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The chemical industry is currently in a critical phase characterized by strict regulatory constraints, volatile raw material prices, improving profitability, and accelerated trends toward higher-end products and lower carbon emissions. In the short term, the key issues are the sharp rise in sulfur prices, price increases due to MDI maintenance work, and the implementation of upgrades to older production facilities. In the medium to long term, the main priorities are reducing competitive intensification, pursuing green transformation, and replacing imported materials with domestic alternatives. I. Policy Developments (intensively implemented in May–June 2026) The \"Petroleum and Chemical Industry Planning Scheme (2026–2030)\」was issued (June 4). Key points: strict control over new refining capacity; promotion of the advancement, diversification, and low-carbon development of coal chemical industry; and cultivation of **-level advanced manufacturing clusters. Support: The second round of urea export quotas, amounting to nearly 2 million tons (1.5–1.6 million tons under regular quotas + 400,000 tons under the G2G program), was implemented simultaneously, which is beneficial for fertilizer export companies. Seven departments work together to advance the upgrading of old equipment (2026–2029) (early June). Goal: Phasing out energy-intensive equipment that is over 20 years old; completing energy efficiency and safety upgrades across the entire industry between 2026 and 2029, with funding provided by special long-term government bonds. The Environmental and Ecological Code will come into effect on August 15 (2 months to go). Impact: The chemical industry is a key sector under strict regulation; compliance costs related to VOCs, groundwater, hazardous waste, and carbon accounting are rising sharply, forcing outdated production capacities to withdraw more quickly. Comprehensive monitoring of energy conservation in industry (starting from June). Key sectors include synthetic ammonia, oil refining, ethylene, PVC produced by the calcium carbide method, methanol, etc.; full coverage will be achieved by 2026–2027, with the computing power and new energy equipment industries included for the first time. New regulations for special operations involving hazardous chemicals (effective June 1): New requirements have been introduced for three types of operations – new coal chemical processes (coal-to-oil, olefins, ethylene glycol), calcium carbide production, and azidation processes. Companies are required to complete the assessment of relevant positions and ensure that their staff hold the necessary qualifications within a specified time frame. II. Market and Prices: Surge in raw material costs leads to price increases for some products 1. Sulfur: Price rose by 160% in half a year, exceeding 10,000 yuan per ton (as of June 7). Price: 3,850 yuan per ton at the beginning of the year → 10,000 yuan per ton on June 7, an increase of 2,283 yuan per week (+30.4%). Reasons: disruptions in supply from the Middle East, shipping restrictions imposed by Russia, port inventory dropping from 2 million tons to 900,000 tons (only enough for 1 month’s demand), and a sharp 72% decline in imports in May. Impact: Costs of phosphate fertilizers, titanium dioxide, sulfuric acid, and new energy sources (LFP) have all increased significantly, leading some small and medium-sized phosphate fertilizer manufacturers to suspend production. 2. MDI: BASF maintenance efforts plus price increases, tight supply (early June). Event: On June 1, a 50,000-ton/year MDI plant in India stopped operating suddenly ； A 45-day maintenance period will begin in July ； On May 29, global MDI prices increased by $0.35 per pound (approximately 5,260 yuan per ton). Current situation: Domestic polymeric MDI prices have stabilized at high levels, while pure MDI has seen limited price increases due to steady demand from downstream industries. 3. Methanol: Port inventories have fallen for six consecutive weeks, reaching a new low in a year (June 4). Inventory level: 633,500 tons; reduced imports and increased domestic maintenance activities have contributed to relatively strong prices. 4. Acrylates: BASF Asia-Pacific raises prices (June 5). Butyl acrylate (BA): price increased by $100 per ton, effective immediately, driven by rising raw material costs. 5. Profit recovery was significant in the first quarter (June 2): Industry revenue reached 2.25 trillion yuan (+6.6%), while profits amounted to 116.87 billion yuan (+54.5%) ； Viscose (+843.8%), film materials (+289.2%), and potash fertilizers (+131.1%) led the gains. III. Corporate Updates: International giants are active – BASF’s MDI plant in India shut down unexpectedly; major maintenance in July, raising expectations of a contraction in global supply ； In the coatings business, sales in 2025 amounted to 3.746 billion euros, with profits of 274 million euros (+22.87%), while the net loss was 18 million euros. Kohlberg Kravis Roberts / Nolion have committed to divesting their global polysulfide business (the plant in Graz, Germany) in order to address antitrust scrutiny. IV. Technology and Transformation: Green and Low-Carbon + High-End Development. In the coal chemical industry, policies outline the direction of \"high-end development, diversification, and low-carbonization\"; products such as coal-derived olefins/ethylene glycol are being developed into high-end polyolefins and biodegradable materials ； Supported by CCUS and green hydrogen for carbon reduction. New energy materials: The phosphorus chemicals industry benefits from the strong demand for LFP. Developments: A super-large phosphorus mine in Zhenxiong has been put into operation; LFP pricing is based on a \"lithium + phosphorus\" formula; the economic viability of using phosphogypsum to produce acid has become apparent. Silicones: High-hydrogen silicone oils led the gains (+40%). Drivers: Strong demand from the photovoltaic, semiconductor, and new energy vehicle sectors, along with tight supply of high-end capacity. V. Key Trends and Concerns Short-term (1–3 months): Sulfur prices will remain volatile at high levels, while costs associated with phosphate fertilizers and titanium dioxide will continue to exert pressure ； MDI supply is tight, making prices prone to rising rather than falling ； Upgrades to old equipment have begun, leading to a slowdown in the industry’s supply growth rate. Medium to long term (6–12 months): Policies to counter involution will be further strengthened, and capacity expansion will be restricted ； The transition toward a green and low-carbon economy is accelerating, with green hydrogen, CCUS, and biodegradable materials emerging as key areas of focus ； The trend toward higher-end products and domestic substitution (electronic chemicals, special materials) is accelerating.