Haoyuan Chemical Actively Addresses Crisis Problems        

Anhui Haoyuan Chemical (Group) Co. Ltd. (Haoyuan Chemical) is located in Fuyang city, Anhui province. Its main production units include 800 000 t/a synthetic ammonia, 700 000 t/a urea, 400 000 t/a ammonium bicarbonate, 300 000 t/a methanol, 200 000 t/a morpholine and 50 000 t/a hydrogen peroxide. It has 6 subsidiaries, including Jieshou Haoyuan Chemical Industry Co., Ltd., Funan Xintian Chemical Co., Ltd. and Fuyang Haoyuan Plastics Co., Ltd.
   Since the second half of 2008, due to the impact of the global financial crisis, the prices and sales of Haoyuan Chemical's urea, methanol and morpholine have dropped significantly. The selling price of its methanol is far below the production cost, but its urea business has relatively strong competitiveness. Haoyuan Chemical has adjusted its product portfolio and strengthened cost control, which improved its operating conditions rapidly. So the company decides to build a new 300 000 t/a urea project (the 2nd and 3rd phases of its 400 000 t/a urea project) with the energy-saving carbon dioxide stripping process. The production cost of urea by this process will be RMB100 per ton lower than that by the original production line. A manager from the company says that during the financial crisis, the prices of steel, cement and other building materials have dropped a lot, so this project can save investment by over RMB40 million in construction.
   In 2009, Haoyuan Chemical started the construction of the urea project, and put in RMB226 million investment. In April 2010, the project will be finished. By then, the urea capacity of the company will reach 1.0 million t/a. A manager from Haoyuan Chemical says that this urea project will bring RMB500 million more sales revenue to the company every year.
   In addition to this project, during 2009 - 2010, Haoyuan Chemical plans to invest in several other projects. In 2009, the company invested RMB118 million to renovate its nitrogenous fertilizer production system. The renovation project will be completed by the end of 2009. The company also invested RMB80 million in the energy-saving renovation of the 150 000 t/a hydrogen peroxide production unit in its subsidiary Funan Xintian Chemical. Construction on the renovation project was started in May 2009 and will be completed in March 2010. In addition, the company plans to put in RMB20 million to build a sewage treatment terminal and reclaimed water project to conserve water resources.

* Improve efficiency by scientific management   

In November and December of 2008, Haoyuan Chemical's methanol business suffered from a severe loss, and its morpholine export was also blocked. But in the hard time, the company has not made pay cuts or layoffs but reduced its production costs by optimizing its management and upgrade its production processes. After the company renovated the key equipment of its synthetic ammonia production facilities, the power and coal consumptions of this production line have dropped by 30 kWh and 110 kg respectively per ton of ammonia, respectively. This measure can reduce the company's ammonia production cost by RMB13 million a year. The company has also optimized its production processes. It replaced its original propylene carbonate decarbonization process with the pressure swing adsorption process, reducing the power consumption by RMB20 million a year. And the cancellation of propylene carbonate can save about RMB7.5 million a year. The elimination of high-energy consumption equipment can also save RMB5 million a year. In the first half of 2009, this company has implemented over 20 large technical renovation projects with an investment of over RMB1.0 million each and over 70 other smaller technical renovation projects.

* Change the sales strategy     

Haoyuan Chemical also changes its sales strategy to develop new markets.
    First, this company expands the sales radius of its products shipped by car. Traditionally, due to the constraints of its resource distribution and transportation costs, the company's car-shipping sales radius only covers nearby areas around Fuyang city. Now, the company expands its car-shipping sales radius to the entire northern part of Anhui province and even to the south-east of Henan province and northern Jiangsu province. In the whole year of 2008, the car-shipping sales volume of the company's products was only 180 000 tons, but in the first five months of 2009, this figure already reached 122 000 tons.
   Second, the company also extends the sales radius of its products shipped by train. Its traditional train-shipping sales mainly concentrated in parts of regions in eastern China and southern China. Now, this company is actively extending its train-shipping sales scope to southwestern China, such as Yunnan, Guizhou and Sichuan provinces, and northeastern China. In the first five months of 2009, the train-shipping sales volume of its products reached 123 000 tons.
   Third, the company strengthens its marketing management and fosters long-term customers. It has not only maintained a good cooperative relationship with large agricultural materials companies, such as SinoChem Group and China National Agricultural Means of Production Group Corporation, but also had a stable network of distributors.
   After having taken a series of such measures, in the first half of 2009, Haoyuan Chemical produced and sold 318 000 tons of ammonia, 284 300 tons of urea and 131 000 tons of ammonium bicarbonate, and achieved a sales revenue of RMB1.042 billion, up 55.93% year on year.

   During 2011 - 2015, the company plans to invest RMB520 million to adopt the HT-L pulverized coal gasification process in the 200 000 t/a raw material reconstruction project for synthetic ammonia production, invest RMB620 million in the relocation and technological transformations of 120 000 t/a synthetic ammonia and 200 000 t/a urea production units at Jieshou Haoyuan Chemical Co. Ltd. and invest RMB530 million to build a 300 000 t/a soda ash project using the Hou's process.