Gulf Resources Provides Detailed Overview of the Economics of its Bromine Segment
Gulf Resources (GURE) provides a detailed analysis of its bromine segment economics. The company experienced significant price fluctuations, with bromine prices peaking at RMB 69,500 in October 2021 before declining to RMB 17,323 in Q3 2024, though recently recovering to RMB 22,400. Due to price declines, management strategically sales to protect mineral assets. Production volumes decreased substantially, with Q3 sales dropping from 2,655 tonnes in 2022 to 655.8 tonnes in 2024, causing utilization rates to fall from 34% to 8%. This led to higher per-tonne costs, rising from $2,773 to $5,709, as fixed costs were spread over fewer units.
Gulf Resources (GURE) fornisce un'analisi dettagliata dell'economia del suo segmento di bromo. L'azienda ha vissuto significative fluttuazioni dei prezzi, con i prezzi del bromo che hanno raggiunto il picco di RMB 69.500 nell'ottobre 2021, per poi scendere a RMB 17.323 nel terzo trimestre del 2024, sebbene recentemente siano risaliti a RMB 22.400. A causa delle riduzioni dei prezzi, la direzione ha strategicamente limitato le vendite per proteggere i propri beni minerali. I volumi di produzione sono diminuiti considerevolmente, con le vendite del terzo trimestre che sono scese da 2.655 tonnellate nel 2022 a 655,8 tonnellate nel 2024, portando i tassi di utilizzo a scendere dal 34% all'8%. Ciò ha comportato costi più elevati per tonnellata, aumentati da $2.773 a $5.709, poiché i costi fissi sono stati distribuiti su un numero inferiore di unità.
Gulf Resources (GURE) proporciona un análisis detallado de la economía de su segmento de bromo. La empresa experimentó fluctuaciones significativas en los precios, alcanzando un pico de precios del bromo de RMB 69,500 en octubre de 2021, antes de caer a RMB 17,323 en el tercer trimestre de 2024, aunque recientemente se ha recuperado a RMB 22,400. Debido a la caída de precios, la dirección limitó estratégicamente las ventas para proteger sus activos minerales. Los volúmenes de producción disminuyeron considerablemente, con las ventas del tercer trimestre cayendo de 2,655 toneladas en 2022 a 655.8 toneladas en 2024, lo que causó una caída en las tasas de utilización del 34% al 8%. Esto llevó a mayores costos por tonelada, que aumentaron de $2,773 a $5,709, ya que los costos fijos se distribuyeron entre menos unidades.
Gulf Resources (GURE)는 브롬 부문의 경제성에 대한 자세한 분석을 제공합니다. 이 회사는 가격이 심각하게 변동했으며, 브롬 가격이 2021년 10월에 RMB 69,500에 도달한 후 2024년 3분기에는 RMB 17,323로 하락했으나 최근에는 RMB 22,400으로 회복되었습니다. 가격 하락으로 인해 경영진은 광물 자산 보호를 위해 판매를 전략적으로 제한했습니다. 생산량이 상당히 감소했습니다, 2022년 3분기 판매량이 2,655톤에서 2024년에는 655.8톤으로 감소하여 가동률이 34%에서 8%로 떨어졌습니다. 이로 인해 톤당 비용이 $2,773에서 $5,709로 증가했으며, 고정비용이 적은 단위에 분산되었기 때문입니다.
Gulf Resources (GURE) fournit une analyse détaillée de l'économie de son segment de brome. L'entreprise a connu d'importantes fluctuations de prix, avec des prix du brome atteignant un sommet de RMB 69.500 en octobre 2021 avant de descendre à RMB 17.323 au troisième trimestre 2024, bien qu'ils aient récemment récupéré à RMB 22.400. En raison de la baisse des prix, la direction a stratégiquement limité les ventes pour protéger ses actifs minéraux. Les volumes de production ont considérablement diminué, avec des ventes au troisième trimestre passant de 2.655 tonnes en 2022 à 655,8 tonnes en 2024, entraînant une baisse des taux d'utilisation de 34 % à 8 %. Cela a entraîné une augmentation des coûts par tonne, passant de $2.773 à $5.709, les coûts fixes étant répartis sur un plus petit nombre d'unités.
Gulf Resources (GURE) bietet eine detaillierte Analyse der Wirtschaftlichkeit ihres Bromsegments. Das Unternehmen erlebte erhebliche Preisschwankungen, wobei die Brompreise im Oktober 2021 auf RMB 69.500 anstiegen, bevor sie im dritten Quartal 2024 auf RMB 17.323 fielen, allerdings kürzlich auf RMB 22.400 zurückgekehrt sind. Aufgrund des Preisrückgangs hat das Management strategisch die Verkäufe eingeschränkt, um Mineralressourcen zu schützen. Die Produktionsvolumen sind erheblich gesunken, wobei die Verkaufszahlen im dritten Quartal von 2.655 Tonnen im Jahr 2022 auf 655,8 Tonnen im Jahr 2024 gefallen sind, was die Auslastungsquote von 34% auf 8% sinken ließ. Dies führte zu höheren Kosten pro Tonne, die von $2.773 auf $5.709 anstiegen, da die Fixkosten auf weniger Einheiten verteilt wurden.
