"Left Phosphorus, Right Lithium": The semi-annual report of many phosphorus chemical companies is expected to increase, and the price of phosphate rock soars

　　Under the integrated development of "left phosphorus and right lithium", the net profit of many phosphorus chemical companies in the first half of the year hit a record high for the same period.

　　The Paper learned that Hubei Xingfa Chemical Group Co., Ltd. (Xingfa Group, 600141), Kunming Chuanjinnuo Chemical Co., Ltd. (Chuanjinnuo, 300505), Guizhou Chuanheng Chemical Co., Ltd. (Chuanheng Co., Ltd., 002895) ) and other phosphorus chemical companies recently announced that it is expected that the net profit in the first half of 2022 will increase by more than 200%, which is close to or even exceeds the profit level of last year.

　　Specifically, in the first half of this year, Xingfa Group is expected to achieve a net profit of 3.62 billion yuan to 3.72 billion yuan, a year-on-year increase of 217.31%-226.08%; Chuan Jinnuo is expected to achieve a net profit of 173 million yuan to 213 million yuan, a year-on-year increase of 344% -477%; Chuanheng Co., Ltd. is expected to achieve a net profit of 360 million yuan to 430 million yuan, a year-on-year increase of 243.95%-310.82%.

　　In addition, Yunnan Yuntianhua Co., Ltd. (Yuntianhua, 600096) is expected to have a net profit of 3.45 billion yuan in the first half of 2022, a year-on-year increase of 119.47%; Hubei Yihua Chemical Co., Ltd. (Hubei Yihua, 000422) is expected to have a net profit in the first half of 2022. 1.65 billion yuan to 1.75 billion yuan, a year-on-year increase of 127.43%-141.21%.

　　Most of the above-mentioned companies mentioned the reasons for the pre-increase in performance that in the first half of this year, the mismatch between supply and demand of phosphate rock and the rise in prices drove the price of products related to the phosphate chemical industry chain to rise, increasing the profit margin of the company.

　　In the past few years, the supply and demand of phosphate rock has been in a tight balance. This year, under the geopolitical situation, the shortage of chemical fertilizer raw materials has intensified this contradiction. The rapid development of superimposed new energy has brought new demand points for phosphate rock.

　　Phosphate ore "reduced in quantity and increased in price", and the price of downstream products "increased"

　　Phosphorus is a non-renewable resource. In China, affected by policies such as cracking down on illegal mining and strengthening the protection of non-renewable resources in Hubei, Guizhou, Sichuan and other provinces with large phosphate rock resources, the increase in phosphate rock production is limited. According to the latest data from the National Bureau of Statistics, from January to May 2022, the national output of phosphate rock was 40.771 million tons, a year-on-year increase of 1.8%; in May, the output of phosphate rock was 8.929 million tons, a year-on-year decrease of 2.51%.

　　According to data from the U.S. Geological Survey, the basic reserves of phosphate rock in China in 2021 are 3.2 billion tons. According to the current average annual mining rate of about 100 million tons, it is only enough for 30 years of mining.

　　Affected by the growing demand for agrochemicals and fluctuations in the supply side, the price of phosphate rock continued to rise.

　　According to Wind data, the price of phosphate rock has gradually strengthened since the beginning of 2021. In 2021, the price of phosphate rock will increase from 374 yuan/ton to 645 yuan/ton, an increase of 72.46%. As of July 17, the average reference price of 30%-grade phosphate rock in mainstream areas in my country was around 1,083.33 yuan/ton, a year-on-year increase of 41.92% and an increase of nearly 60% during the year.

　　The surge in global fertilizer demand has also driven up overseas phosphate rock prices. The price of overseas 32%-grade phosphate rock exceeded 1,900 yuan/ton in July, far exceeding the domestic price. The price difference at home and abroad will continue to support the rise in domestic phosphate rock prices.

　　Phosphate rock is the upstream raw material of the phosphorus chemical industry chain, and the downstream products cover phosphate fertilizer, pesticide, phosphate, phosphoric acid, etc. Among them, phosphate fertilizer is the most important downstream of phosphate rock, accounting for about 70%.

　　The price of upstream raw materials has been reduced and the price of phosphate fertilizer products has been supported. According to data from the commodity quotation platform Sunshine, in the first half of this year, the prices of monoammonium phosphate and diammonium phosphate have been running at a high level, with an increase of over 100%. As of July 17, the average market price of monoammonium phosphate was 4,650 yuan/ton, a year-on-year increase of 28.28%; the average market price of diammonium phosphate was 4,700 yuan/ton, a year-on-year increase of 29.12%.

　　According to the research of Bank of China Securities, among the more than 200 chemical products tracked in the first half of 2022, the number of varieties whose average price has increased will account for 49%. Among them, phosphate rock, sulfur, lithium carbonate and other products have increased by more than 30%.

