Ningxia Baofeng Energy Co., Ltd. reported a record first-half net profit, driven by surging chemical product prices and the relatively low cost of coal-to-chemicals production.

Net profit attributable to shareholders reached 9.73 billion yuan in the first half, up 70.14% year on year, the company said.

Baofeng Energy cautioned that the geopolitical dividend is temporary in nature. In March 2026, geopolitical conflict drove up costs for oil-based olefins and PDH polyolefin production routes, cut plant utilization rates and disrupted Middle East exports, tightening polyolefin supply and sending prices sharply higher. By June, as the conflict eased and crude oil prices fell, polyolefin prices retreated.

At an earnings briefing, the company said it has built a multi-pronged response system to hedge against the potential narrowing of the oil-coal price spread.

The measures include leveraging its own coal resources and long-term supplier arrangements to sustain feedstock cost advantages; adopting flexible co-production to dynamically optimize product mix based on market conditions, prioritizing high-margin products while pushing toward higher-end and differentiated offerings; using futures and other financial instruments for hedging as appropriate to build a product price risk management system; and deepening comprehensive cost control to extract efficiency gains across procurement, production, logistics and sales.

The company said its Ningdong Phase IV project, once operational, will add production capacity, expand economies of scale and further reduce fixed costs per unit. Against the backdrop of cost divergence in the coal chemical industry, companies with cost advantages are more resilient through industry cycles. Baofeng Energy will arrange capacity release in line with market supply and demand changes to ensure a dynamic balance between production and sales.

Baofeng Energy emphasized that international oil prices face significant uncertainty due to geopolitical factors and supply-demand dynamics. The company will closely monitor market changes and adjust its business strategy in a timely manner to maintain stable operating performance.

The company also said that, considering Xinjiang coal delivered to Ningxia offers roughly a 10% cost-performance advantage over coal from Inner Mongolia and Shaanxi, Xinjiang coal resources are mainly used as methanol gasification feedstock for coal-to-olefins units at its Ningdong base. Xinjiang coal accounts for about 30%-40% of the company's total coal consumption.

Baofeng Energy previously said on an investor interaction platform that its coal procurement is mainly concentrated in Inner Mongolia, Shaanxi, Shanxi, Xinjiang and Ningxia.