Fluorochemical Weekly Report: Bottom support for cost construction, strengthening short-term market confidence

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One week market

Refrigerant: HFCs quota policy stimulus combined with raw material price hikes, collectively seen as bullish for the future market

This week, the production and sales of refrigerants in the market remained stable, but due to the overall increase in raw material prices, mainstream refrigerant prices have also increased simultaneously. Weekly market characteristics: The production and sales of upstream basic raw material products have improved, and prices have increased by varying degrees. Among them, the prices of hydrofluoric acid and sulfuric acid in the East China market have increased by more than 13% month on month compared to last week; Tetrachloroethylene has been affected by weak demand, resulting in a narrow range of price consolidation. Recently, the prices of some refrigerant raw materials have continued to rise, and the rapid increase in costs has led to increased support for refrigerant costs, driving up the prices of mainstream refrigerant products such as R134a, R125, and R410A. However, the current downstream demand is relatively stable, and the overall market is still in a situation of oversupply. The upcoming quota management policy determines that global supply is limited, and the HFCs refrigerant market will maintain a long-term positive situation. In summary, enhanced cost support and favorable policies will effectively enhance the industry's prosperity.

Fluoropolymers: Strong bottom support at the cost end, weak balance between supply and demand, continuation

This week, the relatively loose supply of upstream monomer products R22 and R142b in the fluoropolymer market has determined that stable shipments will be maintained in the short term. Although the prices of basic raw materials such as calcium carbide, liquid chlorine, sulfuric acid, and other products fluctuate greatly, there has not yet been a strong price drive for downstream TFE series and VDF series products in the short term. From the perspective of the industrial chain, the prices of basic raw materials have almost bottomed out, and the reduction of production and price protection in the upstream and downstream have led to a significant rebound in prices. However, the limited recovery of demand has determined that the sustainability of price increases is poor. The short-term market will continue the game of effective supply and demand, and under the staggered influence of "quantity" and "price", TFE series and VDF series fluoropolymer products will still operate in a low stalemate.

Fluorinated lithium salts: insufficient demand follow-up and inventory pressure on production enterprises

This week, the demand for lithium carbonate has cooled, and inventory pressure on production companies has emerged. In addition, futures have generally shown a downward trend, forcing prices to decline. As the price of lithium carbonate in the early stage declines and spreads downstream, the cost support for lithium hexafluorophosphate further weakens. Moreover, due to excessive production capacity release, China's hexafluoro production remains at a historical high, and high intensity competition causes the price of hexafluoro to decline with cost. In the context of a weak market, downstream electrolyte and positive electrode material factories maintain low raw material inventory, with few transactions on the market, and weak demand has curbed product prices. Industry Online predicts that the growth of downstream main demand for power batteries is limited, and it is expected that the price of lithium carbonate may still be lowered. The price of lithium hexafluorophosphate will also fluctuate in the same direction as lithium carbonate. However, under the mentality of buying up rather than buying down, downstream inventory levels are generally low. In case of sudden factors such as poor transportation capacity and supply contraction, there may be a significant increase in on-site prices.

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Weekly Highlights

Fluorine raw materials and refrigerants

Jinshi Resources: Net profit of 126 million yuan in 2023H1, a year-on-year increase of 34.71%

On the evening of August 14th, Jinshi Resources released its 2023 semi annual report, stating that the company achieved a revenue of approximately 559 million yuan in the first half of the year, a year-on-year increase of 33.3%; The net profit attributable to the parent company was 126 million yuan, a year-on-year increase of 34.71%.

Jinshi Resources stated that during the reporting period, the company's fluorite business volume and price increased simultaneously, as well as the Jiangxi Jinling lithium bearing fine mud extraction lithium mica concentrate project and the Baogang "selection chemical integration" project began to contribute profits. Compared to the same period in history, the net profit of Jinshi Resources in the first half of 2023 reached a new high since its listing. In a single quarter, the company achieved a profit of 92 million yuan in the second quarter, with a month on month growth of 165.43%.

Dongyue Group: In 2023H1, its revenue exceeded 7 billion yuan and achieved a net profit of 208 million yuan

On August 25th, Dongyue Group released its 2023 semi annual report, stating that in the first half of 2023, Dongyue Group achieved revenue of approximately 7.198 billion yuan, a decrease of 28.83% compared to the same period last year, with a gross profit margin of 15.73% and a comprehensive segment profit margin of 3.85%; The operating profit margin is 3.78%; Excluding pre tax profit of approximately 288 million yuan, net profit of approximately 208 million yuan, and total comprehensive income of approximately 207 million yuan.