　　From the perspective of price historical quantification, at present, the chemical fertilizer industry is in the best situation. Prices of products such as diammonium phosphate and potassium sulfate are also at historically high levels.

　　Cross-border "lithium" track, or have raw material advantages

　　In addition to digging the moat of phosphate fertilizer, many phosphorus chemical companies also regard "lithium" as a new growth point.

　　Chuan Jinnuo said that with the commissioning of the Guangxi project, the company's revenue and profits in the first half of the year have grown rapidly. It is understood that in the first half of this year, Chuanjinnuo spent 3.9 billion yuan and the People's Government of Fangchenggang City, Guangxi signed the "Chuanjinnuo New Energy Battery Materials Series Project Investment Agreement". The body material iron phosphate and the supporting 600,000 tons/year sulfuric acid project have been agreed upon.

　　According to incomplete statistics from The Paper, since last year, nearly 10 phosphorus chemical companies, including Xingfa Group, Yuntianhua, Chuanjinnuo, Hubei Yihua, and Xinyangfeng Agricultural Technology Co., Ltd. (Xinyangfeng, 000902), have crossed borders. Bet on the lithium iron phosphate track.

　　In terms of Yuntianhua, the largest phosphate rock producer in China, in October 2021, Yuntianhua announced that it plans to invest 7.286 billion yuan to build 500,000 tons/year of new material precursors and supporting projects for iron phosphate batteries. The first phase of the project with an annual output of 100,000 tons of iron phosphate is expected to be put into production at the end of August. At present, the project has entered the stage of commissioning.

　　In addition, Yuntianhua announced on February 16, 2022 that the company and Enjie (002812), Yiwei Lithium Energy (300014) and others jointly signed the "New Energy Battery Whole Industry Chain Project Cooperation Agreement". Mining mineral resources, joint research and development, production and sales of new energy batteries and new energy battery upstream and downstream materials. The total investment of the project is 51.7 billion yuan.

　　Another leading phosphorus chemical company, Xingfa Group, is also actively deploying lithium iron phosphate business. On November 5, 2021, Xingfa Group's key material project with an annual output of 300,000 tons of batteries started with a total investment of 10 billion yuan. After two days, Xingfa Group and Zhejiang Huayou Cobalt Co., Ltd. signed a strategic cooperation agreement, planning to build 500,000 tons/year of iron phosphate, 500,000 tons/year of lithium iron phosphate and related supporting projects.

　　In addition, Hubei Yihua, the "first domestic nitrogen fertilizer company", also joined hands with a subsidiary of CATL to set up a joint venture to build and operate iron phosphate, nickel sulfate and its front-end phosphate rock, phosphoric acid, sulfuric acid and other chemical raw materials.

　　Why are phosphorus chemical companies so actively entering the lithium iron phosphate track?

　　From the perspective of demand, in the context of the rapid development of new energy vehicles and the cost advantage of lithium iron phosphate batteries, lithium iron phosphate batteries have grown rapidly. According to the data of China Automotive Power Battery Industry Innovation Alliance, my country's power battery output in 2021 will be 219.7GWh, a year-on-year increase of 163.4%, of which lithium iron phosphate battery output will be 125.4GWh, accounting for 57.1% of the total output, a year-on-year increase of 262.9%.

　　Driven by the high demand for lithium iron phosphate from downstream new energy vehicles and energy storage batteries, the demand for upstream raw material iron phosphate continues to rise, and the industry operating rate remains high. According to Baichuan Information data, since November 2021, the operating rate of iron phosphate enterprises has remained above 90%, close to full production.

　　The Everbright Securities Research Report stated that the supply and demand pattern of lithium iron phosphate will remain tight in the short and medium term, and the demand for lithium iron phosphate is expected to be about 1 million tons in 2022. Demand will continue to improve, and the demand for lithium iron phosphate is expected to reach about 2.36 million tons in 2025.

　　More importantly, compared with phosphate fertilizer, entering the lithium iron phosphate track can bring higher profits to phosphorus chemical companies.

　　According to previous calculations by Soochow Securities, in the field of traditional agricultural fertilizers, the production of one ton of monoammonium phosphate requires about 1.75 tons of phosphate rock, and each ton of phosphate rock can generate a profit of about 172 yuan.

　　In comparison, about 2.26 tons of phosphate rock is needed to produce one ton of lithium iron phosphate. According to the average market price in the first half of 2021, the industry profit per ton of lithium iron phosphate is about 4,439 yuan, and each ton of phosphate rock can generate a profit of nearly 2,000 yuan. Yuan. In the first half of this year, the price of lithium iron phosphate has soared, which may further expand this profit space.

　　It is worth noting that on the lithium iron phosphate competition track, phosphorus chemical companies control the upstream raw material of phosphate rock, and cross-border entry may help them gain more competitive advantages.