” characteristics in the sector:

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

2. China Energy Construction, which has invested in the Jilin Songyuan Green Hydrogen-Ammonia Integration Project, with Phase I commissioning expected by the end of 2025. This is currently the world’s largest green hydrogen-ammonia integration project.

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

4. Sanwei Chemical, whose main technical advantage lies in sulfur recovery. Its independently developed “online-free sulfur recovery process technology” has reached domestic leading and international advanced levels.

5. Explosive companies following the “coal chemical -> coal mine -> explosive” transmission logic, including Snow Peak Technology, E-Power, Jiangnan Chemical, Guangdong Hongda, and Kailong Co., Ltd., which are locally deployed in Xinjiang.

6. Qinglong Pipe Industry, where water resources are a prerequisite for coal chemical projects. The company has a strong presence in Xinjiang.

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

(Source: Guojin Securities)