Income of basic chemical industry increased by 3.14%, net profit of attribution increased by 11.14% and non-net profit increased by 8.53% year on year. Income and profit growth slowed down slightly.

In the first half of 2016, the gross interest rate increased by 1.14 PPT to 19.31%, the sales cost rate increased by 0.23 PPT to 4.63%, and the management cost rate increased by 0.55 PPT to 6.59%.
Sub-industry performance differentiation is obvious, income:

Lithium battery materials, fine chemicals and chlor-alkali industries are the leading growth industries; in the first half of the year, the industry was depressed, product prices fell, and the income of fertilizer, dyestuff and other industries dropped significantly year-on-year.

Profit: Low base leads to high-speed growth of net returns to mother in fluorine chemical industry. Net returns to mother in lithium batteries, chlor-alkali, organosilicon and chemical fibre industries increase by more than 50%. Prices of products related to fertilizers, pesticides and feed additives fall sharply, resulting in a sharp decline in net returns to mother.
Prices of polyester, dyes and titanium dioxide are expected to continue to rise.

1) Polyester: At present, the price gap between polyester and raw materials is large. It is expected that the improvement of supply and demand and the price synergy mechanism of leading enterprises will drive the bottom of the industry to reverse. This year, the new production capacity of polyester filament has basically been put into production. In the second half of the year, the excess production capacity in the earlier period is mainly consumed. It is expected that the price of polyester will remain strong in the third quarter.

2) Dyestuffs: The supply-side reform of high-polluting industries will drive up the price of dyestuffs, which is expected to rise to 45,000-50,000 yuan/ton in the second half of 2016.

3) Titanium dioxide: Enhanced environmental protection threshold and supply-side reform have accelerated capacity clearance, slowed down the growth rate of new capacity, increased demand for overseas emerging markets has driven up enterprise sales, and prices are expected to continue to rise.

It is expected that the lithium battery industry will enter the peak production and marketing season in September. Catalysts will see whether sales and policies exceed expectations.