CHINA XLX FERT (01866) saw its shares climb more than 5% in Hong Kong trading. At the time of writing, the stock was up 5.44%, trading at HK$11.63 with a turnover of HK$27.456 million. The price movement follows escalating conflicts in the Middle East, which are heightening market concerns over potential fertilizer supply shortages. The Middle East is a core region for global fertilizer supply, including nitrogen, potash, and phosphate fertilizers. Iran, in particular, is the world's second-largest exporter of urea, with annual exports of approximately 9 million tonnes. Galaxy Securities previously indicated that sudden changes in the Iranian situation could increase uncertainty around the restart of urea production facilities and exports from Iran. This may lead to a temporary gap in the global urea supply, thereby pushing up international urea prices. China possesses sufficient urea production capacity, but its exports are subject to quota controls. If the trend of increasing export quotas continues into 2025, urea producers could see improved profitability driven by higher volumes and prices. Public information shows that CHINA XLX FERT is a leading domestic urea producer with top-tier scale and profitability per unit. It is the leader in China's nitrogen fertilizer industry, ranking first in the country in urea output and among the top producers in compound fertilizer sales volume. In 2024, the company's urea production capacity was 3.9 million tonnes, while its compound fertilizer sales reached approximately 2.3 million tonnes. In the first three quarters of 2025, these two products contributed 25.3% and 58% of the company's revenue, respectively, together accounting for over 50% of total revenue.
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