Understanding the Chemical Industry Index Differences in One Article

Ask AI · Why does the Petrochemical Index keep outperforming on the right side of the economic cycle?

The chemical industry is a typical “big and fragmented” industry, with a long industrial chain, many sub-sectors, and high technological barriers. Therefore, it’s time-consuming and labor-intensive for ordinary investors to do stock research, so investors can efficiently allocate investment opportunities in the chemical industry via index funds. In practice, many investors find that the main chemical-industry ETFs in the market mainly track two indices—the CSI Petrochemical Industry Index (H11057.CSI) and the CSI Sub-sector Chemical Industry Theme Index (000813.CSI). Although they are both chemical-industry indices, their underlying holdings differ. Today, starting from the underlying index-construction logic, we’ll explain clearly the two indices’ core differences, and point out why the CSI Petrochemical Industry Index performs better—both in an environment of rising oil prices and on the right side of the chemical cycle.

I. Underlying differences: Understanding chemical indices from the index-construction logic

At present, chemical ETFs mainly track two indices: the CSI Petrochemical Industry Index (39 constituent stocks) and the CSI Sub-sector Chemical Industry Theme Index (50 constituent stocks). The overlap between the two indices is relatively high (about 80%). The main differences lie in:

Differences in constituent stocks: The CSI Petrochemical Industry Index has more petrochemical companies such as the “Three Big Oil” companies, while the Sub-sector Chemical Index has more battery-chemical companies (such as Tianqi Lithium, and Rongbai Group).

Differences in industry allocation: The CSI Petrochemical Industry Index has a higher chemical purity; the proportion of the petroleum & petrochemicals and basic chemicals industries is 93%( (Shenwan first-level industry classification) ). In the Sub-sector Chemical Index, the proportion of petroleum & petrochemicals and basic chemicals is 82%, and power equipment accounts for 9%.

Differences in beneficiary directions: The CSI Petrochemical Industry Index increases exposure to petrochemical companies under its index-construction rules, and therefore is more sensitive to rising oil prices. In addition, traditional high energy-consuming chemical content is higher, so it can benefit more from improvements on the industry supply side (sub-sectors with high energy consumption and high carbon emissions are more strongly constrained by supply). Since the Sub-sector Chemical Index has exposure to battery-chemical companies, it has a higher correlation with the prosperity of the battery materials sub-segment (such as lithium battery materials).

Table: Comparison of constituent-stock differences between the CSI Petrochemical Industry Index and the CSI Sub-sector Chemical Industry Theme Index

Source: Wind, as of March 30, 2026

Chart: Comparison of industry-exposure differences between the CSI Petrochemical Industry Index and the CSI Sub-sector Chemical Industry Theme Index

Source: Wind, as of March 30, 2026

II. Historical performance: Sub-sector chemicals rise on the left vs. petrochemicals rise on the right

The CSI Sub-sector Chemical Industry Theme Index is more sensitive to changes in industry cyclical conditions in its constituent stocks. It often bottoms out earlier on the left side of the industry cycle and starts running ahead when the market forms expectations of a reversal, showing a “leading runner” characteristic.

The CSI Petrochemical Industry Index, by contrast, is in the stage when the industry cycle confirms a reversal, enters the right side of the prosperity uptrend, and product prices rise and profits are realized. Relying on the pricing power and scale effects of leading companies, it often demonstrates stronger market staying power and excess returns.

For example, in the chart below, in 2021–2022, when crude oil prices and chemical product prices were in the rising phase (right-side period), the CSI Petrochemical Industry Index had better relative performance than the Sub-sector Chemical Index (the relative-return indicator of CSI Petrochemical Industry Index / Sub-sector Chemical Index trended higher). Since 2025, when crude oil prices and chemical product prices were in the declining phase (left-side period), the Sub-sector Chemical Index had better relative performance (the relative-return indicator of CSI Petrochemical Industry Index / Sub-sector Chemical Index trended lower)

Chart: The CSI Petrochemical Industry Index often has an excess advantage during the uptrend stage on the right side of the prosperity cycle

Source: Wind, as of December 31, 2025; data has been normalized

Since 2026, as crude oil prices and chemical product prices have entered a rising cycle, the CSI Petrochemical Industry Index’s increase (11.42%) has been greater than that of the Sub-sector Chemical Index (8.23%), which is consistent with the above rule of “sub-sector chemicals lead on the left, petrochemicals lead on the right.”

From a long-term perspective, since 2016, its return has achieved about 24% of excess returns relative to the CSI Sub-sector Chemical Industry Theme Index (as of March 30, 2026), and it has outperformed in 7 out of 10 years.

Chart: Comparison of the performance trends of the CSI Petrochemical Industry Index and the CSI Sub-sector Chemical Industry Theme Index

Chart: Comparison of the return-and-risk characteristics of the CSI Petrochemical Industry Index and the CSI Sub-sector Chemical Industry Theme Index

Source: Wind, as of March 30, 2026

III. Why is it suitable to invest in the CSI Petrochemical Industry Index in the current stage?

The CSI Petrochemical Industry Index is a more fitting investment choice for the current market environment: Right now, we are facing a high-oil-price environment, and chemical industry cyclical conditions have entered the right side with the prosperity uptrend and product prices gradually being realized. This is precisely aligned with the stage in which the CSI Petrochemical Industry Index historically performed better.

How to conveniently invest in the CSI Petrochemical Industry Index? At present, among all index funds tracking this index, the one with the leading scale is Chemical Industry ETF from E Fund (516570; feeder fund (A/C): 020104/020105). This product’s combined management fee and custody fee is only 0.20% per year. It’s an efficient tool for investors to build a low-cost allocation to the petrochemical industry’s full-chain core leaders and capture the right-side rally of the chemical cycle.