Dongyue Group also stated that the main reason for the decline in performance of the refrigerant business segment is the decline in the prices of R142b products. Due to changes in demand for the PVDF industry chain and the expansion of supporting production capacity for R142b by some PVDF manufacturers, the market demand for R142b has declined, and its price has significantly decreased compared to the same period last year. Although there was good demand in the refrigerant market in the first half of the year, with prices of products such as R22, R32, and R410A increasing, it failed to compensate for the impact of the R142b price decline on the performance of the refrigerant division.

Fluoropolymer

New Zebang: Heidefu High Performance Fluorine Materials Project Phase I will be put into operation in the fourth quarter

On August 22nd, New Zebang stated at the performance briefing:

The company's 40000 ton lithium-ion battery electrolyte project in Poland and the first phase of Tianjin New Zebang Semiconductor Chemicals and Lithium Battery Materials project have been put into production as scheduled;

The high-end fluorine fine chemical project (Phase II) has started trial production in July;

The Huizhou Phase 3.5 solvent expansion project is expected to begin trial production in the second half of 2023;

The Heidefu High Performance Fluorine Materials Project (Phase I) will be put into operation in the fourth quarter of 2023.

New Zebang also stated that the main products of the Heidefu High Performance Fluorine Materials Project (Phase I) include tetrafluoroethylene and hexafluoropropylene as fluorinated monomers, which are important raw materials for synthesizing fluorinated polymers and fine chemicals; Polytetrafluoroethylene, fusible polytetrafluoroethylene, and perfluorosulfonic acid resin are fluorinated polymers; Hydrofluorinated ether and tetrafluorosulfolactone are fine chemicals containing fluorine. The company's implementation of this project not only focuses on expanding mid to high-end fluoropolymers and fine chemicals using tetrafluoroethylene and hexafluoropropylene as raw materials, improving product structure, enriching downstream application scenarios, and improving revenue quality; It can also extend and improve the value chain of organic fluorine chemicals, ensure the supply of raw materials such as tetrafluoroethylene and hexafluoropropylene, and form a good industrial chain synergy and complementarity with Hesfu, providing a solid foundation for the company's continued development of mid to high-end fluorine chemical products in the future.

Shenghua New Materials plans to build a high-end fluorine material project with an annual output of 10000 tons, including fluorobenzene and fluorotoluene (Phase II)

On August 29th, Shenghua New Materials announced that its subsidiary Dongying Fuhua Dayuan New Materials Co., Ltd. had launched a 10000 ton/year high-end fluorine material project (Phase II).

It is understood that the project plans to construct 2000 tons/year of fluorobenzene, 2000 tons/year of ortho fluorotoluene, and 2000 tons/year of para fluorotoluene, including the expansion and upgrading of production facilities and factory buildings, as well as other supporting public and auxiliary facilities. The project is expected to have a total investment of 42.826 million yuan and an area of 14800 square meters. It is expected to be put into operation in April 2024.

Shenghua New Materials stated that the construction of high-end fluorine material projects is in line with national industrial policies, which can extend the existing industrial chain of enterprises, facilitate their growth and strength, fully leverage resource advantages, increase product added value, increase profit growth points, and enhance their influence and core competitiveness.

In addition, projects such as Shenghua New Materials 11000 tons/year of additives, 100000 tons/year of liquid lithium salts, Wuhan Company's integrated production and research and development of lithium battery materials, and Meishan Company's Southwest Base of Lithium Battery New Materials have been smoothly promoted; Actively preparing for the second phase of the Quanzhou Company's carbonate comprehensive project and the Fuzhou silicon-based negative electrode project; Leshan Company has completed the signing of cooperation agreements and company registration, and the integrated layout of the company is gradually improving. The 100000 ton/year liquid lithium salt project at Dongying Base and the lithium battery material production and research and development integration project at Wuhan Company will be put into operation in 2023.

