Shandong Hualu Hengsheng Chemical Co., Ltd said coal is its main raw material and that higher coal prices will weigh on production costs, while stressing that its coal-chemical route is gaining a relative cost advantage over oil-based competitors, it said at an earnings briefing.

The company said it is curbing coal costs by optimizing feedstock supply channels, raising the share of long-term contract coal and tapping energy-saving and consumption-reduction potential through its coal gasification platform and flexible co-production model.

Rising coal and international energy prices have pushed up costs for oil-based producers, further highlighting the relative cost advantage of its coal-chemical route, it said. Coal price trends remain uncertain and the company will keep strengthening cost control.

On urea prices, Hualu Hengsheng said the outlook faces significant uncertainty due to the combined impact of supply-demand fundamentals, feedstock costs, export policy and seasonal agricultural demand.

The company said it will closely monitor industry supply-demand and policy changes, strengthen lean production management, tap cost-reduction and efficiency gains, and optimize production-sales coordination to better cope with market price volatility and improve operating quality.

As of the end of its 2026 semi-annual reporting period, Hualu Hengsheng's designed urea capacity stood at 3.07 million tonnes per annum (Mtpa). In the first half of 2026, its chemical fertilizer segment, dominated by urea, posted revenue of 3.88 billion yuan, accounting for 23% of its main business revenue.

The company's strategic goal is to become a modern chemical enterprise with excellent quality, world-class standards and strong industry competitiveness, benchmarking against leading international companies and aiming to lead industry development with advanced technology, high-end products, lean management and strong performance.

On carbon market policy, Hualu Hengsheng said China's national carbon market currently covers four sectors — power generation, steel, cement and aluminum smelting — while the timing and allowance allocation plan for including the chemical industry have yet to be clarified by relevant authorities. The company will keep tracking national carbon market policy and respond through energy conservation, carbon reduction, resource recycling and carbon asset trading, it said, adding that relevant information should be based on company disclosures.

Hualu Hengsheng is the core enterprise of Shandong Hualu Hengsheng Group Co., Ltd., which is the main chemicals unit of Hualu Group. Its products span more than 40 items across four segments — chemical fertilizers, basic chemicals, new chemical materials and new energy materials — while also providing industrialization services including development planning, engineering design, project management and equipment manufacturing.

Hualu Hengsheng is a major domestic basic chemical raw material manufacturer and one of the leading companies in China's modern coal-chemical industry. It operates two production bases in Dezhou, Shandong province and Jingzhou, Hubei province, covering more than 40 products across the four segments.

In the first half of 2026, Hualu Hengsheng posted revenue of 17.16 billion yuan, up 8.87% year on year, while net profit attributable to shareholders reached 2.35 billion yuan, up 49.98% from a year earlier.

Its financial report showed that in the first half, affected by market supply-demand and policy factors, prices of its main products generally recovered, with urea, adipic acid, acetic acid, dimethyl carbonate and isooctanol all rising year on year, becoming key drivers of profit growth.

In its semi-annual report, Hualu Hengsheng said the chemical market recovered in the first half of 2026 amid multiple factors, with some product prices rising and boosting corporate profits. However, structural overcapacity and rising feedstock prices remain severe challenges, and the U.S.-Israel-Iran war has had unpredictable impacts on international energy, chemical and fertilizer industries, putting overall pressure on the market environment.

Facing the complex situation, Hualu Hengsheng said it will deepen market efforts, seize fertilizer export opportunities and adopt diversified marketing to break through homogenized competition, while accelerating project construction to underpin its "dual aircraft carrier" operating layout in Dezhou and Jingzhou and further consolidate profitability.