Deep Analysis of the Pricing Mechanism for Long-Chain Dicarboxylic Acids of Cathay Biotech (SH688065)

Based on the collected information, I will provide you with a

of the pricing mechanism for long-chain dicarboxylic acids of Cathay Biotech (SH688065).

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Cathay Biotech is a globally leading enterprise in the production of bio-based long-chain dicarboxylic acids, with core products including

, detailed as follows [1][2]:

Product Type	Molecular Weight	Purity Requirement	Main Application Fields
DC10 (Sebacic Acid)	202	≥98.0%	Polyamide Resin (PA1010), Plasticizers, Hot Melt Adhesives
DC12 (Dodecanedioic Acid)	230	≥98.5%	Polyamide Resin (PA1212), Fragrances, Powder Coatings
DC13	244	≥98.0%	Polyamide Resin (PA1313), Synthetic Musk, Hot Melt Adhesives
DC14	258	≥98.5%	High-Grade Synthetic Fragrances, Powder Coatings, Hot Melt Adhesives
DC16	286	≥98.0%	Long-Chain Polyamides, Lubricants, Pharmaceuticals, Fragrances
DC18	314	>97.0%	Long-Chain Polyamide (PA1818), Pharmaceutical Intermediates
Mixed Acids	-	≥98.0%	Metalworking Fluids, Coolants, Rust Inhibitors

Cathay Biotech holds an

in the long-chain dicarboxylic acid sector [3][4]:

• Global market share of approximately 80%-85%
• Domestic market share of up to 95%
• Recognized twice by the Ministry of Industry and Information Technology as a “Single Champion” in manufacturing
• The only enterprise worldwide capable of mass-producing the full DC10-DC18 series of long-chain dicarboxylic acids

• Current market size: Approximately 180,000 tons
• Compound Annual Growth Rate (CAGR) for 2023-2028: Approximately 7%
• Expected global demand to reach 270,000 tons by 2028 [1]

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Cathay Biotech adopts a

for its long-chain dicarboxylic acids, with the cost structure as follows:

Raw Material	Cost Proportion	Price Influencing Factors
Alkanes	Major cost item	Crude oil price fluctuations
Sulfuric Acid	Auxiliary material	Chemical market trends
Caustic Soda	Auxiliary material	Chemical market trends
Glucose	Auxiliary material	Agricultural product prices

• The price of the raw material alkanes is
  greatly affected by crude oil prices
  [1]
• Benefiting from
  scale effects
  brought by capacity expansion and process optimization
• Since 2020, the increase in the company’s direct material cost per ton has been significantly
  lower than the simultaneous increase in crude oil prices

Based on public data, the

of Cathay Biotech’s long-chain dicarboxylic acids are as follows [1][5]:

Year	Average Price (RMB 10,000/ton)	Average Price of DC Monomers	Average Price of Mixed Acids
2017-2022 Average	3.56	-	-
2020-2022 Average	3.40	-	-
2019	-	3.75	5.77
2020E	-	3.68	5.60
2021E	-	3.72	5.70
2022E	-	3.75	5.75

• 2022 average export price of sebacic acid (tax-included):
  RMB 32,700/ton
• Year-on-year increase of 18.2% [1]

Given Cathay Biotech’s

, the company’s products have strong , and the pricing mechanism is influenced by the following factors:

1. Market supply and demand relationship
   - Core pricing basis [6]
2. Prosperity of the downstream polyamide industry
3. Segmented demand for metalworking fluids, fragrances, hot melt adhesives, etc.
4. Price comparison with chemical-based competitors

Application Field	Sales Proportion
Polyamides	69.2%
Metalworking Fluids	18.9%
Fragrances	11.4%
Hot Melt Adhesives	8.6%
Powder Coatings	2.6% [1]

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Cathay Biotech’s long-chain dicarboxylic acid business maintains a

[1][7]:

Year	Gross Margin of Long-Chain Dicarboxylic Acids	Consolidated Gross Margin	Gross Profit per Ton (RMB 10,000/ton)
2020	47.4%	-	-
2021	42.3%	39.03%	1.37
2022	40.7%	35.24%	1.45
2023	-	28.79%	-
2024H1	-	31.22%	-

• The decline in gross margin is mainly due to the increase in average sales price driven by
  rising raw material alkane prices
• However, from the perspective of gross profit per ton, 2022 (RMB 14,500) saw an
  increase of RMB 800
  compared to 2021 (RMB 13,700)
• This indicates that the company has
  strong pricing power
  and can pass cost increases through to terminal prices

Cathay Biotech gains pricing advantages through

[4][8]:

1. Independent strain construction capability
   - Fermentation yield increased from the industry average of 50% to over 85%
2. Industrial fermentation scale-up process
   - Stability in large-scale production
3. Engineering system integration capability
   - Full industry chain technology coverage
4. Mature separation and purification process
   - Different extraction technologies adopted for products of different chain lengths

• Production cost of bio-based method:
  Approximately RMB 28,000/ton
• Production cost of chemical method:
  Approximately RMB 40,000/ton
• The cost of the bio-based method is
  about 30% lower
  than that of the petrochemical route [4]

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Cathay Biotech adopts a

sales model [9]:

• Direct sales through domestic production bases
• Entrust third-party logistics companies to deliver goods to locations designated by customers

• Orders with flexible delivery terms: Direct shipment from domestic bases to ports designated by customers
• Orders with tight delivery terms: Warehouses rented in the US and Europe respectively, with inventory maintained to meet customer demand quickly

• Small customers:
  Payment before delivery
• Large strategic customers: Given a certain credit period (customers with long-term cooperation, good reputation, and large sales scale)

