Traditional Coal Gasification Urea Capacity is Exiting, but Large Advanced Coal Gasification Capacity is Improving

Recently, Guangxi Hechi Chemical Co., Ltd (Hechi Chemical for short) released announcement that it planned to acquire a controlling stake in Chongqing Nansong Medical Technology, and also would sell existing business, assets and liabilities related to urea production. Hechi Chemical is a key fertilizer producer in Guangxi, with ammonia production capacity of 0.21 million MT/year and urea capacity of 0.34 million MT/year, whose urea production accounts for 60% of the total in Guangxi. However, in the last three years, its urea production has been in a situation of a continuous loss. According to annual reports, during 2016-2018, operating revenues of urea business took up 77.30%, 94.67% and 85.06% in the total operating revenues; the gross profit rate was -22.37%, -3.37% and -6.01%. Because of relatively high production costs and weak market competitiveness, urea production was totally suspended in 2018.
 
Guizhou Chitianhua acquired a 100% stake in Guizhou Shengjitang Pharmaceutical Industry in 2016, and it is developing towards chemicall and pharmaceutical business from the single chemical business. Its subsidiary Chitianhua Chemical has suspended production since 2015 because of an increase in natural gas prices and sluggish urea market. The equipment with annual ammonia capacity of 0.3 million MT and urea capacity of half million MT would be dismantled. At present, urea production mainly depends on its subsidiary Tongzi Chemical, with urea capacity of 0.52 million MT/year and methanol capacity of 0.3 million MT/year.
 
By 2018, urea capacity had reached 69.54 million MT/year, 3.22 million MT/year less than last year. Of which urea capacity with advanced coal gasification technology was 25.49 million MT/year, taking up 36.7% in the total capacity, 2.4 percentage points higher than last year; urea capacity with traditional coal gasification technology was 23.39 million MT/year, accounting for 33.6%, 3.5 percentage points less than last year. Ammonia and urea capacity is developing towards the trends of large scale and advanced coal gasification.