Sinolink: Explosives industry prosperity is picking up, optimistic about the growth of explosives demand in Xinjiang and Tibet.

Sinolink released a research report stating that the prosperity of the civil explosives industry is picking up, and the decline in raw material prices is supporting the continuous improvement of industry profitability. The high prosperity of the civil explosives market in Xinjiang and Tibet continues. In the future, the pattern of regional demand differentiation in the domestic civil explosives industry will continue. It is recommended to pay attention to targets with integrated service capabilities and explosive production capacity in high-growth areas of civil explosives demand such as Xinjiang and Tibet. Event: On January 20th, China Explosives Association released the operating data of the civil explosives industry in December 2024: in December, production enterprises completed a total production value of 4.159 billion yuan, an increase of 5.13% year-on-year; completed a total sales value of 4.187 billion yuan, an increase of 4.19% year-on-year; achieved a total tax income of 1.167 billion yuan, an increase of 55.74% year-on-year; realized a total profit of 882 million yuan, an increase of 69.36% year-on-year. In December, the industrial explosive production and sales volume of production enterprises were 436,400 tons and 438,000 tons respectively, an increase of 8.11% and 5.65% year-on-year; among them, the on-site mixed explosive production volume was 157,600 tons, an increase of 12.57% year-on-year. The industrial detonator production and sales volume of production enterprises were both 68 million pieces, a decrease of 3.48% and 3.11% year-on-year respectively. Sinolink's main points are as follows: The industry's prosperity is rebounding, and the decline in raw material prices is supporting the continuous improvement of industry profitability From the demand side, the downstream of civil explosives is mainly concentrated in the field of coal, metal, and non-metal mining. According to data from the National Bureau of Statistics, the domestic raw coal output in January-December 2024 was approximately 4.759 billion tons, an increase of 1.3% year-on-year, with the output in December approximately 439 million tons, an increase of 4.2% year-on-year; the fixed asset investment completion amount of non-ferrous metal ore mining and dressing industry accumulated by December increased by 26.70%. Against this background, the industry's operating indicators in December showed a trend of recovery, especially the year-on-year high increase in blasting service revenue. According to data from the China Explosives Association, from January to December, production enterprises completed a total production value of 41.695 billion yuan, a decrease of 4.50% year-on-year, of which the total production value completed in December was 4.159 billion yuan, an increase of 5.13% year-on-year; from January to December, the total blasting service revenue realized was 35.311 billion yuan, an increase of 4.26% year-on-year, of which the blasting service revenue realized in December was 4.812 billion yuan, an increase of 42.04% year-on-year. Ammonium nitrate, the main raw material for industrial explosives, showed a continuous downward trend in prices in 2024. According to data from the China Explosives Association, the average price of ammonium nitrate (powder form) in January 2024 was about 2822 yuan/ton, which decreased to 2384 yuan/ton by December, with a cumulative decrease of approximately 15.52% for the whole year. In this context, although the total production value of the industry's production enterprises came under pressure in 2024, the profitability improved year-on-year. From January to December, production enterprises cumulatively achieved a total profit of 9.639 billion yuan, an increase of 13.04% year-on-year, of which the total profit in December was 882 million yuan, an increase of 69.36% year-on-year. Regional demand differentiation is evident, and the high prosperity of the civil explosives market in Xinjiang and Tibet continues According to data from the China Explosives Association, in 2024, regions with civil explosives production and sales values exceeding 3 billion yuan include Xinjiang, Inner Mongolia, Sichuan, and Shanxi, but only Xinjiang's civil explosives industry maintained a year-on-year growth rate of over 20% in production and sales value. The other three provinces experienced varying degrees of decline. Additionally, according to data from the China Explosives Association, from January to December 2024, the net increase in profits of civil explosives production enterprises was 1.1 billion yuan, with a net increase of 660 million yuan in the Xinjiang region and 450 million yuan in other regions. Furthermore, the demand growth rate of the civil explosives market in Tibet is significant. In 2024, the production and sales value reached 432 million and 434 million yuan respectively, with year-on-year growth rates of 35.96% and 38.37% respectively. Xinjiang: Coal mining supports the continuous growth of civil explosives demand According to data from the National Bureau of Statistics, in 2024, Xinjiang's raw coal output was approximately 541 million tons, an increase of 17.5% year-on-year. Meanwhile, according to data from the Xinjiang Coal Trading Center, the railway transport volume of Xinjiang coal steadily increased in 2024, with an external railway transport volume of 90.6 million tons from January to December, an increase of 50.2% year-on-year. Under the promotion of relevant policies such as the "Fourteenth Five-Year Plan for National Economic and Social Development and the Long-term Goals for 2035 of the Xinjiang Uygur Autonomous Region" and the "Implementation Plan for Accelerating the Construction of Large Coal Supply Guarantee Bases in Xinjiang to Serve National Energy Security", Xinjiang's coal production is expected to maintain growth, thereby driving the demand for civil explosives. Tibet: According to reports from CCTV News in December 2024, the approval of the Yarlung Zangbo River downstream hydropower project has been obtained, and the advancement of large-scale infrastructure projects is expected to drive the upward demand for civil explosives in the Tibet region. Risk warning: downstream demand falls short of expectations; significant fluctuations in raw material prices; risks of changes in industry policies.