Phosphorus chemical industry has ushered in the boom cycle of strong agrochemical industry under the global energy transformation: we believe that the cost under the global energy transformation is behind the rise in the price of energy to Shenzhen Agricultural Products Group Co.Ltd(000061) and phosphate fertilizer. The uncertainty of the situation in Russia and Ukraine may lead to supply tension lasting longer. We expect the prices of phosphate fertilizer and phosphate products to remain high for a long time. After the supply side reform in the past few years, the supply and demand of phosphate rock in China has been in a tight balance. In February 2022, the guidance on safe production in non coal mines was issued, resulting in the continuous clearing of some small phosphate rock production capacity, further aggravating the tension between phosphate rock supply and demand. We judge that the price of phosphate rock in China will continue to rise in the future. The rise of new energy has brought new demand for phosphorus ore, and due to the high quality requirements of iron phosphate and purified phosphoric acid, the demand for “good ore” in the medium and long term will be more intense. At present, the listed phosphorus chemical enterprises have basically completed the integration of upstream resources, and most of them have formed integrated development. They are high-quality assets that can resist inflation.
The new energy industry will rebuild a phosphorus chemical industry in the next 10 years: we believe that new energy is an important opportunity for the transformation and upgrading of the phosphorus chemical industry in the next 10 years. The demand explosion of new energy vehicles and energy storage market in 2021 led to a significant increase in the demand for upstream materials such as lithium iron phosphate, PVDF and lithium hexafluorophosphate. Since the second half of 2021, many phosphorus chemical companies have planned large production expansion plans around the field of new energy. According to our calculation, considering the development and utilization of iron phosphate and associated fluorine resources (excluding lithium iron phosphate, PVDF and lithium hexafluorophosphate), the market scale of the whole phosphorus chemical industry will increase by 167.5 billion yuan by 2030, an increase of 117% compared with 2021, which is equivalent to rebuilding a phosphorus chemical industry and bringing important growth opportunities to companies in the industry.
The supply gap of iron phosphate will remain in 2022, and the market pattern in the next 1-2 years may be better than the market expectation: 1) the market planning capacity is large, but in fact, the capacity of each enterprise will be constructed in batches according to the technical mastery and future market supply and demand, and will be limited by energy assessment, environmental assessment and land, In fact, the construction progress of the project may also be lower than expected; 2) The degree of technical mastery and product verification cycle may lead to the volume of products lower than expected; 3) After the long-term capacity expansion, it may face the problem of resource factor mismatch. According to our follow-up, enterprises such as Xinyangfeng Agricultural Technology Co.Ltd(000902) , Guizhou Chanhen Chemical Corporation(002895) , Yunnan Yuntianhua Co.Ltd(600096) , Guangzhou Tinci Materials Technology Co.Ltd(002709) , Lb Group Co.Ltd(002601) etc. have a high probability of capacity release this year, and are expected to obtain a strong first mover advantage in the state of iron phosphate shortage this year and enjoy the excess return under the high boom this year. In the medium and long term, resource endowments and advanced technology will determine the cost. We hope to have a phosphate chemical integrated enterprise with high-quality phosphate resources and advanced production technology.
Development of phosphate rock associated resources — phosphorus chemical enterprises will be both phosphorus chemical enterprises and fluorine chemical enterprises in the future:
Phosphate rock is associated with fluorine resources of about 3 ~ 4 points. In the future when resources are increasingly scarce, fluorine resources in phosphate rock may become an important source of fluorine chemical industry. The development and utilization of fluorine resources has opened another growth space for phosphorus chemical enterprises. According to our calculation, the anhydrous hydrofluoric acid produced by phosphorus chemical enterprises through the by-product fluosilicic acid of wet process phosphoric acid has a cost advantage of nearly 4000 yuan compared with the traditional fluorite route in terms of raw material cost.
Investment suggestions: focus on Guizhou Chanhen Chemical Corporation(002895) , Yunnan Yuntianhua Co.Ltd(600096) , Hubei Xingfa Chemicals Group Co.Ltd(600141) , Hubei Yihua Chemical Industry Co.Ltd(000422) , Sichuan Development Lomon Co.Ltd(002312) , Xinyangfeng Agricultural Technology Co.Ltd(000902) , Chengdu Wintrue Holding Co.Ltd(002539) , Shanghai Zhongyida Co.Ltd(600610) (backdoor of Wengfu group).
Risk tip: the price of phosphate rock fell, the demand for new energy was less than expected, the product price fell sharply due to the intensification of market competition, and the production progress of the project was less than expected.
