Core conclusion
High grain price + low inventory, and the high boom of chemical fertilizer is expected to continue under the large cycle of agrochemical industry. Since 2021, grain prices outside China have continued to rise and remain high. The sales ratio of international grain and oil depots has reached a new low in the past 15 years. Driven by tight supply and inflation, grain prices are easy to rise but difficult to fall. On the demand side, the maintenance of high grain prices will drive the demand of the chemical fertilizer industry. According to mosaic’s prediction, the growth rate of China’s phosphate fertilizer demand will be between 3.5% and 6.4% in 2022. On the supply side, in the medium and long term, the supply side reform of phosphorus chemical industry continues to deepen, and the strong resource attribute gradually appears. In the short term, the global and Chinese phosphate fertilizer inventory is at a low level, and the conflict between Russia and Ukraine will further exacerbate the global shortage of fertilizer supply. We believe that the high prosperity of fertilizer under this wave of agrochemical cycle is expected to last for at least 1-2 years, and the high profit space of fertilizer will lay the foundation for the performance of phosphorus chemical enterprises.
The export of chemical fertilizer is limited, and the industry boom may continue with the relaxation of export restrictions. Driven by high grain prices, raw material prices and downstream demand, the current price of chemical fertilizer is strong, and we are expected to see the price rise again when the spring farming season is coming. According to wind data, the current weekly average price of monoammonium phosphate Market in China (58% powdered, East China) is 3720 yuan / ton, with a month on month increase of + 5.5% and a year-on-year increase of + 40.9%; The weekly average price of urea market (Shandong region) was 2992 yuan / ton, with a month on month increase of + 2.7% and a year-on-year increase of + 39.1%; The weekly average price of potassium chloride Market (60% powder, Qinghai region) was 4667 yuan / ton, with a month on month ratio of – 2.2% and a year-on-year increase of + 128%. At the same time, the international phosphate fertilizer price brought by the export ban forms a large price difference of more than 3500 yuan / ton with China’s price. The market expects that the state may liberalize the export restrictions of chemical fertilizer after spring ploughing. With the peak season of overseas demand approaching, the high boom of chemical fertilizer is expected to continue under the stronger expectation of price rise.
The supply gap of iron phosphate will remain in 2022. At present, China’s total capacity of iron phosphate is 645000 tons, and the total capacity of lithium iron phosphate is 776000 tons. Iron phosphate is in short supply. From the perspective of production expansion plan, phosphorus chemical enterprises will be the main force of iron phosphate production expansion in the future, accounting for 55% of the total production expansion plan; From the perspective of production expansion rhythm, it is expected that iron phosphate will still be in the state of mismatch between supply and demand in 2022, and the state of tight balance between supply and demand is expected to remain until the middle of 2023; From the actual progress, the expansion of iron phosphate production will be limited by environmental impact assessment, energy assessment, process and other restrictions. At the same time, the verification cycle of downstream products may lead to lower than expected capacity release. Therefore, we are optimistic about the continuation of iron phosphate boom under the pattern of supply-demand mismatch.
In the medium and long term, the resource attribute of phosphorus chemical industry is prominent, and the supply side reform continues to optimize the industry competition pattern. At present, China’s phosphorus ore resources are facing the pressure of shortage. At the same time, with the joint restrictions of various supply side control measures such as carbon neutralization, dual control of energy consumption and capacity indicators, we will see that some enterprises with leading resource endowment layout will show stronger competitiveness. While the industry profits are more inclined to the upstream, the competition pattern of the industry will also be continuously optimized. At present, the leading enterprises of phosphorus chemical industry have basically completed the integration of upstream resources, improved the integration of industrial chain, and have the advantages of sufficient resources, cost, energy consumption indicators and so on.
It is suggested to pay attention to the following suggestions: attention to the following issues: attention to the following issues: the 60096 ), Shanghai Zhongyida Co.Ltd(600610) ( Founder Technology Group Co.Ltd(600601) . SH), Kunming Chuan Jin Nuo Chemical Co.Ltd(300505) ( Kunming Chuan Jin Nuo Chemical Co.Ltd(300505) . SZ), Jchx Mining Management Co.Ltd(603979) ( Jchx Mining Management Co.Ltd(603979) . SH), etc.
Risk warning: safety accidents affect commencement; Changes in environmental protection policies; Rapid iterative update of technical route, etc
