Fluorine chemical industry: favorable policies to promote industrial upgrading

　　In order to improve the situation of large but not strong fluorine chemical industry and excessive production capacity of low value-added products in China, the Ministry of Industry and Information Technology (MIIT) recently issued the "Access Conditions for Hydrogen Fluoride Industry". The draft for consultation clearly states that the total scale of hydrogen fluoride in the newly-built production enterprises shall not be less than 50,000 tons per year, and the production capacity of the newly-built hydrogen fluoride production units shall not be less than 20,000 tons per year (except for the production of hydrogen fluoride by comprehensive utilization of resources). In the 12th Five-Year Plan for the Protection and Integration of Fluorite Resources, the fluorine chemical industry will make a separate special plan for the compulsory integration of resources, so that the relevant enterprises will focus on the development of electrolyte lithium hexafluorophosphate for lithium-ion batteries, new fluorine-containing intermediates for new varieties of pharmaceutical pesticides and other products to achieve industrial transformation and upgrading. Grade. The draft has set a threshold for the domestic hydrogen fluoride industry from "industrial layout, technology, scale, energy consumption, environmental protection, product quality" and other aspects. We believe that the implementation of the draft policy will benefit the long-term development of hydrogen fluoride and even the fluorine chemical industry chain, mainly reflected in the following aspects: reflects the state's determination to protect and integrate fluorite resources. Although the draft is only limited to the hydrogen fluoride industry, and does not directly involve fluorite resources, we can still see from the article that the national integration of fluorite resources to control the export of fluorine primary products. As the direct export of fluorite ore has been controlled by quota system, fluorine primary products are basically exported in the form of hydrofluoric acid; domestic exports of 108,000 tons in 2009, up from 116,000 tons in September this year, an increase of 57.8% over the same period last year. In addition, the export enterprises are mainly foreign-funded joint ventures. For example, 80% of the export of hydrofluoric acid in Zhejiang is from foreign invested enterprises. Therefore, the policy will effectively control the fluorite resources to accelerate the outflow. Promoting the price increase of fluorine chemical industry chain will change the demand and supply structure of domestic hydrogen fluoride and fluorine chemical industry. In recent years, the production capacity of hydrogen fluoride in China has been put into large quantities, resulting in a decreasing rate of operation. In 2003 -2009, the average annual growth rate of production capacity was 20.9%, while the average annual growth rate of actual output was 13.2%. By the end of 2009, domestic capacity reached 1 million 220 thousand tons, and capacity utilization rate was less than 50%. Due to the serious overcapacity, it also urges domestic enterprises to use the export to digest surplus capacity. After the promulgation of the policy, not only the construction and delivery of new production capacity have been tightened from the source, but also the elimination of backward hydrofluoric acid production capacity has been promoted by establishing industry standards in terms of technology, scale, energy consumption, environmental protection and product quality. The supply and demand structure of the industry is expected to be gradually improved. As hydrogen fluoride is an indispensable link in the fluorine chemical industry chain, the balance of supply and demand of hydrogen fluoride will also have a positive impact on the fluorine chemical industry chain. The price of fluorine chemical industry chain will be promoted. We believe that the price increase of fluorine chemical products will be promoted in two ways after the introduction of the policy. On the one hand, due to the further strengthening of the market awareness of the state control of fluorite resources, the attributes of fluorite scarcity resources will be reflected in the market price, thus driving up the price of fluorine products in terms of raw material costs. On the other hand, since China is a major exporter of fluorinated primary chemicals, if China's exports grow at a slower rate than global demand, the global supply shortage will push up the prices of fluorinated chemicals, which in turn will push up the prices of domestic fluorinated chemicals. Long term positive related leading companies of listed companies are more benefited. The policy has a significant positive effect on the expansion and integration of leading enterprises and the promotion of sales volume. Most of the downstream products of hydrofluoric acid belong to capital-intensive and technology-intensive industries. We estimate that only 20% of the 70 domestic enterprises with hydrogen fluoride plants have the production capacity of downstream products. It is forbidden to build new production enterprises with hydrogen fluoride as the final product, and to build or expand new non-raw materials hydrogen fluoride production plants. The development opportunities of future fluorine chemical industry will be focused on leading enterprises with downstream production capacity. In addition, foreign companies will be forced to buy more fluorinated chemicals downstream of hydrogen fluoride for further deep processing because future exports of hydrogen fluoride may not be able to meet global demand. As only a few of these leading fluorinated chemicals have the capacity to produce on a large scale, the increase in demand will be expected. Sales volume of leading enterprises. The listed companies of A in fluorine chemical industry mainly include giant stock, three Ai Fu, multi fluorine and Yongtai technology. According to the analysis, the introduction of relevant policies not only reflects the state's attention to fluorite and its downstream fluorine chemical industry, but also plays a positive role in the healthy development of fluorine chemical industry in the medium and long term, and will play a more prominent role in promoting the development of leading enterprises in the industry. In the above companies, Yongtai Technologies is mainly fluorine-containing fine chemicals, and the operation of the hydrogen fluoride industry is less relevant; and the other three enterprises are comprehensive leading enterprises in the industry, the policy will form a long-term good for the relevant enterprises. Favorable policies have a relatively large impact on Juhua shares. The main reason is that the downstream application of hydrogen fluoride industry is mainly organic fluoride, so the impact of Juhua and Sanaifu is relatively significant. While Giant Fluoride products are sold independently, a considerable proportion of Sanaifu's products are supplied to DuPont, its strategic partner, and there is little room for gross profit fluctuation. Therefore, Juhua shares have a larger profit margin when the industry is booming. Maintain the "recommended" investment rating for Juhua shares.