SHOUGUANG, China, Nov. 20, 2024 (GLOBE NEWSWIRE) -- Gulf Resources, Inc. ( 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 34% in 2022 to 19% in 2023, and to 8% in 2024.
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 105.9% increase in the cost per tonne, rising from $2,773 to $5,709. The increase in the cost per tonne was primarily due to the need to allocate costs of the factories, such as overhead, depreciation, amortization, and other expenses- over less than ¼ the number of tonnes. (These numbers are calculated by dividing bromine revenues by tonnes sold.)
| 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 | 34% | 7,362,103 | 2,772.6 | $10,552,343 | ||||||||
| 2023 | 4,908,152 | 3,237 | 1,516.3 | 19% | 5,995,496 | 3,954.1 | -$2,143,203 | ||||||||
| 2024 | 1,571,313 | 2,396 | 655.8 | 8% | 3,744,088 | 5,709.1 | -$4,029,999 | ||||||||
| % change | -92.1% | -67.9% | -75.3% | -76.5% | -49.1% | 105.9% | |||||||||
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.
Contact Data CONTACT: Gulf Resources, Inc. Web: http://www.gulfresourcesinc.com Director of Investor Relations Helen Xu
