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Demand Rise Phosphate Ore Industry Boom Is Expected To Continue.​

2022-07-26

The latest data from the institution shows that the price of phosphate ore in China has risen rapidly this year and recently stood at 1000 yuan/ton. Affected by this, the relevant listed companies in the first half of the performance of a substantial forecast. Industry insiders said that this round of phosphate ore industry boom is just when the demand for phosphorus new materials started, the business cycle may last for a long time, phosphate ore value is expected to reshape, driving the price center upward.


Flush iFinD data show that the current price of domestic phosphate ore is 1066.67 yuan/ton, the same period last year at 530 yuan/ton.


Industry insiders said that this round of phosphate ore prices are different from the past, mainly driven by the demand for new energy materials. At the same time, the supply side is affected by safety inspection, national strengthening of phosphate rock resource protection and other factors, industry expansion is strictly restricted, and supply continues to tighten.


Data from the China Institute of Business Industry showed that the country's phosphate ore production in 2021 was 102.89.9 million tons, up 13.8 percent year on year.  The top four provinces in terms of phosphate ore production in 2021 were Hubei, Guizhou, Yunnan and Sichuan.  Among them, Hubei province produced 48,352,900 tons in 2021. 


Yuntianhua said in a survey by institutional investors that it is difficult to add new phosphate mining capacity at present, and the acquisition of mining rights and the supporting construction of phosphorus industry need a long time for demonstration and approval.


In terms of demand, with the capacity expansion and industrial chain extension of phosphorus chemical enterprises, there is an increasing demand for self-owned phosphate ore. Some phosphorus chemical enterprises begin to stop selling phosphate ore abroad, and even need to purchase phosphate ore to meet the needs of production.


Yunnan Phosphating, Guizhou KaiPhosphorus, Wengfu Group, Xingfa Group and Chuanheng Stock are the main phosphate rock producers, with their production capacity accounting for 34.02 percent of the total phosphate rock production capacity, according to Sealand Securities. At present, the phosphate ores of these enterprises are mainly used for their own use, and only a small amount is sold abroad.


New Yangfeng recently said in the interactive platform, the company's phosphate ore can only meet part of the demand, still need to buy a part of phosphate ore, the current product raw material price conduction is relatively smooth.


"This round of phosphate ore industry is the global scale boom, the current overseas 32% grade phosphate ore price has exceeded 1900 yuan/ton, far more than the domestic price." Industry insiders said.


Changjiang Securities research report said that the current round of phosphate ore industry boom from new energy materials to bring incremental demand. It is expected that by 2025 and 2030, lithium iron phosphate and lithium hexafluorophosphates will account for 2.5% and 7.4% of the global phosphate ores downstream. With the incremental space gradually open, phosphate ore demand will be long-term support.


Guotai Junan's research report shows that power batteries and energy storage batteries are the main driving forces for the demand for phosphorus elements, while lithium iron phosphate is used in a large proportion in power batteries and energy storage batteries. It is expected that the demand for phosphate rock from lithium batteries will reach 4.7 million tons/year.


Benefiting from rising prices, listed companies' performance in the first half of the year increased significantly. According to Wind data, the net profit attributable to the parent company of the four listed companies that have disclosed their performance forecasts for the first half of the year all achieved year-on-year growth.


Chuanjinnuo expects to achieve a net profit of 173 million yuan to 213 million yuan attributable to shareholders of listed companies in the first half of the year, a year-on-year increase of 344%-447%. Xingfa Group expects to realize a net profit of 3.62 billion yuan to 3.72 billion yuan attributable to shareholders of listed companies in the first half of the year, a year-on-year increase of 217.31%-226.08%.


Regarding the substantial pre-increase in performance, Xingfa Group said that in the first half of the year, the chemical industry generally continued the boom cycle since 2021. Although the sales prices of the company's glyphosate, phosphate rock, yellow phosphorus, phosphate fertilizer and other chemical and agrochemical products fluctuated, the overall operation remains high.


New Yangfeng said that in the first half of the year, the price of sulfur, phosphate ore and other commodities soared. The company injected Bagu phosphate ore in 2021, and phosphoric acid, sulfuric acid and other upstream supporting capacity are in the leading position in the industry. Building a significant industrial chain integration advantage, the gross margin of monoammonium phosphate remains at a high level.


Chuan Fa long Python on July 8 disclosed the survey minutes show that in the recent past, phosphate ore in the supply shortage and strong demand under the dual impact of a substantial increase in prices, but the downstream market demand is still strong, the current price of phosphate ore is still acceptable.


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