Talk every Monday:
On March 12, the Minister of food and agricultural policy of Ukraine said that the Ukrainian government decided to temporarily ban the export of all types of chemical fertilizers, including nitrogen, phosphorus, potassium fertilizers and compound fertilizers. Prior to this, on March 10, the Russian Minister of industry also said that Russia decided to suspend the export of chemical fertilizer temporarily. We believe that the ban on chemical fertilizer export from Russia and Ukraine has made the supply side continue to be tight. Under the background that the increase of grain planting area promotes the demand for chemical fertilizer, the price of chemical fertilizer represented by potassium fertilizer is expected to remain high.
The ban has a great impact on China’s potash supply. Russia is the largest producer of three types of fertilizers and has a significant impact on the global fertilizer market. In terms of chemical fertilizer exports, Russia accounts for 23% of global ammonia exports, 14% of global urea exports, 21% of global potassium fertilizer exports and 10% of phosphate exports. For China, nitrogen fertilizer and phosphorus fertilizer are basically self-sufficient, while the import dependence of potassium fertilizer is as high as 50%. According to the data of the General Administration of customs, from January to November 2021, China imported 8.72 million tons of chemical fertilizer, including 7.28 million tons of potassium chloride, accounting for 83%, and 42% of potassium fertilizer from Russia and Belarus.
Fertilizer prices are expected to remain high in 2022. Under the influence of the continuous epidemic, tariff and trade disputes and other factors, the price of chemical fertilizer in China has risen sharply in the past two years. Among them, the price of urea rose by 77% and the price of potassium chloride rose by 127%, both at historic highs. We believe that if the Russian Ukrainian war cannot be ended in a short time, or even the scale of the war is further expanded, the supply side of chemical fertilizer is expected to remain tight, and the mismatch between supply and demand will lead to the continued rise of global chemical fertilizer prices, especially potassium fertilizer prices.
Investment strategy: the ban on chemical fertilizer export in Russia and Ukraine makes the supply side continue to be tight. Under the background that the increase of grain planting area promotes the demand for chemical fertilizer, the price of chemical fertilizer represented by potassium fertilizer is expected to remain high, which will be good for potassium fertilizer companies with resource advantages. It is suggested to pay attention to the leaders of Qinghai Salt Lake Industry Co.Ltd(000792) , Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) and other potash fertilizer industries with resource advantages and scale advantages. In addition, the rise in the price of chemical fertilizer is expected to push the issue of food security to be paid attention again. For the formation of relevant leaders in the pesticide industry, it is suggested to continue to pay attention to the leaders of Jiangsu Yangnong Chemical Co.Ltd(600486) , Hubei Xingfa Chemicals Group Co.Ltd(600141) and other agrochemical sectors.
Market review:
Sector performance: this week, CITIC’s basic chemical sector fell 3.61%, and the composition of the Shanghai Composite Index fell 3.66%. Compared with the Shanghai Composite Index in the same period, the basic chemical sector led by 0.05 percentage points; In terms of sub sectors, the basic chemical sub sectors mainly fell this week, with polyester and other sub sectors leading the rise; Printing and dyeing chemicals, soda ash, rubber products, spandex, synthetic resin and other sub sectors led the decline.
Rise and fall of individual stocks: the basic chemical sector led the rise of individual stocks this week, including Yunnan Energy Investment Co.Ltd(002053) , Zhejiang Dayang Biotech Group Co.Ltd(003017) , Elion Clean Energy Company Limited(600277) , Guangdong Rongtai Industry Co.Ltd(600589) , Yunnan Yuntianhua Co.Ltd(600096) , etc; Leading decliners include Bluestar Adisseo Company(600299) , Aofu Environmental Technology Co.Ltd(688021) , Sanxiang Advanced Materials Co.Ltd(603663) , Guizhou Redstar Developing Co.Ltd(600367) , Shanghai Yongguan Adhesive Products Corp.Ltd(603681) , etc.
Risk tips: the risk of fluctuations in international oil prices, the risk of repeated global epidemics, etc.
