Phosphorus Industry China Monthly Report 1602 (12 issues per year)

09 Mar, 2016, 16:20 ET from ReportBuyer

LONDON, March 9, 2016 /PRNewswire/ -- In Feb. 2016, market conditions for China's phosphorus chemical industry were quite stable. In particular, market prices of upstream products such as phosphorus ore and yellow phosphorus began to increase slightly while those of downstream products such as phosphoric acid and phosphate continued to decline. In addition, influenced by Chinese Lunar New Year, many phosphorus chemical manufacturers suspended production, leading to a declining operating rate.

Company dynamics:

Yunnan Yuntianhua split and reconstructed its subordinate Chongqing R&D Center and plans to set up a wholly-owned subsidiary and add alternative energy to its business scope. CCM believes that besides relying on its fine phosphate business, this may be the first step for Yunnan Yuntianhua entering into the field of Li-ion batteries.

Kingenta planned to build a wholly-owned subsidiary (Xinjiang Puhui) in Xinjiang to engage in sales of fertilizers. Considering that Kingenta has built a new-type crop fertilizer production project in Xinjiang, to build a subsidiary will help Kingenta to optimize its operation distribution, improve its operating efficiency and accelerate the process of market expansion and promotion.

JPMC and China's CQMM planned to build a phosphate fertilizer and phosphoric acid plant in Aqaba, Jordan with an investment of about USD1.40 billion.

In this issue, CCM reviewed the market conditions of yellow phosphorus in China in 2015. Specifically, market price kept dropping after remaining stable in a short term in Q1 2015. Operating rate was lower than 40%, mainly because of insufficient demand caused by the depressed downstream products (like glyphosate and phosphate) market conditions.

The USD/RMB exchange rate in this report is USD1.00=RMB6.5539 on 1 Feb., 2016, sourced from the People's Bank of China. All the prices mentioned in this report will include the VAT, unless otherwise specified.At present, in Feb. 2016, China's ammonium phosphate market is depressed and trading is lax. CCM predicts that China's ammonium phosphate market will remain depressed in Q1 2016 and will struggle in its attempts to rally prices.

In 2015, as market price of yellow phosphorus kept declining in China in 2015, profit margin became more and more meager, most Chinese yellow phosphorus manufacturers reduced their operating rate. CCM predicts that China's yellow phosphorus market may remain as depressed as in 2015 this year considering that market conditions of downstream products of yellow phosphorus are not likely to recover in 2016.
In Feb. 2016, Shenzhen Batian disclosed that its application for a non-public offering of shares had been approved by the CSRC. This allows for the steady enhancement of both its new compound fertilizer business, and its strategic plan to develop a new sales model, and will help its business to achieve innovation and upgrades, as well as increase its performance.

In Feb. 2016, Kingenta planned to build a wholly-owned subsidiary (Xinjiang Puhui) in Xinjiang to engage in sales of fertilizers. Considering that Kingenta has built a new-type crop fertilizer production project in Xinjiang, to build a subsidiary will help Kingenta to optimize its operation distribution, improve its operating efficiency and accelerate the process of market expansion and promotion.
In Feb. 2016, Guizhou Chitianhua announced that its major reorganization of assets had made gradual progress. When Guizhou Chitianhua finishes the reorganization, it will add pharmaceutical business which has strong profitability and a wide market foreground, to develop a "Pharmaceutical + Chemical" operation mode, which can help the enterprise to reverse the operation downturn and make more profits.

At the end of Jan. 2016, Hubei Xingfa released its 2015 performance forecast, showing that its net profit fell dramatically in 2015 due to it falling from a substantially higher than average net profit in 2014, and not because of a decline in profitability. In 2014 it made a non-recurring profit and loss of USD67.35 million (RMB438 million) which is a far cry from 2015. However, if you disregard the influence of non-recurring profits and losses from 2014 on net profit in 2015, Hubei Xingfa actually made an YoY increase. With Hubei Xingfa's phosphorus ore exploitation projects progressing smoothly, CCM believes it will continue to perform well in the future.

Though the output in China's chemical industry had increased in 2015, the whole industry was still haunted by four problems: weak investment, compulsory limitation on production capacity by the government, heavier taxation and increasing manufacturing costs.

In early Feb. 2016, Yunnan Yuntianhua split and reconstructed its subordinate Chongqing R&D Center and plans to set up a wholly-owned subsidiary and add alternative energy to its business scope. CCM believes that besides relying on its fine phosphate business, this may be the first step for Yunnan Yuntianhua entering into the field of Li-ion batteries.

In Jan. 2016, market price of phosphorus ore was quite stable in China as downstream phosphate fertilizer and yellow phosphorus markets maintained depressed. Meanwhile, as Chinese Lunar New Year was coming, successive domestic manufacturers began to stop mining and maintain relationships with old clients by relying on inventory. CCM predicts that market price of phosphorus ore may remain stable while transaction volume may decrease in the short term.

In Jan. 2016, China's phosphoric acid market remains sluggish. Market prices of upstream products such as phosphorus ore and yellow phosphorus, increased slightly while operating rate of its downstream phosphate market kept declining. Under the influence of cost pressure and insufficient demand, market price of phosphoric acid remained stable and operating rate slid.
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