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Listed Fertilizer Companies’ Urea Business in the First Half of 2017 Fully Shrank

China Agriculture Report By CnAgri2017-08-29 09:23:40China Agriculture Report Print Recently, Luxi Chemical, Lanhua Sci-Tech, Sichuan Meifeng and Xinlianxin have published their performance in the first half o 2017, and all made profits, even better than last year; but fertilizer market is still severe, and the profits from fertilizer business especially urea are getting smaller and the profits mainly come from chemical products. The details are as followings:
Table, Operating Situation of Listed Fertilizer Companies in the First Half of 2017
 Name of Company  Net Profits (RMB 100 Million)  YOY Urea Business YOY  Reasons for an Increase in Profits
Luxi Chemical 5.51 an increase of 330% operating revenues reached RMB 415 million a decline of 49.4% mainly from integrated soda, fine chemical products and NPK 
Lanhua Sci-Tech 5.1 turn a loss into a profit production stood at 0.4984 million MT;
sales reached 0.5532 million MT
a fall 19.46%
a decline of 2%
mainly from coal sector
Sichuan Meifeng 0.85 turn a loss into a profit operating revenues stood at RMB 415 million  a fall of 4.39% mainly from NPK, melamine and other products and trade
Xinlianxin 1.71 a growth of 113% operating revenues stood at RMB 1.392 billion a decline of 10.37% mainly from NPK, melamine, methyl alcohol, liquid ammonium products  
Data source: semiannual reports from listed fertilizer companies
The main reasons for a shrink in urea business of listed fertilizer companies are as the followings:
Judging from industry, the overall market of urea in the first half of 2017 got better obviously compared to that in the same period of last year, but the market still is severe. Serious overcapacity, low urea prices and aggravating loss result in the average operating rate of urea only at 57.50%, down 13.52% year on year; urea output in the first half of 2017 reached 26.5712 million MT, an obvious year-on-year decline of 24.19%; urea exports in the first half of 2017 stood at 2.753 million MT, down 45.48% or 2.2968 million MT.
Judging from companies, influenced by the pressure of environmental protection policies, the cancellation of preferential policies for fertilizer, an increase in urea production costs and a fall in urea prices, the loss faced by companies must be inevitable. For example: Lanhua Sci-Tech’s urea production costs reach 1,417.35 RMB/MT, but selling prices (excluded taxes) only are 1,342.27 RMB/MT; the more the sales are, the more the loss is, which has become a common understanding for urea companies.

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