Fluorinated lithium salt

Ganfeng Lithium Industry: In 2023H1, its revenue exceeded 18 billion yuan, a year-on-year increase of 25.63%

On August 30th, Ganfeng Lithium Industry released its 2023 semi annual report, showing that the company achieved a revenue of 18.145 billion yuan, a year-on-year increase of 25.63%; The net profit attributable to shareholders of the listed company was 5.85 billion yuan, a year-on-year decrease of 19.35%; The net profit attributable to shareholders of the listed company after deducting non recurring gains and losses decreased by 48.79% year-on-year.

Despite a decline in profits, Ganfeng Lithium remains optimistic about the lithium market for a long time. Wang Xiaoshen, President of Ganfeng Lithium Industry, stated at the performance briefing on August 30th that in the long run, the demand side for lithium prices is still relatively strong, and there will be continuous new demand in the future. The demand for energy storage has started to explode from last year to this year, and there will be more fields in the future, including heavy trucks, ships, etc., which are expected to grow in the future.

Hunan Yuneng: In the first half of 2023H1, its revenue exceeded 23 billion yuan, a year-on-year increase of 64.49%

Hunan Yuneng (301358) disclosed its semi annual report on the evening of August 24th. The company achieved a revenue of 23.179 billion yuan in the first half of the year, a year-on-year increase of 64.49%; The net profit was 1.238 billion yuan, a year-on-year decrease of 24.15%; Basic earnings per share are 1.78 yuan.

Hunan Yuneng is a major supplier of positive electrode materials for lithium-ion batteries in China. Since the end of April, with the gradual increase in downstream demand and the gradual stabilization of lithium carbonate prices, the company's product sales have grown significantly. During the reporting period, the company achieved sales of 216000 tons of lithium iron phosphate products, with a significant year-on-year growth.

Hunan Yuneng also stated that in terms of product types, the sales volume of the company's power type lithium iron phosphate products continues to increase, and the sales volume of energy storage type lithium iron phosphate products is also growing rapidly and the proportion has significantly increased. In the first half of 2023, the proportion of products applied by the company in the energy storage field has increased to around 30%.

Yahua Group: Revenue in 2023H1 was 6.22 billion yuan, a year-on-year increase of 3.5%

On August 24th, Yahua Group disclosed its semi annual report that in the first half of 2023H1, the company achieved a revenue of 6.22 billion yuan, a year-on-year increase of 3.5%, a net profit attributable to the parent company of 950 million yuan, a year-on-year increase of -58.0%, and a net profit attributable to the non parent company of 920 million yuan, a year-on-year decrease of -59.2%.

In Q2 2023, the company achieved a revenue of 3.18 billion yuan, a year-on-year increase of -5.0%, a month on month increase of+4.6%, a net profit attributable to the parent company of 360 million yuan, a year-on-year decrease of -71.2%, a month on month increase of -39.7%, and a net profit attributable to the non parent company of 350 million yuan, a year-on-year decrease of -71.8%, and a month on month increase of -38.8%.

Regarding the sharp decline in performance in the first half of the year, Yahua Group stated that it was mainly affected by changes in supply and demand in the lithium industry, resulting in a significant decrease in lithium salt prices. However, lithium raw material prices are still at a high level, compressing the profitability of lithium salt products, leading to an overall decline in the company's operating performance compared to the same period last year.

Tianhua New Energy: Revenue of 6.64 billion yuan in 2023H1, and the expansion process continues to advance

Tianhua Xinneng released a semi annual report stating that the company achieved a revenue of 6.64 billion yuan, a year-on-year decrease of 14.58%; The net profit attributable to shareholders of the listed company was 13.7 yuan, a year-on-year decrease of 60.86%.

Tianhua Xinneng stated that the company's operating performance in the first half of 2023 decreased year-on-year, mainly due to the impact of the new energy lithium battery industry market environment, resulting in a year-on-year decrease in lithium salt prices and an increase in costs.

In terms of lithium salt production capacity, Tianyi Lithium, a joint venture with Ningde Times, has an annual production capacity of 50000 tons of lithium hydroxide. According to the latest disclosure in the semi annual report, the Sichuan Tianhua battery grade lithium hydroxide construction project that started construction last year with an annual production capacity of 60000 tons has now reached production capacity; The Yibin Weineng Lithium Industry Phase I project with an annual production of 25000 tons of battery grade lithium hydroxide is under construction according to plan and is expected to reach the expected usable state of the project in the third quarter of this year.