HK Stock Market Move | China XLX FERT (01866) rose over 5% in the morning, with oil prices rising and the cost advantage of coal and chemical industry becoming apparent.

China XLX FERT(01866) rose more than 5% in the morning, up 5.04% as of the time of writing, at 8.55 Hong Kong dollars, with a trading volume of 21.9962 million Hong Kong dollars. On the news front, disturbances in the Hormuz Strait have pushed up international oil prices, LNG and LPG prices, and the costs of oil and gas routes such as ethylene cracking, ethane cracking, and PDH have increased, leading to higher prices for East Asian ethylene and propylene. Donghai Securities pointed out that China's coal prices are relatively controllable under the policy of ensuring supply and stabilizing prices, and the cost gradient of coal-to-olefin raw materials is low. In the high oil price environment, the cost advantage of coal-to-ethylene and coal-to-propylene routes is significantly restored, and the profitability and strategic value of coal chemical routes are expected to increase. Zhongjin released a research report stating that China XLX FERT's advanced coal-water slurry technology builds a moat with a cost advantage of about 10% below the industry average; with expansion at the Henan, Xinjiang Zhundong, and Jiangxi bases completed, urea production capacity is expected to increase by 59% to 8.05 million tons by 2027. Currently, urea profits are at a cyclical low, with limited downward price pressure, and capacity expansion is expected to drive the company's performance growth.