Under the slowdown of demand, there is a long way to go to reduce production capacity and maintain the "neutral" rating of the industry. In terms of investment, take the well-developed agricultural materials circulation, MDI and pesticide customization industry and lithium battery materials with great potential, and recommend leading companies nopson, Kim Jong Il, Wanhua chemical, Lianhua technology, Huabang Yingtai, xinzhoubang and Cangzhou pearl.

　　Review of the first half of the year: shallow recovery. From January to April 2014, the operating revenue and profit of chemical raw materials and products increased by 10.7% and 10.1% respectively year-on-year; Chemical fiber increased by 3.8% and 11.5% year-on-year respectively. It mainly benefited from the sustained growth of domestic economy, the improvement of foreign economy and the steady growth of demand, which led to the increase of chemical product sales, while the gross profit margin of industrial sales fell, indicating a low-level recovery. In terms of industries, the competition order was improved, and the profit of the dye industry increased by 71%, ranking first among the best; The fertilizer industry is oversupplied, with prices falling endlessly and profits falling by 40%. The pattern of industry differentiation will continue in the future.

　　Outlook for the second half of the year: waiting before dawn. On the demand side, the macro-economy is in a period of transformation. The overall environment of development slowdown in the second half of the year has not changed, and the demand has not exceeded expectations. On the supply side, it is difficult to change the situation of overcapacity in the industry. Fixed asset investment maintains rapid growth. It will take a long time to digest capacity, and the prosperity of the industry still needs to wait. Overall, the industry will fluctuate in a narrow range with economic development and maintain a "neutral" investment rating.

　　Medium term investment strategy: recommend promising agricultural materials circulation, MDI and pesticide customization, and look forward to the lithium battery material industry with huge market space.

　　Circulation of agricultural materials: changes in the industry give birth to long-term investment opportunities. Land transfer will enhance the scale and degree of agricultural production. Large grain growers and various farmers' cooperatives will gradually increase their requirements for the brand, quality, distribution and technical services of agricultural products, and raise the entry threshold of the industry. The concentration of downstream customers will promote the concentration of agricultural materials enterprises, and the market share of high-quality agricultural materials companies will be significantly increased. It is mainly recommended to recommend nopuxin, the leader of pesticide preparation, and Jin Zhengda, a new compound fertilizer.

　　MDI: good supply and demand pattern. The global economy is improving, MDI consumption is growing steadily, the industry is oligopoly, and the supply and demand structure is good. Wanhua chemical, a leading enterprise of MDI integration, is recommended;

　　Pesticide Customization: a good opportunity for industrial transfer. Bring about industrial transfer, and the domestic customized production of pesticide intermediates and technical drugs has broad development prospects. It is recommended that Lianhua technology, the leading company for customized pesticide intermediates, and Huabang Yingtai, the leading company for the coordinated development of agriculture and medicine.

　　Lithium battery materials: the rise of the tide of development. The cost performance of lithium batteries has improved, and the electric vehicle market has entered an explosive period. As the upstream material, lithium battery diaphragm and electrolyte will benefit fully. The diaphragm leader Cangzhou pearl and electrolyte leader xinzhoubang are recommended.

　　Risk warning: commodity price fluctuation; The economic recovery is lower than expected; Environmental protection and other policy risks.