Open Source Securities released a research report saying that increasing barriers in the phosphate ore mining and selection industry will help raise the price center of phosphate ore, and the downstream phosphorus chemical product pattern is expected to continue to be optimized and refined and developed to high-end.
Zhitong Finance Editor, Open Source Securities released a research report saying that raising barriers in the phosphate ore mining and selection industry will help raise the phosphate ore price center. The downstream phosphorus chemical product pattern is expected to continue to be optimized and refined and high-end. He is optimistic that large-scale phosphorus chemical superior enterprises integrating “mining, selection, and addition” will achieve deep and diversified development and utilization of phosphate ore resources, optimize the industrial structure, and accelerate the transformation and upgrading of the phosphorus industry. Recommended targets: Xingfa Group (600141.SH), Yuntu Holdings (002539.SZ). Beneficial targets: Yuntianhua (600096.SH), Chuanheng Co., Ltd. (002895.SZ), Chuanfalong Python (002312.SZ), Xinyangfeng (000902.SZ), etc.
The main views of Open Source Securities are as follows:
Phosphorus Chemical: Tighter investment in phosphate resources helps the price center rise, and the product pattern is expected to continue to be optimized
The phosphorus chemical industry has strong resource properties. The upstream mainly relies on phosphate ore. Yellow phosphorus and phosphoric acid are important intermediates, and downstream products are mainly used in agriculture and industry. Driven by policies such as the “Implementation Plan for Promoting Efficient and High-Value Utilization of Phosphorus Resources”, Open Source Securities is optimistic that the phosphorus chemical industry will start high-quality development. (1) Resource side: China is rich in phosphate resources, but the average grade is low and the level of comprehensive utilization is low. As barriers in the phosphate mining industry rise, Open Source Securities is optimistic that the supply and demand pattern will continue to be optimized to help raise the phosphate ore price center. (2) Product side: With the transformation and upgrading of traditional industries such as yellow phosphorus and phosphate fertilizer, the phosphorus chemicals industry chain is rapidly expanding to emerging industries such as new energy materials, electronic chemicals, and functional fine chemicals, and the phosphorus chemical product pattern is expected to continue to be optimized.
Resource side: Domestic phosphate resources are unevenly distributed, mineral rights investment is being tightened, and the phosphate ore price center is expected to rise
According to USGS and the National Bureau of Statistics, China's phosphate ore reserves rank second in the world and production rank first in the world all year round, but the average grade is low and the waste of resources is serious; more than 90% of domestic phosphate ore resources are distributed in the four provinces of Yunnan, Hubei, Sichuan and Guizhou, and domestic phosphate ore production has shown a shrinking trend since 2018. With the gradual improvement of the domestic phosphate resource market allocation and mining rights concession system, and the stricter and orderly investment of phosphate mining rights, the phosphate ore mining industry has shown the basic characteristics of high industrial concentration, high degree of upstream and downstream integration, and high entry barriers.
According to Open Source Securities statistics, domestic phosphate ore plans to add a lot of new production capacity, but the certainty of project implementation and actual commissioning progress remains to be seen. The increase in phosphate ore is mainly constrained by rising barriers in the phosphate ore mining and selection industry rather than simply the circulation restriction policies in major production areas. It is optimistic that the phosphate ore industry will further integrate. Continued optimization of the supply and demand pattern will help the phosphate ore price center rise.
Product side: About 60% phosphate ore is used to produce phosphate fertilizer. Refinement and high-end development are the direction of development
According to Open Source Securities statistics, at present, the domestic wet phosphoric acid, diammonium phosphate, and calcium dihydrogen phosphate industries are highly concentrated, capacity utilization rates have increased, and the new production capacity of the diammonium phosphate industry is strictly limited, the new production capacity in the calcium dihydrogen phosphate industry is limited, the wet phosphoric acid industry has many new production capacity, but the technical barriers for wet purification of phosphoric acid are high. In contrast, the industry pattern of yellow phosphorus, thermal phosphoric acid, monoammonium phosphate, feed-grade calcium hydrogen phosphate, sodium tripolyphosphate, and sodium hexametaphosphate has been optimized in recent years, but the production capacity distribution is still scattered, and new production capacity is limited.
Furthermore, benefiting from the booming development of the new energy industry, the “phosphate ore-wet phosphoric acid-wet purification of phosphate-iron phosphate (lithium)” industry chain has great potential. Large phosphorus chemical companies that are optimistic about integrating “mining, selection, and addition” are seizing the opportunity to achieve transformation and upgrading to fine phosphorus chemicals and new energy materials-related industries.
Risk warning: Policy implementation falls short of expectations, safe and environmentally friendly production, large fluctuations in product prices, etc.