Chemical sector plunges sharply! Huabao Fund Chemical ETF (516020) crashes over 4% intraday, leading stocks collapse across the board! The darkest hour before dawn?

The chemical sector experienced a deep correction today (March 19). The chemical ETF (516020), which reflects the overall trend of the chemical industry, opened lower and continued to decline. As of the time of writing, the on-market price has fallen by 4.19%.

In terms of constituent stocks, sectors such as petrochemicals and fluorochemicals led the declines. As of the latest update, Tongkun Shares dropped over 8%, Rongsheng Petrochemical and Xin Feng Ming both fell more than 7%, Xingfa Group, Duofuo, and Enjie Shares each declined over 6%, dragging down the sector.

On the news front, recent increases in shipping risks in the Middle East have affected international fertilizer transportation, with about 33% of global fertilizer shipments passing through the Strait of Hormuz. Meanwhile, the domestic chemical industry continues to focus on biotech innovation and development. Industry reports and conferences indicate that synthetic biology and other cutting-edge technologies are accelerating from laboratory research to production lines, reshaping the agricultural chemical industry landscape.

Guotai Haitong pointed out that the basic chemical industry is nearing the end of its down cycle, with chemical product prices approaching the lows of previous cycles. Industry profit indices have recently begun to recover. In refining, finished oil consumption has peaked early and is accelerating downward. During the 14th Five-Year Plan period, capacity reduction and replacement are prominent features. Specifically, for certain products, the PX industry has limited new capacity additions before 2026 after expansion and overseas capacity exits; the PTA industry will have virtually no new capacity after 2026; and the ethylene and propylene industries are expected to bottom out in supply and demand by 2026, with a subsequent recovery in prosperity. The polyester filament industry is highly concentrated, with slowing capacity growth and spontaneous production cuts to maintain prices, which have stabilized.

Looking ahead, CITIC Construction Investment suggests that if the Producer Price Index (PPI) turns positive by mid-year and the economic mainline becomes clearer, the price increases driven by supply and demand improvements in major commodities may become more certain, thus boosting profit growth in the second half of the year. After the chemical industry’s cumulative capital expenditure turned negative in June 2025, the two-year outlook for a reversal in supply and demand patterns is highly promising.

How to seize opportunities in the chemical sector? Using the chemical ETF (516020) for efficient allocation may be more effective. Public data shows that the chemical ETF (516020) tracks the CSI Sub-industry Chemical Industry Theme Index, with combined weights of petroleum, petrochemicals, and basic chemicals exceeding 80%. Off-market investors can also use the chemical ETF connection funds (Class A 012537 / Class C 012538) to allocate to the chemical sector.

Source: Shanghai and Shenzhen Stock Exchanges, etc., as of March 19, 2026.

Note: When investors subscribe or redeem fund shares, the subscription and redemption agents may charge a commission of up to 0.5%, including related fees from stock exchanges, registrars, etc. The chemical ETF does not charge sales service fees.

The subscription fee for the Chemical ETF Connection A is: below 1 million yuan, 1%; between 1 million (inclusive) and 2 million yuan, 0.6%; above 2 million yuan, a flat 1,000 yuan per transaction. Redemption fees are: within 7 days, 1.5%; between 7 days (inclusive) and 180 days, 0.5%; beyond 180 days, 0%.
The redemption fee for the Chemical ETF Connection C is: within 7 days, 1.5%; beyond 7 days, 0%. The sales service fee rate is 0.2%.

Note: According to Wind data, as of February 27, 2026, the weights of basic chemicals and petroleum petrochemicals in the CSI Sub-industry Chemical Index are 71.57% and 11.7%, respectively.

Risk reminder: The chemical ETF passively tracks the CSI Sub-industry Chemical Industry Theme Index, which was base date December 31, 2004, and published on April 11, 2012. The index components are adjusted periodically according to the index rules. Past backtested performance does not predict future performance. The individual stocks mentioned are only for objective display and listing of index components, not as recommendations or endorsements. All information (including but not limited to stocks, comments, forecasts, charts, indicators, theories, or any other forms) in this article is for reference only. Investors are responsible for their own investment decisions. The views, analysis, and forecasts in this article do not constitute investment advice. The fund manager and fund investment directions are not guaranteed. According to the fund manager’s assessment, the risk level of the chemical ETF is R3—medium risk, suitable for balanced (C3) and above investors. Suitability opinions are subject to sales institutions. Sales institutions (including direct sales by the fund manager and other sales channels) will evaluate the risk of the fund according to relevant laws and regulations. Investors should pay attention to the suitability opinions issued by the fund manager. The risk ratings provided by sales institutions may differ and should not be lower than those of the fund manager. Differences may exist between the fund’s risk-return characteristics in the fund contract and its risk level due to different considerations. Investors should understand the fund’s risk-return profile, consider their own investment objectives, time horizon, experience, and risk tolerance, and choose products carefully. Past performance does not predict future results. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Based on the fund manager’s evaluation, the risk level of the chemical ETF is R3—medium risk.