Recently, Jiangsu Chengxing Phosphorus Chemical Co., Ltd. (securities abbreviation: “*ST Chengxing”) issued an announcement stating that it received the “Notice of Creditor’s Rights Transfer and Collection” from Wuxi Branch of China Minsheng Banking Corporation and Jiangsu Branch of China Cinda Asset Management Co., Ltd. According to public information. As of July 27, the cumulative amount involved in *ST Chengxing was approximately 2.018 billion yuan (including: 1.934 billion yuan for major lawsuits, including 200 million yuan for property preservation that has not entered litigation procedures; other lawsuits The amount is 84 million yuan).
The cumulative amount involved in the case exceeds 2 billion yuan, and the holdings The equity of 17 companies has been applied for freezing, related lawsuits have increased, some customers have been lost, and banks have continued to reduce loan quotas, leading to operational difficulties… From the world’s largest yellow phosphorus producer with unlimited glory, to a company that has been losing money for nearly 20 years in one year. Net profit, *ST Chengxing’s situation took a turn for the worse, and a delisting risk warning was implemented in May this year. The securities abbreviation was changed from “Chengxing Shares” to “*ST Chengxing”.
It is understood that this situation is not unique in the chemical industry. Since the Spring Festival in 2021, a variety of factors have worked together, and many chemical companies have been in trouble and are facing difficulties. Many litigation disputes occurred between upstream and downstream enterprises.
More than 40,000 lawsuits, the chemical industry is in trouble
According to China Judgment Documents Network According to data, since 2021, there have been more than 40,000 documents involving litigation in the chemical industry, mainly focusing on sales disputes. The regions and courts involved include Shanxi, Hebei, Shandong, Henan, Beijing, Tianjin, Jiangsu, Zhejiang, Shanghai and other provinces and cities.
According to incomplete statistics, the above chemical companies Causes of litigation include but are not limited to sales contract disputes, land lease contract disputes, product liability disputes, partnership agreement disputes, sales contract disputes, recourse rights disputes, construction project construction contract disputes, etc. Most chemical companies have filed property preservation applications against the defendant/responsored. Freeze a person’s bank deposits or seize their property of equivalent value, repay accounts, etc.
A few leading companies are making money, while the vast majority of midstream and downstream companies are “suffering”
From being popular to having operational difficulties, it does not happen overnight, but is caused by multiple factors. It is understood that the ruthless invasion of the epidemic has seriously affected the development of the chemical industry, and this will be reflected most vividly in 2021. Since the beginning of the year, raw materials have skyrocketed and even hit record highs, and the cost side has been under constant pressure. However, downstream demand has not picked up as fast as expected, and the order situation is not optimistic. As a result, the cost pressure of chemical companies cannot be smoothly passed on to the sales side, and The situation becomes more serious in the middle and lower reaches. Except for a few leading chemical companies that have made huge profits, most chemical companies are still on the verge of “drowning”.
It has been previously reported that hundreds of chemical companies filed for bankruptcy in the first half of this year, and some companies have been suffering losses for a long time. More and more companies are struggling and unable to survive. The disruption of the capital chain and the supply of raw materials at any link in the entire industrial chain will affect enterprises upstream and downstream of the industrial chain. No snowflake is innocent in the avalanche, and tens of thousands of lawsuits are just a few of the many chemical companies that are already in danger. Dilemma adds a ruthless fire.
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