- Recent bromine price recovery to RMB 22,400 as of November 17, 2024
- Strategic management decision to protect long-term asset value
- 92.1% revenue decline in bromine segment from Q3 2022 to Q3 2024
- 75.3% decrease in sales volume from 2,655.3 to 655.8 tonnes
- 105.9% increase in cost per tonne from $2,773 to $5,709
- Utilization rate dropped from 34% to 8%
- Shift from $10.5M profit to $4M loss in bromine segment
Insights
The strategic decision to limit bromine production amid price declines represents a significant operational shift. The
The bromine market dynamics reveal a classic commodity cycle pattern, with COVID-driven demand spike followed by severe correction. The price collapse from RMB 49,301 in Q3 2021 to RMB 17,323 in Q3 2024 indicates significant market oversupply relative to current demand. Management's decision to restrict supply, while preserving asset value, has resulted in severe underutilization of production capacity. The recent price recovery suggests potential market rebalancing, but current levels still remain
SHOUGUANG, China, Nov. 20, 2024 (GLOBE NEWSWIRE) -- Gulf Resources, Inc. (Nasdaq: GURE) ("Gulf Resources", “we,” or the "Company"), a leading manufacturer of bromine, crude salt and specialty chemical products in China today announced the following press release to provide investors with a detailed overview of the key factors impacting our bromine segment, specifically focusing on how changes in both pricing and volume have influenced performance.
Similar to oil and gold, we believe our company has a relatively fixed amount of bromine available for extracting from our properties. During the COVID-19 pandemic, demand for bromine, especially for antiseptics surged. Based on numbers from Sunsirs.com, the per tonne price of bromine increased from RMB 28,017 in Q3 2020 to RMB 49,301 in Q3 2021. Bromine prices even peaked at RMB 69,500 in October 2021. However, over the next two years, prices dropped to RMB 24,200 in Q3 2023 and to RMB 17,323 in Q3 2024. Since the end of the third quarter of 2024, the price of bromine has started to recover, standing at RMB 22,400 as of November 17, 2024. The table below shows the price changes from 2020 to 2024.
| Period | Bromine Price RMB |
| 2020-Q3 | 28,017 |
| 2021-Q3 | 49,301 |
| 2022-Q3 | 51,795 |
| 2023-Q3 | 24,200 |
| 2024-Q3 | 17,323 |
| 11/17/2024 | 22,400 |
As the price continued to decline, management decided to limit sales and protect our mineral assets in anticipation of a future price rebound.
While the decline in prices impacted the profitability of our bromine operations, the decline in production has also had an impact. This is because factory overhead, depreciation, amortization, and various other expenses are spread across a much smaller number of tonnes.
As reported in our 10-Qs, in the third quarter of 2022, we sold 2,655 tonnes of bromine. In the same quarter of 2023, we sold 1,516 tonnes, and in Q3 2024, only 655.8 tonnes were sold. As a result, our utilization rate plunged from
As shown in the numbers below, the number of tonnes sold declined from 2,655.3 in 2022 to 655.8 in 2024, resulting in a
| Bromine Economics Q3 | 2022-2024 | ||||||||||||||
| Q3-Year | Revenue | Price | Tonnes | Utilization | Cost | Cost/Tonne | P & L | ||||||||
| 2022 | 19,845,773 | 7,474 | 2,655.3 | 7,362,103 | 2,772.6 | ||||||||||
| 2023 | 4,908,152 | 3,237 | 1,516.3 | 5,995,496 | 3,954.1 | - | |||||||||
| 2024 | 1,571,313 | 2,396 | 655.8 | 3,744,088 | 5,709.1 | - | |||||||||
| % change | - | - | - | - | - | ||||||||||
Since the end of the third Quarter of 2024, the price of bromine has increased substantially (bromine prices are sourced from sunsirs.com).
Mr. Liu Xiaobin, the Chief Executive Officer of Gulf Resources, stated, “As the price of bromine declined, we made a decision to protect the long-term value of our assets by controlling our sales. As utilization dropped sharply, our costs per tonne increased. However, as the economy showing signs of improvement, we are now in a position to increase our utilization. We believe this will positively impact our future results.”
About Gulf Resources, Inc.
Gulf Resources, Inc. operates through four wholly-owned subsidiaries, Shouguang City Haoyuan Chemical Company Limited ("SCHC"), Shouguang Yuxin Chemical Industry Co., Limited ("SYCI"), Daying County Haoyuan Chemical Company Limited (“DCHC”) and Shouguang Hengde Salt Industry Co. Ltd. (“SHSI”). The Company believes that it is one of the largest producers of bromine in China. Elemental Bromine is used to manufacture a wide variety of compounds utilized in industry and agriculture. Through SYCI, the Company manufactures chemical products utilized in a variety of applications, including oil and gas field explorations and papermaking chemical agents, and materials for human and animal antibiotics. Through SHSI, the Company manufactures and sells crude salt. DCHC was established to further explore and develop natural gas and brine resources (including bromine and crude salt) in China. For more information, visit www.gulfresourcesinc.com.
Forward-Looking Statements
Certain statements in this news release contain forward-looking information about Gulf Resources and its subsidiaries business and products within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. The actual results may differ materially depending on a number of risk factors including, but not limited to, the general economic and business conditions in the PRC, future product development and production capabilities, shipments to end customers, market acceptance of new and existing products, additional competition from existing and new competitors for bromine and other oilfield and power production chemicals, changes in technology, the ability to make future bromine asset purchases, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risks factors detailed in the Company's reports filed with the Securities and Exchange Commission. Gulf Resources undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.
FAQ
What caused Gulf Resources (GURE) bromine prices to drop in 2024?
How much did Gulf Resources (GURE) bromine production decrease in Q3 2024?
What is Gulf Resources (GURE) current bromine facility utilization rate?
