On May 23, 2026, UBS released a hundred-page in-depth industry research report, clearly judging that 2026 marks the starting point of a new upward cycle for China’s chemical industry. The report points out that after years of strict domestic capacity control and continuous contraction of industrial capital expenditure, coupled with the accelerated exit of high-cost overseas chemical capacity, the supply and demand pattern of China’s chemical industry has been comprehensively optimized. The industry has officially stepped out of the profit bottom in 2025 and entered a sustained profit recovery and upward channel. In the global market, the continuous high volatility of crude oil prices driven by Middle East geopolitical conflicts has increased the production costs of overseas petroleum-based chemical enterprises. In contrast, China’s advantageous processes such as coal-to-olefins and light hydrocarbon cracking have obvious cost advantages, greatly enhancing the global competitiveness of domestic chemical products. This structural advantage will continue to expand market share for Chinese chemical enterprises in global trade. In terms of policy and industry fundamentals, domestic dual-carbon policies have standardized backward capacity elimination, optimized industrial structure, and reduced homogeneous competition. The gradual recovery of downstream demand for new energy, new materials and consumer chemicals further boosts industry operating performance. UBS predicts that China’s chemical industry will maintain steady profit growth throughout 2026 and 2027, with leading enterprises enjoying both profit recovery and valuation repair. The whole industry chain will usher in high-quality development opportunities, becoming one of the most promising traditional manufacturing sectors in China’s capital market.