Hubei Yihua: Keeps Good Performance in Crisis    

Hubei Yihua Chemical Industry Co., Ltd. (Hubei Yihua, SZ: 000422) is located in Yichang, Hubei province and is a holding company under Hubei Yihua Group Co., Ltd. (Yihua Group). It achieved an operating revenue of RMB8.761 billion in 2009, an increase of 22.86% year on year, and net profit of RMB238 million, down 4.37%.

The increase of sales revenue in 2009 was mainly contributed by the operation of the newly built urea and pentaerythritol projects in its Erdos branch. The urea business contributed sales revenue of RMB3.97 billion, up 57.2% year on year, and occupied 45.3% of the company's total revenue. The relatively low price of urea and diammonium phosphate lowered the profit. "The company's comprehensive gross profit rate in 2009 was 16.86%, slightly down from the 17.09% in 2008." a sales manager of Hubei Yihua says.

As to the domestic urea market, he disclosed his opinion: "The price of urea and diammonium phosphate has risen since the end of 2009. But the severely cold weather in northern China and the lingering dry weather in southwestern China in the first quarter of 2010 delayed the spring ploughing, so urea producers in the whole country had to face a trend of falling in demand and decline in prices. Urea price was some RMB1 840/t in late March 2010. Although the oversupply of fertilizers in domestic market was unlikely eliminated in a short term, the expected recovered demand may lead to a higher average urea price in 2010 compared to the past year. But it will unlikely see a big rise because of the sustainable growth in feedstock cost, though it will turn warmer in the north and the drought in the south may ease up in the coming days."

After the startup of the 1.05 million t/a urea project in Inner Mongolia in December 2008, the company's urea capacity has raised to 2.5 million t/a, making it the largest urea manufacturer in China. The company uses two raw materials - coal and natural gas to produce urea: its headquarters in Hubei province, two branches in Guizhou province and Hunan province with respective capacity of 650 000 t/a, 400 000 t/a and 400 000 t/a use coal as raw material and one share controlled branch company in Erdos with a capacity of 600 000 t/a synthetic ammonia and 1.05 million t/a urea uses natural gas. Using natural gas can bring a higher gross profit rate to the company compared to the coal feedstock. In 2009, the gross profit rate of urea in Hubei Yihua exceeded 25%, leading all previous records.

Hubei Yihua also attaches great importance to chlor- alkali business and is constructing 300 000 t/a PVC project and 300 000 t/a caustic soda project in Inner Mongolia and will put them into operation in late 2010. It also plans another 300 000 t/a PVC project in Qinghai province and will put it into operation in the second half of 2011. The company's comprehensive gross profit rate of chlor-alkali business in 2009 has risen to 13.58% from negative 0.07% in the first half year. Hubei Yihua is confident in an earning increase in this segment with an average growth rate of 20% in the next three years. It also expects bright prospect in the 100 000 t/a sodium hydrosulfite project which came on stream in Yichang of Hubei province in October 2009.

Note: Yihua Group is one of the most infusive top ten representative enterprises of petrochemical industry in China. It holds two listed companies, five joint ventures, twenty-six research and development centers and subsidiary entity companies locating in Beijing, Hubei, Hunan, Henan, Yunnan, Chongqing, Guizhou, Sichuan, Inner Mongolia, Xinjiang, Ningxia, and other provinces in China and also a join venture in Vietnam. Yihua focuses on coal chemical industry, phosphorus chemical industry, salt chemical industry, natural gas chemical industry and mine development. These five backbone scopes account for the most of fifty-two products.
   Its turnover of 2008 was 3.9 billion U.S. dollars, of which 200 million U.S. dollars came from exports. Yihua Group is the largest manufacturer of pentaerythritol with an annual output of 110 000 tons. It covers 80% of the Chinese domestic market. In additional, the group succeeded in developing fine chemical products of di-pentaerythritol, TMP and di-TMP.
   Its total turnover reportedly reached 4.4 billion U.S. dollars in 2009 and is expected to reach 7.4 U.S. dollars by 2010.