Risks and countermeasures faced by the silica industry
The risks and countermeasures faced by the silica industry are on belows:
（1） The risk of fluctuations in the prices of major raw materials
The main raw materials for the company's products are sodium silicate, sulfuric acid, etc. The main raw materials of sodium silicate include soda ash, quartz sand, etc., while the main raw material of sulfuric acid is sulfur, which is a bulk raw material. Its price fluctuates due to the impact of domestic and foreign market supply and demand, which in turn will have a certain impact on the company's business performance. The company faces the risk of significant fluctuations in the prices of its main raw materials causing adverse effects on production and operation. The company will determine a reasonable raw material procurement volume and channels based on its own order situation, continuously strengthen supply chain management, and reduce the impact of raw material price fluctuations on the company's profitability.
（2） Risk of energy supply and price fluctuations
Multiple stages of the company's production process require the consumption of energy such as electricity, natural gas, and coal. Anthracite coal is mainly used for the drying of silica, while natural gas is mainly used for the production of steam and the drying of silica. All of the above energy sources are necessary for the company's production. If the above energy supply is interrupted or there is a significant increase in energy prices, and the company cannot effectively transfer the pressure of rising raw material and energy prices downstream or offset the pressure of rising costs through technological innovation, Will have a negative impact on the company's operating performance. The company will actively expand new energy procurement channels, continuously optimize supply chain management, and strive to reduce the impact of energy procurement price fluctuations on the company's profits.
（3） The risk of a single product structure
The precipitation method silica currently produced by the company is mainly used as a reinforcing agent for silicone rubber. Although the company has already laid out silicon dioxide for PE battery separators, insulation materials, matting agents, and defoamers, and achieved small sales, the above products have not yet been officially put into mass production. The relatively single product structure of the company will result in a relatively insufficient ability to resist macroeconomic risks. The company will continue to research and innovate, optimize product structure, and expand new application fields.
（4） Environmental risks
The company belongs to the chemical raw material and chemical product manufacturing industry, which generates pollutants such as exhaust gas, wastewater, and solid waste during the production process. The daily operation of the company must comply with the requirements of relevant laws and regulations, and carry out prevention and treatment of pollutants. With the increasing emphasis on environmental protection in society and the continuous strengthening of environmental protection efforts by the Chinese government, stricter environmental standards and higher environmental requirements may be introduced in the future; If the company cannot upgrade and transform its production equipment and environmental protection facilities in a timely manner, it will have a negative impact on the company's production and operation. The company will strictly comply with relevant environmental requirements, continuously strengthen environmental and safety management, and timely upgrade and maintain relevant production equipment and environmental facilities.