CHEMICALS：OIL PRICES HIT YTD HIGH CHEMICAL PRICES ROSE IN SL
As crude oil price***** a YTD high in November 2017, the marketexpects commodity growth to remain resilient in 2018 and thetightening of environmental regulations to improve long-termsupply-demand conditions in the chemical sector. We thu****pectchemical prices to stay buoyant. Over the short term, rising costs, lowinventory and stricter environmental regulations over winter coulddrive up chemical product prices. We are upbeat oncommodity-related subsectors and leading plays. We recommendENN Ecological, Hualu Hengsheng and Yangnong Chemical.
We believe the high international oil prices and lower domesticcoal prices should drive up both the prices and earnings ofcommodity and coal chemical products. We are upbeat onmethanol and olefin products.
As strict environmental regulations become normal andtechnologically outdated capacity is removed, thesupply-demand conditions in chemical subsectors could improveover the long term.
Rising costs, low inventory and stricter environmentalregulations in winter to push up product prices.
Earnings forecast and valuation
In order of their degree of earnings boost from product price rallies,we recommend: ENN Ecological ； HualuHengsheng ； Yangnong Chemical andChangqing Agrochemical ； Hengyi Petrochemical andTongkun Group ； Wanhua Chemical and;Hongda Xingye 。
Decline in crude oil prices; surge in coal prices; looseningenvironmental regulations.
□ .X.u.a.n. .L.I./.Y.i.c.h.e.n. .X.U./.X.i.o.n.g.w.e.i. .J.I.A./.S.h.a.n.s.h.a.n. .S.H.E.N .中.国.国.际.金.融.股.份.有.限.公.司