Big profit year for the chemical industry

Sales prices increased all year, chemical and fertilizer businesses reported record profits in 2022.

Vietnam Chemical Group (Vinachem) estimates that last year's profit exceeded 6,000 billion VND, an increase of more than 70% compared to 2021. That means, on average, Vinachem profits more than 16 billion VND per day - a record level from 2014 to present. .

Similarly, Duc Giang Chemical Group (DGC) profit after tax is about VND 6,040 billion in 2022, more than 2.4 times higher than the previous year. This is the highest profit level since this business announced information in 2007.

The two "giants" in gas - electricity - cluster, PetroVietnam Fertilizer and Chemicals Corporation (Phu My Fertilizer - DPM) and PetroVietnam Ca Mau Fertilizer Joint Stock Company (Ca Mau Fertilizer - DCM) also had results. Record business results in 2022. Phu My Fertilizer reported a profit of more than 5,600 billion VND, an increase of 77% while Ca Mau Fertilizer profit was about 4,280 billion VND, 3 times higher than the same period in 2021.

Rising product prices and good use of export markets became key factors when explaining companies' record profits. Data from the General Statistics Office shows that Vietnam exported more than 3,100 million USD of chemicals last year, an increase of nearly 25% compared to 2021. As for the fertilizer group, the export price index increased by more than 42% in the year last.

Vinachem's leadership also said that in 2022, world fertilizer prices will increase in all markets. DAP sometimes reached 1,000 USD per ton, urea nitrogen reached 900 USD per ton in Asia. Thanks to that, the price of Vietnam's fertilizers also increased. Some of Vinachem's key fertilizer products such as urea, DAP, and NPK remain stable at high levels, creating conditions for the domestic fertilizer production industry to continue to develop and bring high efficiency.

According to Duc Giang Chemical Group, thanks to increased output and benefit from selling prices, yellow phosphorus revenue increased by 112%, extracted phosphoric acid increased by 62%... Meanwhile, Phu My Fertilizer took advantage of the high price period. to export urea, increasing export output in 2022 to about 190,000 tons, an increase of 280% compared to the year's plan.

Positive business results of the chemical industry are expected to last in the coming time when the market converges with many favorable conditions. A recent report from Vietcombank Securities (VCBS) predicts that yellow phosphorus prices will increase thanks to limited supply while demand remains strong. Similarly, DAP fertilizer prices will increase further due to supply shortages, supporting the profit margins of businesses. In addition, rice prices are on the rise, which will support farmers in consuming high-priced fertilizers.

Looking at the fertilizer industry in general, the International Fertilizer Association (IFA) proposed three scenarios for this year from pessimistic, moderate to optimistic according to the level of consumption demand. What all three of these scenarios have in common is that there is little chance of fertilizer prices falling to low levels this year.

However, SSI Research's analysis team believes that the profits of urea fertilizer production enterprises will decrease in 2023. The above prediction is based on the assumption that the price of this product will go backwards because exports from Russia and China will recover. recovery, urea input costs (coal and natural gas) may decline and demand shows signs of weakening. However, urea fertilizer prices could increase if natural gas and coal supplies are suddenly interrupted due to the Russia-Ukraine conflict.

Tat Dat