Fluorochemical Weekly Report: Narrow Cost Relaxation and Market Game Stability Maintenance

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One week market

Refrigerant: Loose costs add up to demand, weak factories reduce production and maintain prices

This week, due to the loosening of upstream raw material prices and insufficient demand support, the refrigerant market has been fluctuating and maintaining stable operation. Weekly market characteristics: Affected by the overall weakening of production and sales, upstream basic raw material products such as hydrofluoric acid, TCE, and methane chloride have light transactions and narrow price drops; The prices of other raw materials fluctuate in a narrow range. The decline in hydrofluoric acid prices has led to a weakening of refrigerant cost support. However, with the clear quota policy for HFCs refrigerants, factories are no longer rushing at low prices and losing money, but are returning to rational production and sales, with a strong mentality of reducing production and maintaining prices. In addition, due to the upcoming expiration of export licenses and long shipping schedules, foreign trade orders are coming to an end, and refrigerant factories are cautious in receiving orders. Overall, towards the end of the year, the overall demand for domestic and foreign sales is weak, and mainstream refrigerant factories will continue to produce according to demand, with narrow price consolidation and operation being the main focus in the future market.

Fluoropolymers: Narrow cost range, loose supply and demand relationship, loose price stalemate, and stability maintenance

This week, the cost support for the fluoropolymer market has slightly weakened, with the prices of the main monomer raw materials R22 and R142b decreasing narrowly. In addition, the supply and demand relationship between TFE series and VDF series fluoropolymers continues to be weak. As mainstream fluoropolymer product prices have already bottomed out to low levels, there is limited room for further decline, and the overall market is in a dilemma of consolidation. In terms of specific products, the upstream raw material product fluorite prices have rebounded and stabilized after exploring an increase, and the prices of products such as hydrofluoric acid have rebounded and consolidated. The pattern of oversupply of other products is difficult to change in the short term, and the game of effective supply and actual demand will continue to stabilize and consolidate the market in the future.

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Weekly Highlights

Fluorine raw materials and refrigerants

Zhongjuxin plans to produce 196000 tons of ultra-pure electronic chemicals annually

On October 24th, the Ecological Environment Bureau of Qianjiang City announced the annual production of 196000 tons of ultra pure electronic chemicals by Zhongjuxin Qianjiang. According to the public announcement, the project is located in Jianghan Salt Chemical Industrial Park in Qianjiang City, with a total investment of 1.38 billion yuan and will be constructed in two phases.

The first phase construction scale is 52500 tons/year (including 40000 tons/year of electronic grade sulfuric acid and 12500 tons/year of electronic grade ammonia);

The construction scale of Phase II is 143500 tons/year (including 40000 tons/year of electronic grade sulfuric acid, 12500 tons/year of electronic grade ammonia, 30000 tons/year of electronic grade hydrofluoric acid, 30000 tons/year of electronic grade nitric acid, 20000 tons/year of electronic grade hydrogen peroxide, 10000 tons/year of electronic grade isopropanol, and 1000 tons/year of electronic grade mixed acid).

Kemu collaborates with Juhua to increase HFO-1336mzzZ production capacity

In May 2023, Comus announced that it would invest in production capacity for its Low Global Warming Potential (GWP) Opteon (Oten) 1100 foaming agent and Opteon (Oten) SF33 special fluid. Kemu has reached an agreement with Zhejiang Juhua Co., Ltd. to produce an additional quantity of HFO-1336mzzZ. Kemu expects the agreement project to start by the end of 2025 and full production by early 2026. The production of HFO-1336mzzZ (hexafluorobutene) will be doubled to support a wide range of applications such as foaming agents, electrical appliances, refrigerants, and special fluids.

Juhua Group: In Q3 2023, its revenue was approximately 5.9 billion yuan, an increase of 0.75% year-on-year

On October 26th, Juhua Group released its report for the third quarter of 2023. The report states that in the third quarter of 2023, Juhua Group achieved a revenue of approximately 5.917 billion yuan, a year-on-year increase of 0.75%; The net profit attributable to shareholders of the listed company was approximately 257 million yuan, a year-on-year decrease of 65.54%; The net profit attributable to shareholders of the listed company after deducting non recurring gains and losses was approximately 233 million yuan, a year-on-year decrease of 68.48%. In the first three quarters of this year, Juhua Group achieved a revenue of approximately 16 billion yuan, a year-on-year decrease of 2.22%; The net profit attributable to shareholders of the listed company was approximately 750 million yuan, a year-on-year decrease of 56.04%.

R410B imported from the United States, China's refrigerant exports may be affected

It is understood that the US Department of Commerce has started investigating whether refrigerant mixtures imported from Mexico have evaded anti-dumping duty orders.

