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The performance of three leading phosphorus chemical companies in the first half of 2022 rose sharply, but they warned of price risks

 

 In the first half of 2022, the performance of the three domestic phosphorus chemical giants increased significantly, with a cumulative net profit of nearly USD1.3 billion. The three companies are as follows:

²  Yunnan Yuntianhua Co., Ltd. (Yuntianhua)

²  Hubei Xingfa Chemical Group Co., Ltd. (Hubei Xingfa)

²  Hubei Yihua Chemical Co., Ltd. (Hubei Yihua)

 

Among them, Yuntianhua and Hubei Xingfa both hit record highs in the first half of the year. The sharp rise in the price of phosphorus chemical products is one of the main driving forces for the rapid increase in the performance of phosphorus chemical enterprises. Taking Hubei Yihua as an example, the company's semi-annual report said that in the first half of the year, the prices of the company's leading products increased significantly year-on-year, and the prices of chemical fertilizer products such as urea and diammonium phosphate and chemical products such as PVC and caustic soda continued to run high.


All three companies have prompted to be alert to the impact of price fluctuations of phosphorus chemical on company performance in the later period

 

Affected by the cyclical nature of the chemical industry, phosphorus chemical companies are generally vigilant against the price fluctuations of chemical products and the risk of rising raw materials.

 

Hubei Xingfa: The market prices of some of the company's products are prone to large fluctuations due to changes in industry policies, market supply and demand and other factors, posing certain challenges to the company's operation and management.

 

Hubei Yihua: The industry in which the company operates is cyclical. Product prices are highly correlated with the demand for downstream applications. If the price of downstream agricultural products is low or the demand in the downstream chemical industry shrinks, it will have an adverse impact on business performance; in addition, as the main raw materials, phosphate rock, sulfur, coal and other bulk commodities are vulnerable to the international market prices. All of these later price fluctuations will adversely affect operating results.

 

Yuntianhua: In 2022, the impact of the epidemic will continue, the international situation will be turbulent, and uncertainties in the international market will increase. Affected by these factors, the domestic fertilizer and chemical industry has the risk of product market price fluctuations, which will largely affect the stability of the company's profits.

 

Table : 2021 and H1 2022 results of China's phosphorus chemical giants, billion USD

Company

Indicator

H1 2022

YOY Change

2021

YOY Change

Yuntianhua

Operating income

5.3

18.4%

9.2

21.4%

Net profit

0.50

120.5%

0.53

1,238.8%

Hubei Yihua

Operating income

1.6

18.9%

2.7

34.3%

Net profit

0.24

129.5%

0.23

1,255.0%

Hubei Xingfa

Operating income

2.5

74.5%

3.4

28.9%

Net profit

0.53

211.6%

0.62

583.6%

Source: reports of the three companies

Source: reports of the three companies

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