Street Calls of the Week
Investing.com -- As shipping conflicts between the US and China intensify, J.P. Morgan has identified five standout chemical stocks positioned to navigate these challenging waters. The recent introduction of port service fees on Chinese-owned ethane carriers by the US Trade Representative marks a significant development that could reshape the competitive landscape in the chemical sector.
The geopolitical tensions, combined with China’s anti-involution measures, are expected to slow Chinese chemical capacity additions significantly in 2026-30. This potential rebalancing of global supply and demand dynamics could benefit certain regional players as product spreads gradually improve.
Hengli Petrochemical emerges as J.P. Morgan’s top pick in the Asian chemical space. Analysts expect Hengli to benefit from the projected slowdown in Chinese net chemical capacity additions through 2030, a direct result of anti-involution measures and US-China supply chain decoupling. The company is well-positioned to capitalize on the gradual rebalancing of global supply-demand dynamics and improving product spreads.
PetroChina ranks second on the list as another beneficiary of changing market conditions. The company stands to gain from the anticipated sharp slowdown in China’s chemical capacity additions between 2026-30, driven by geopolitical tensions and China’s anti-involution policies. Unlike competitors like Wanhua that face increased costs from new US port service fees on ethane carriers, PetroChina’s operations appear less directly impacted by these measures.
PTT Global Chemical takes the third spot amid the complex regulatory environment. The analysis notes that under the 2025 Section 301 maritime action, vessels owned or operated by Chinese entities face escalating fees starting at $50 per net ton and increasing annually. However, there are potential exemptions for vessels chartered by non-Chinese entities under specific conditions, which could provide strategic advantages for companies like PTTGC.
Reliance Industries secures fourth place in J.P. Morgan’s rankings. The analysis highlights how competitors like Wanhua, which operates through joint ventures with ADNOC, face significant cost increases due to new port fees. These regulatory changes could increase US ethane landed prices from $479/t in FY24 to approximately $768/t, potentially strengthening the competitive position of alternative suppliers like Reliance.
LG Chem rounds out the top five chemical stocks to watch. The company’s chemicals division is specifically mentioned as a preferred option within the Asian chemical space as the industry adjusts to new regulatory challenges and changing supply-demand dynamics.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.