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 an attack on Iran, significantly disrupting oil transportation in the Middle East. Iran has closed the Strait of Hormuz to prevent all commercial ships from passing, and 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 share research insights on coal chemical industry and investment opportunities in related fields!

After oil prices broke $90, why is coal chemical industry considered a safe haven?

Coal chemical industry mainly involves three directions: coal-to-olefins, coal-to-oil, and coal-to-natural gas. Under China’s resource environment of abundant coal and scarce 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 in Xinjiang becomes economically viable. After the Israel-Iran conflict, oil prices again reached $90. We believe that recent years have seen significant oil price fluctuations, and the strategic importance of coal chemicals may outweigh their 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 overseas, oil and gas prices have surged, while domestic coal prices have risen slightly. However, product categories have differentiated: 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 report, by 2025, revenue is expected to reach 10 billion yuan, a 13% increase, with net profit attributable to parent company of 533 million yuan, nearly 30% growth.

2. China Energy Construction Corporation (China Energy) has completed Phase I of the Jilin Songyuan Green Hydrogen and Ammonia Integration Project by the end of 2025. This is currently the world’s largest green hydrogen and 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, whose main technical advantage lies in sulfur recovery. Its independently developed “online-free sulfur recovery process technology” has reached leading domestic and advanced international 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), Beifang Shares (driving demand for large open-pit coal mine unmanned mining trucks), among others.

(Source: Guojin Securities)