Fluorine workers are waiting to crack down on production and profit reduction

Zhejiang is China's largest fluorine chemical production base. In 2007, the province's fluorine chemical sales revenue has exceeded 10 billion yuan. It is worth noting that, compared with 2006, most of the fluorine chemical manufacturing enterprises in Zhejiang achieved significant growth in both their output value and sales revenue, while their profits were declining. The statistics report of the provincial fluorosilicone association on 20 member companies shows that in 2006, the total profit was 300 million yuan, and in 2007 it was only 230 million yuan, a decrease of 23%.
According to the reporter's understanding, while the expansion of production scale and increase of sales revenue, the low price of products and the decline in the profitability of enterprises are not the unique phenomenon in Zhejiang, but the general state of the fluorine chemical industry in China. Judging from the market operation situation in the first quarter of this year, this phenomenon has not changed.
Multiple factors squeezing profits Since last year, due to the country's fixed asset investment scale control policy, general export product restrictions on tariff adjustment policies, energy-saving emission reduction and environmental governance policies, the fluorine chemical market demand is inhibited. Due to the expansion of the production scale of the previous round of the fluorine chemical industry and the elimination of ozone-depleting substances (ODS) products that should be eliminated from production in some countries, the contradiction between the supply of fluorine chemical products exceeds demand has become more prominent, and the product sales have been extremely difficult. Most products, whether they are domestic sales prices or export prices, are difficult to increase or even decline. At the same time, due to the impact of resources, transportation capacity, financial constraints, and related national policies, the raw materials and energy costs, transportation costs, capital costs, export costs, and environmental governance costs of the fluorine chemical industry have increased dramatically, and companies are faced with huge profit reduction factors.
The industry analysts have analyzed that the cause of the poor quality of the fluorine chemical industry in China in 2007 was directly related to the unfavorable operating conditions. However, the unreasonable industrial structure was the internal cause of the weakening of the profitability of the industry. It manifests itself in:
The first is the primaryization of the industrial structure. In China's fluorine chemical products, hydrofluoric acid, fluorine refrigerants and general substitutes accounted for an absolute proportion. As most of these technologies are relatively mature, or the acquisition of technology is relatively easy, the boom of expansion continues to rise, leading to a sharp expansion of the production scale, and the contradiction of supply exceeding demand continues to intensify. In 2003, the output of HCFC-22 nationwide was only 170,000 tons. Currently, it has reached more than 600,000 tons per year. In Zhejiang alone, it has reached 200,000 tons per year, while the largest consumer demand including export demand is only 270,000 to 300,000 tons. /year. Some of the products that belong to the national restricted products such as hydrofluoric acid, or belong to the second category of national cut-out products such as HCFC-22, HCFC-141b, HCFC-142b, etc., still account for a considerable proportion in China's fluorine chemical products.
The second is low-end product quality. The consequence of low quality is low profitability. For example, PTFE, foreign high-quality resin sold more than 20 million per ton, while the domestic can only sell more than 40,000 yuan.
Third, the development model is assimilated. Most of the fluorine chemical companies in China have failed to get out of the product development assimilation or product chain development and the assimilation of the dilemma. There is no unique competitive advantage among enterprises, which will inevitably lead to the homogenization of competition measures and the intense degree of competition, which will eventually lead to diminishing marginal profits.
International trends are worth noting In recent years, transnational fluorine chemical companies have made major adjustments after a new round of asset restructuring. Most of them have given up their diversification strategy and concentrated their efforts on their own advantages in the field of fluorine chemical products. For example, most foreign fluorochemical production companies have ceased the construction of basic fluorinated industrial raw materials, fluorocarbon refrigerants, and general alternatives that have been included in local plans for new construction or expansion, and have reduced the output of such products to varying degrees. Turning to cheaper China and India procurement.
On the one hand, the international fluorochemical giants are actively appealing to the international community to accelerate the reduction and elimination of ODS products that have lost their competitive advantage. On the other hand, they actively develop new alternatives that will have a patent protection period to form a new business monopoly. Especially for the development of HFC-134a substitutes, US and European companies are in full swing. At the same time, due to the scarcity of fluorite resources and the gradual reduction of China’s export quotas for fluorite resources, more and more foreign fluorine chemical manufacturing companies are seeking to cooperate with Chinese enterprises, or to build primary product production devices, or to construct relatively inexpensive products. The primary product deep processing device.
In addition, the newly established multiple non-tariff trade barriers also pose new challenges to China's fluorine chemical industry. In September 2007, the 19th Meeting of the Parties to the Montreal Protocol issued a resolution requesting that developing countries freeze production and consumption in the average baselines of 2009 and 2010 in 2013, reduce them in 2015, and advance in 2030. Phase out. In addition, the EU REACH regulations have been officially put into effect, the EU is China's important sales area of ​​fluorine chemical products, the implementation of this regulation will undoubtedly greatly increase the difficulty of China's fluorine chemical products into the market and cost of sales.
Embarrassing out of the difficult situation: In 2007, Sinochem Corporation successively reached strategic cooperation agreements with key domestic fluorine chemical production enterprises such as Zhejiang Petrochemical Building Materials Group and Juhua Group, setting off a wave of asset restructuring and becoming a fluorine chemical enterprise in China. Out of the woods provides new ideas.
Big group ideas should be a strategic choice for powerful companies. A series of problems such as the primary industrial structure, the low-end product quality, the homogenization of the development model, and the homogeneity of the competition means cannot be solved by the efforts of a single company. Only through asset reorganization and mergers and acquisitions, integrate the resources in the middle and lower reaches of the industry, achieve resource sharing and complement each other, and thus change the competition of individual products into the competition of the entire supply chain and change the competition of individual enterprises into the competition of enterprise alliances. The strength to compete with international opponents.
For SMEs, the most pressing issue now is to solve the problem of upgrading the product level. At present, most of the fluorine chemical companies in China have relatively weak independent innovation capabilities and new product development capabilities, and the adjustment of product structure is very difficult. This requires government departments to give certain tilts and support in terms of policies, funds, and so on. Enterprises should actively use the power of the government, industry associations and technical experts to vigorously carry out cooperation in production, learning and research, and promote the upgrading of products through the introduction and digestion and absorption of advanced technologies to enhance product value. In addition, the issue of intellectual property protection should also receive sufficient attention.
In addition, companies should also make full use of existing international policies, such as the carbon dioxide clean-up trading mechanism. The latent heat value of HCFC-22 by-product HFC-23 is 10,000 times that of CO2 latent heat and has therefore become the focus of the implementation of the clean trading mechanism in western developed countries. Domestic enterprises can build HFC-23 decomposition projects through the introduction of foreign advanced technology and gain considerable profits.

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