On
June 3rd, 2013, Hubei Xingfa Chemicals Group Co., Ltd. (Hubei Xingfa) reported
it expects to report a 30-50% decline in net profit in the first half of 2013,
compared to USD25.66 million of net profit in H1 2012, according to CCM’s Phosphorus Industry
China Monthly Report issued in June.
Hubei
Xingfa attributed the expected profit drop to the following three points:
Firstly,
the market price of phosphorus ore is declining while the cost of phosphorus
mining is rising.
Secondly,
electricity costs have risen sharply because of drought. Hubei Xingfa gets most
of its electricity from hydropower it owns. But drought has caused Hubei Xingfa
to buy more electricity from more expensive outside sources than last year to
maintain production.
Thirdly,
the company's newly launched 600,000t/a DAP project has suffered losses. The
project came on stream at the end of 2012, and is operated by wholly owned
subsidiary Yidu Xingfa Chemical Co., Ltd. (Yidu Xingfa). Obviously, Hubei
Xingfa overestimated the tendency of phosphate fertilizer market.
Hubei
Xinfa's performance reflects the status of China's entire phosphorus chemical
industry. While phosphorous ore business has been highly profitable in recent
years, margins of the phosphorus chemical industry are getting thinner as
gloominess in the downstream phosphate fertilizer market spread to the upstream
phosphorus ore market. New projects face a tough time generating profitability,
and the profit margin of phosphorus manufacturing firms in the entire industry
is being squeezed.
Table of Contents of Phosphorus
Industry China Monthly Report 1306:
Editor's
Note
Headlines
of Phosphorus Industry China Monthly Report 1306
Phosphorus
Ore
Yuntianhua
completes asset reorganization
Hubei
Xingfa foresees a profit down in H1 2013
Yellow
phosphorus
Yunnan
publishes energy consumes across local yellow phosphorus industry
Phosphate
Fertilizer
CPFIA
to work out schemes for weeding out excess phosphate fertilizer capacity
Rapid
appreciation of RMB to aggravate China's phosphate fertilizer export
Investment
on fertilizer project went up in Q1 2013
Fine
Phosphate Chemicals
Phosphorus
flame retardant foresees huge growth potential
Global
Insight
Saudi
Arabia breaks into China's phosphate fertilizer market
Brief
News
Guizhou
Province to launch Technology Roadmap for local phosphorus chemicals industry
Jinchang
City to construct a sulfur-phosphorus industrial park
China
to make rules for stacking phosphogypsum
Supply
& Demand
Market
review of prime phosphate chemical in May 2013
Import
& Export
International
trade of phosphate chemicals in April 2013
Price
Update
Price
monitoring of some phosphate chemicals in May 2013
Phosphorus
Industry China Monthly Report, issued by CCM on 15th,
keeps providing the latest company dynamics related to China’s phosphorus
industry, and market analysis on supply and demand, import and export as well
as global insight.
CCM is dedicated to market research in China
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