Gulf Resources, Inc

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China’s Gulf Resources Plans to Increase Production

Oct. 26 (Bloomberg) -- Gulf Resources Inc., a Chinese producer of bromine and other specialty chemicals, plans to expand production capacity to take advantage of a 36 percent jump in domestic prices since the start of the year, said Chief Executive Officer Xiaobin Liu.

The company, which is listing on the Nasdaq stock market tomorrow, is targeting a 30 percent share of the market for bromine, used in flame-retardant materials, from 20 percent, he said in an interview in Bloomberg’s New York headquarters. Gulf Resources also plans to expand in “higher margin” businesses such as pharmaceuticals and fertilizers, he said.

“We’re starting to see a recovery in bromine prices in the third quarter,” Liu, 41, said. “We expect prices to grow steadily because of China’s economic recovery.”

Gulf Resources is the largest bromine producer in China with eight production facilities, Liu said. He expects the number of domestic manufacturers to fall to 30 within the next five years from the current 70 to 80.

The bromine market’s prospects are tied to the global economy, Laurence Alexander, a New York-based basic materials analyst at Jefferies & Co., said in a telephone interview.

China’s economy may grow 8.5 percent this year, with growth in the second half accelerating to more than 9 percent, Caijing Magazine reported on its Web site last week, citing Yu Bin, head of the macro-economic research department at the State Council Development and Research Center.

Prices for bromine have increased to 15,000 yuan ($2,196.92) a ton from 11,000 yuan at the beginning of this year, Liu said. Prices may rise to 16,000 yuan by the end of this year, he said, citing industry data.

The Shouguang, China-based company expects revenue of $100 million this year, up from $85 million in 2008, Liu said. Profit may jump to $27 million in 2009 from $22 million in the year- earlier period, he said.

Gulf Resources rose 6.7 percent to $10.30 in over-the- counter trading in New York.

http://www.bloomberg.com/apps/news?pid=20601089&sid=aBv3F25gWFoA