The subject of the investigation is R410B, a refrigerant mixture that is very similar to air conditioning refrigerant R410A but not commercially used. A US refrigerant manufacturer has complained that R410B was manufactured in Mexico using R32 and R125 imported from China, and then imported to the United States where it was further processed into R410A, thereby avoiding anti-dumping orders and being sold in the US market.

The HFC Alliance of the United States claims that these unapproved HFC refrigerant mixtures are only remixed into one of the products covered by the anti-dumping duty order after importation. The alliance said that it had seen an "astonishing" increase in the import volume of R410B originating in China or mixed from Chinese parts in Türkiye.

The American Hydrofluorocarbon Alliance claims that this imported product will lead to a decline in product prices for companies including Akoma, Comus, Honeywell, and Mercy Fluorochemical, resulting in a decrease in sales revenue and market share.

Fluoropolymer

Inner Mongolia Fluorine Source Technology's Fluorine High tech New Material Industry Project Commences

According to Inner Mongolia Daily, on September 19th, the high-end fluorine material integration project of Inner Mongolia Fluorine Source Technology Co., Ltd. began smoothly. It is understood that the project is planned to be divided into three phases to construct the fluorine-containing high-tech new material industry. The current project is the first phase, with a total planned investment of 30.2 billion yuan.

The first phase investment is 3.66 billion yuan. The project mainly involves the construction of difluoromethane (R22), tetrafluoroethylene (TFE), tetrafluoroethyl methyl ether (HFE-254), methyl difluoroacetate, ethyl difluoroacetate, perfluoroalkyl ethyl acrylate, ethylene terephthalate copolymer (ETFE), soluble polytetrafluoroethylene (PFA), polyfluoroethylene propylene (FEP), hexafluoropropylene (HFP), hexafluoroepoxy propane (HFPO), perfluoropropyl vinyl ether (PPVE), fluorine gas (F2), surfactant (PFPE) Products such as calcium chloride dihydrate and sulfuric acid production from desulfurization mother liquor.

Yonghe Shares: Q3 2023 revenue of 1.15 billion yuan, a year-on-year increase of 20%

On October 27th, Yonghe Shares released its report for the third quarter of 2023.

The report shows that in the first three quarters of 2023, Yonghe Shares achieved operating revenue of approximately 3.229 billion yuan, an increase of 18.69% year-on-year. The net profit attributable to shareholders of the listed company was approximately 162 million yuan, a decrease of 28.86% year-on-year. The net profit attributable to shareholders of the listed company after deducting non recurring gains and losses was approximately 151 million yuan, a decrease of 24.29% year-on-year. Among them, in the third quarter, the operating revenue was about 1.149 billion yuan, an increase of 20.37% year-on-year. The net profit attributable to shareholders of the listed company was about 52 million yuan, a decrease of 42.58% year-on-year. The net profit attributable to shareholders of the listed company after deducting non recurring gains and losses was about 49 million yuan, a decrease of 28.64% year-on-year.

Yonghe Co., Ltd. mentioned in the report that the changes in net profit were mainly affected by the overall market situation, such as a decrease in product prices, a decrease in gross profit margin, an increase in financial expenses, and the impact of the tax rate adjustment of the preferential policies for the Western Development enjoyed by its subsidiary Inner Mongolia Yonghe in the same period last year.

Haohua Technology's net profit in the first three quarters was approximately 687 million yuan, a year-on-year decrease of 9.23%

On October 31st, Haohua Technology released its report for the third quarter of 2023.

In the first three quarters of 2023, Haohua Technology's operating revenue was approximately 6.274 billion yuan, a year-on-year decrease of 3.01%. The net profit attributable to shareholders of the listed company was approximately 687 million yuan, a year-on-year decrease of 9.23%. The net profit attributable to shareholders of the listed company after deducting non recurring gains and losses was approximately 677 million yuan, a year-on-year decrease of 9.75%.

In the third quarter of 2023, Haohua Technology's operating revenue was approximately 1.97 billion yuan, a year-on-year decrease of 18.83%. The net profit attributable to shareholders of the listed company was approximately 184 million yuan, a year-on-year decrease of 30.14%. The net profit attributable to shareholders of the listed company after deducting non recurring gains and losses was approximately 178 million yuan, a year-on-year decrease of 32.31%.

Haohua Technology mentioned in the report that the year-on-year decrease in net profit in the third quarter was mainly affected by macro factors such as the cyclical downturn in the fluorine chemical industry. The main product market prices in the high-end fluorine material business sector continued to decline, and the decrease in gross profit led to a decrease in overall net profit.