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Huarong Chemical Co., Ltd. 2026 Interim Report
Date: August 14, 2026
Document Number: 2026-040
Section 1 Important Notices, Table of Contents, and Definitions
The Board of Directors, the Board of Supervisors, and the directors, supervisors, and senior management of the Company guarantee that the information in this interim report is true, accurate, and complete, and contains no false records, misleading statements, or major omissions, and they assume individual and joint legal liability.
Company Head: Shao Jun [blank], Person in Charge of Accounting: Cai Xiaoqin [blank], and Head of Accounting Department (Accounting Supervisor): Yang Liu [blank] declare: Guarantee the truth, accuracy, and completeness of the financial report in this interim report.
All directors attended the board meeting to review this interim report.
Forward-looking statements in this report, such as future plans, do not constitute substantive commitments by the Company to investors. Investors are advised to pay attention to investment risks.
- Risk of Intensified Market Competition
According to market research data, as of the end of the reporting period, the total domestic production capacity of the potassium hydroxide industry exceeded 2 million tons. With an apparent consumption of 494,000 tons in the first half of this year, coupled with new capacity added since 2023, structural overcapacity pressure has further increased. Industry competition is expected to continue to intensify, and there is a risk of a decline in the Company's product prices, which will adversely affect the Company's operating performance.
- Risk of Concentrated Profit Sources and Continued Losses in Chlorine Products
During the reporting period, potassium hydroxide was the Company's main source of profit. To optimize the product structure and enhance green circular and sustainable development capabilities, after shutting down the polyvinyl chloride resin production line, the Company relied on traditional chlorine-consuming processes such as hydrochloric acid and sodium hypochlorite to consume byproduct chlorine gas. It also actively deployed high-value-added products like electronic-grade hydrochloric acid and accelerated the R&D and industrialization of chlorine-consuming products like anhydrous aluminum chloride. However, at this stage, lower-priced general industrial-grade chlorine products account for a large proportion, while high-grade chlorine products are still in the volume-release stage and other chlorine-consuming products are still under development, causing chlorine products to fail to fully cover their corresponding production costs, resulting in overall losses for chlorine products.
- Risk of Supplier Reliance and Raw Material Price Fluctuations
During the reporting period, the Company's main raw material was potassium chloride, which constitutes the main part of the cost of the Company's potassium and chlorine compound products. Potassium chloride is a scarce resource; domestic reserves are not high and are unevenly distributed. Domestically produced potassium chloride is mainly produced in the Northwest region and primarily sourced from Qinghai Salt Lake. In the first half of 2026, the domestic share of potassium chloride was less than 40%. As of the end of the reporting period, only a few state-owned trading enterprises, such as China National Agricultural Means of Production Group and Sinochem Fertilizer, were approved to import potassium chloride and sell it through their distribution channels, serving as the main suppliers. Restricted by its scarcity and the highly concentrated domestic supply pattern, the Company's final sources of potassium chloride are limited, posing a risk of a certain degree of supplier reliance on Qinghai Salt Lake and trading enterprises like China National Agricultural Means of Production Group and Sinochem Fertilizer. In addition, the Company's operating performance is subject to the risk of significant fluctuations in potassium chloride prices.