China's leading chemical companies have seen enhanced earnings and strong cash flows since 2016

Since 2015, improved environmental and safety standards have led to a contraction in the supply of chemicals and their upstream intermediates and raw materials, etc. The production costs of small capacities on the right side of the chemical production cost curve have significantly increased, which in turn pushed up the marginal costs and prices of chemicals. The production cost of the leading enterprises is relatively stable based on their high environmental protection and safety capability, engineering capability, the advantages of a well-integrated industrial chain, and better cost control capability. The widening cost gap between the leading enterprises and small capacity chemical enterprises leads to a gradual steepening of the chemical production cost curve and further enhancement of the profitability of the leaders.

 Data source: Wind, Bloomberg, CICC, etc.

The leading enterprises have achieved accelerated growth based on their core competitive advantages and profitability. Based on the data comparison of revenue growth rate and total profit growth rate of chemical raw materials and chemical listed companies, the leading companies lead the chemical industry and chemical listed companies in revenue and profit growth rate after 2016 based on their stronger profitability.

 Data source: Wind, Bloomberg, CICC, etc.