Research purpose: affected by the war between Russia and Ukraine, Europe's energy supply tension, Russian natural gas accounted for a large amount of natural gas use in Europe, Russia and Ukraine during the conflict, natural gas and other energy prices rose several times, the cost of industrial production in Europe rose sharply, the price gap between China and Europe chemical products widened, the export of Chinese chemical products is expected to increase.

    The main conclusion: Europe's energy shortage and price spikes will lead to a further shortage of natural gas for industrial production, the production costs of European chemicals will rise sharply, at the same time, the shortage of energy and high costs may lead to passive load shedding of local chemical installations, resulting in a large gap in the supply of chemicals, further pushing up the price of local products in Europe. At present, the price difference between China and some European chemical products is widening, and the export volume of Chinese chemicals is expected to increase significantly. In the future, China's supply advantage in traditional energy and new energy is expected to continue to exist, the cost advantage of Chinese chemicals over Europe will continue to exist, and the global competitiveness and profitability of the Chinese chemical industry is expected to further enhance.

    Supply side, Europe's energy shortage, China's energy advantage is prominent.

    Affected by the sharp rise in natural gas energy prices, the European chemical industry energy costs and raw material costs have increased significantly, and the global energy supply chain will take a long time to reconstruct and recover. China has an advantage in traditional energy production and supply and new energy industry system, maintaining relatively low energy prices.

    Demand side, domestic and foreign demand recovery at the same time.

    Domestic measures to stabilize the economy gradually strengthened, domestic demand is expected to recover, the background of the high price difference between China and Europe, coupled with the decline in sea freight prices, China's chemical exports to Europe will also be a significant increase in volume.

    Taking into account the opportunities brought by the high cost of energy in Europe to the domestic chemical industry, we maintain our "Recommend" rating on the chemical industry.

    Risk warning.

    The risk of large fluctuations in raw material prices; global epidemic repeatedly fermentation affect downstream demand risk; industry expansion risk; the risk of safety and environmental protection of the relevant subject; focus on the company's performance is not as expected risk;