On June 17, Caixin reported that Hubei Yihua Chemical Industry (000422.SZ) teamed up with Do-Fluoride New Materials (002407.SZ) and the Yichang High-Tech Zone Management Committee to expand its layout in anhydrous hydrogen fluoride and seize the fluorine chemical market.

Hubei Yihua announced tonight that the company signed a framework cooperation agreement with the Yichang High-tech Zone Management Committee and Do-Fluoride New Materials to establish the Do-Fluoride Yihua Central China fluorosilicon industry park project in the Yichang High-tech zone chemical park. The project is located in the chemical park of Yichang High-tech Zone and will use wet-process phosphoric acid by-product fluorosilicic acid to produce anhydrous hydrogen fluoride and develop downstream fluorosilicon materials and electronic chemicals for the entire industry chain.

Yihua Chemical Industry pointed out that this agreement is an investment intention agreement and is expected to have no significant impact on the company's performance in 2024 and will not cause changes in the company's main business and business scope.

Hubei Yihua’s main products include ammonium phosphate, urea, polyvinyl chloride, caustic soda, fine chemicals, while Do-Fluoride New Materials deeply cultivates the fluorine chemical industry. In fact, this cooperation is not surprising. Hubei Yihua has already aimed at using the fluorine resources associated with phosphate mines. Since this year, Hubei Yihua Fluorine Chemical Co., Ltd., a wholly-owned subsidiary of the company, has had a total of 1.4 billion yuan worth of fluorine chemical projects that have been publicly disclosed for the first time for environmental impact assessment, and all have entered the public consultation phase of environmental impact assessment report (draft)

Specifically, on April 24, Hubei Yihua Fluorine Chemical Co., Ltd.'s wet-process phosphoric acid with a supporting 30, 000 tons/year anhydrous hydrogen fluoride and 20,000 tons/year sodium fluorosilicate project underwent a public hearing of its first environmental impact evaluation. The project has a total investment of about 400 million yuan, and after completion, it will produce 30,000 tons of anhydrous hydrogen fluoride and 20,000 tons of sodium fluorosilicate per year.

Even earlier, on January 11, Hubei Yihua Fluorine Chemical Co., Ltd.'s wet-process phosphoric acid supporting 2×30,000 tons/year anhydrous hydrogen fluoride project underwent a public hearing of its first environmental impact evaluation. The project has a total investment of about 1 billion yuan, and after completion, it will produce 60,000 tons of anhydrous hydrogen fluoride, 38,000 tons of functional nano silica, 80000 tons/year of sodium fluoride, and 1.56 million tons/year of industrial sulfuric acid.

When receiving institutional research last year, Hubei Yihua stated that the company established an ammonium phosphate production base in Yichang and the surrounding areas where phosphorus resources are abundant, leveraging the advantages of the Yangtze River Golden Waterway. In the future, the company plans to high-value use of fluorine resources associated with phosphate mines and plans to build an anhydrous hydrogen fluoride, polyvinylidene fluoride and lithium hexafluorophosphate and other chemicals relying on Central China's largest fluorine resource potential to accelerate industrial structural transformation and integrated layout and build a complete fluorine industry chain.

In institutional research, Hubei Yihua also stated that compared with traditional fluorine chemical enterprises that use fluorite as raw material, the company uses fluorosilicic acid, a by-product in the ammonium phosphate production process, as raw material when producing fluorine chemical products. In the future, it can seize the fluorine chemical market with stronger cost advantages.

Industry-wise, in its June research report, Kaiyuan Securities pointed out that the entire industrial chain of fluorine chemicals will enter a long cycle of prosperity. From the resource end of fluorite to the industry that is one of the most thorough in terms of carbon neutrality, refrigerants, and various links in the fluorine chemical industry, such as high-end fluorine materials and fluorinated fine chemicals that benefit from the outbreak of demand, all have significant development potential.