China’s three phosphorus chemical giants report net first quarter earnings of RMB4 billion

As last year’s business boom is continuing, the business performance of three major Chinese phosphorus chemical giants increased significantly in the first quarter, with a cumulative net profits reaching some RMB4 billion, a year-on-year increase of 249.91% over RMB1.142 billion in the previous year.

On the evening of 14th April, Yuntianhua announced a first quarter operating income of some RMB14.962 billion, a year-on-year increase of 13.28%, with a net profit attributable to shareholders of about RMB1.646 billion, which is a year-on-year increase of 186.15%. Recently, the Xingfa Group released its expected performance results, revealing a first quarter net profits of RMB1.7 billion, a year-on-year increase of 379.35%. Hubei Yihua’s performance pre-announcement revealed an expected net profits of RMB580 to RMB650 million, which is a year-on-year increase of between 173.17% and 206.14%.

Last week, six Chinese ministries, including the Ministry of Industry and Information Technology, jointly circulated an instruction requesting the strict control of newbuilds of production capacities of oil refining, ammonium phosphate, calcium carbide and yellow phosphorus. As a result, the phosphorus chemical industry appeared to be leading the two stock markets, with Liuguo Chemical Industry, Xingfa Group and Hubei Yihua being the leading gainers. Concerning the future market outlook, the supply side will become restricted while down-stream demand will increase, therefore, backing up the higher prices. As a result, the phosphorous chemical industry boom is expected to continue.

Industry analysts are of the opinion that the current price of phosphate ore is relatively low in China, while the international price of phosphate ore is high. Therefore, going forward, the importation of phosphate ore may increase. The International Fertilizer Industry Association (IFA) estimates that by 2024, the phosphate fertilizer production capacity will reach 53.34 million tons.