• Main customers for sebacic acid
  partially overlap
  with customers for long-chain dicarboxylic acids (DC11-DC18)
• Downstream customers cover multiple industries including polyamides, hot melt adhesives, fragrances, coatings, rust prevention, and lubricants
• Bio-based polyamide customers include industries such as
  automotive, electronics and electrical appliances, textiles, and films
  [6]

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Production Base	Capacity (10,000 tons/year)	Commissioning Time	Main Products
Cathay Jinxiang	-	-	Long-chain dicarboxylic acids
Wusu Technology	3 (long-chain dicarboxylic acids)	Completed in 2023	Long-chain dicarboxylic acids, long-chain polyamides
Taiyuan Technology	4 (sebacic acid)	Commissioned in 2022	Bio-based sebacic acid
Taiyuan Technology (Under Construction)	90 (bio-based polyamides)	December 2025	Bio-based polyamides

Indicator	2020	2021	2022
Capacity Utilization Rate	58.5%	79.3%	51.6%
Sales Volume (10,000 tons)	4.31	6.15	5.87
Production-Sales Rate	98.3%	103.4%	99% [1]

• Long-chain dicarboxylic acid series: 115,000 tons of capacity, with a utilization rate of 72.4% [6]
• Sales volume of the series in 2024
  hit a record high

1. Scale effects
   - Capacity expansion brings room for reduction in unit costs
2. Consolidation of market leading position
   - Further enhancement of pricing power
3. Product structure optimization
   - Increase in the proportion of high-value-added products
4. Cost pass-through capability
   - Scale advantages strengthen bargaining power with upstream raw material suppliers

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Indicator	2024	2023	Year-on-Year Change
Operating Revenue	RMB 2.958 billion	RMB 2.114 billion	+39.9%
Net Profit Attributable to Shareholders	RMB 489 million	RMB 367 million	+33.2%
Gross Margin	31.25%	28.79%	+2.46 percentage points

• 2023-2025 procurement agreement: 10,000 tons → 80,000 tons → 200,000 tons of bio-based polyamide resins
• Provision of low-cost financing support
• Joint development of “plastic replacing steel” application scenarios [3]

• Established a joint venture “Anhui Kai Xi Shi Dai Composite Materials Co., Ltd.” in February 2025
• Construction of a bio-based battery shell manufacturing base with RMB 500 million investment and 18 production lines in Hefei
• Upon reaching full capacity, annual production of 2.5 million sets of bio-based PA56 composite battery shells [3]

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Pricing Element	Details
Pricing Basis	Cost-plus (raw material alkanes as the main component) + market supply and demand relationship
Pricing Power	Strong (global market share of over 80%)
Price Pass-Through	Can effectively pass raw material cost increases downstream
Price Range	DC monomers: approximately RMB 34,000-37,500/ton; mixed acids: approximately RMB 56,000-58,000/ton
Gross Margin Level	40%-47% (fluctuates due to raw material price changes)

1. Crude oil prices
   → Alkane costs → Product pricing
2. Downstream polyamide demand
   → Market supply and demand → Price elasticity
3. Capacity expansion progress
   → Scale effects → Cost optimization space
4. Technological iteration
   → Cost structure → Pricing floor
5. Strategic customer agreements
   → Sales volume guarantee → Price stability

• Stable pricing power
  : 80% global market share ensures the company has strong product pricing power
• Smooth cost pass-through
  : Raw material price fluctuations can be effectively passed through to terminal products
• Growth driven by capacity release
  : After the commissioning of the 900,000-ton Taiyuan bio-based polyamide project in 2025, pricing power is expected to extend downstream
• Downstream binding enhances price stability
  : Cooperation with strategic customers such as China Merchants Group and CATL ensures sales volume and price stability

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[1] Shanxi Securities - In-Depth Analysis Report on Cathay Biotech (688065.SH): Global Leader in Long-Chain Dicarboxylic Acids, China Merchants Group Invests to Jointly Develop New Bio-Based Nylon Market (August 2023)
https://pdf.dfcfw.com/pdf/H3_AP202308151594742765_1.pdf

[2] Company Official Website - Cathay Biotech Product Information
https://www.cathaybiotech.com

[3] Caifuhao - Cathay Biotech Holds Absolute Leading Position in Bio-Based Long-Chain Dicarboxylic Acid Sector (September 2025)
https://caifuhao.eastmoney.com/news/20250917210701742673550

[4] Huaan Securities - Continuous Capacity Expansion of Long-Chain Dicarboxylic Acids, Bio-Based Polyamides to be Mass-Produced Soon (April 2023)
https://pdf.dfcfw.com/pdf/H3_AP202304291586134617_1.pdf

[5] Sinolink Securities - Building a Bio-Based Polyamide Platform to Share the Hundred-Billion-Yuan Nylon Market
https://img3.gelonghui.com/pdf/9cdd0-35b82273-8894-48c0-a4c4-a44a12a34196.pdf

[6] 2024 Annual Report of Shanghai Cathay Biotech Co., Ltd. (April 2025)
http://static.cninfo.com.cn/finalpage/2025-04-22/1223197523.PDF

[7] CITIC Securities - Review Inquiry Letter on the Application Documents for the Issuance of Shares to Specific Objects by Shanghai Cathay Biotech Co., Ltd. (March 2024)
https://static.sse.com.cn/stock/disclosure/announcement/c/202403/688065_20240315_MLOH.pdf

[8] 2024 Semi-Annual Report of Shanghai Cathay Biotech Co., Ltd.
http://notice.10jqka.com.cn/api/pdf/6beb96a1dc1145d.pdf

[9] Xueqiu - Investment Analysis of Cathay Biotech (SH688065)
https://xueqiu.com/S/SH688065

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Report Generation Date: January 20, 2026
Data Sources: Brokerage Research Reports, Company Announcements, Industry Research