The demand side drives growth, and the performance of phosphorus chemical companies in the first half of the year is booming

　　Recently, phosphorus chemical giant Chuanheng Co., Ltd. (002895.SZ) released its 2022 semi-annual report, showing that the company achieved operating income of 1.587 billion yuan, a year-on-year increase of 57.77%; net profit attributable to the parent was 371 million yuan, a year-on-year increase of 254.08%.

　　In addition, many domestic phosphorus chemical companies achieved performance growth in the first half of the year. Among them, Xingfa Group (600141.SH) estimates that the net profit in the first half of this year will be 3.62 billion yuan to 3.72 billion yuan, a year-on-year increase of 217.31% to 226.08%, a record high. Yuntianhua (600096.SH) expects that the net profit attributable to the parent in the first half of this year is about 3.45 billion yuan, an increase of about 119.47% year-on-year.

　　Yuan Jingmei, a researcher at Zhongyan Puhua, said in an interview with a reporter from China Business News that there are two main reasons for the growth of phosphate chemical companies: first, the terminal fertilizer market has improved. Still; Second, the demand for lithium iron phosphate batteries continues to rise.

　　The reporter learned from the securities department of Chuanheng Co., Ltd. that the company's performance increased significantly in the first half of this year, mainly due to the increase in the company's product sales unit price and the increase in sales revenue of phosphoric acid.

　　Raw material prices firm

　　Phosphorus chemical products mainly include phosphate fertilizer, pesticide, phosphate, phosphoric acid, etc., which are widely used in agriculture, food, flame retardant, detergent, electronics and other industries. The core cost of phosphate chemical enterprises is phosphate rock, which is one of China's strategic resources.

　　It is reported that the phosphorus chemical industry chain of Chuanheng Co., Ltd. starts from phosphorus ore. The phosphorus ore is mined and processed to obtain phosphorus concentrate slurry, which is then used to produce phosphoric acid through wet process, and further reacts with other chemical raw materials to generate chemical products such as calcium dihydrogen phosphate and monoammonium phosphate.

　　According to the data of the business agency, the price of phosphate rock was 1083.33 yuan/ton on July 11, up 96.97% over the same period last year. In addition, market data shows that as of June 30, the market price of 30% grade phosphate ore was 1100 yuan/ton, up about 20% from the beginning of June; Compared with less than 400 yuan/ton at the beginning of January last year, the increase has exceeded 220%.

　　In this regard, a person from a phosphorus chemical enterprise told the reporter that in recent years, due to the continuous mining of phosphorus ore, environmental protection, new production capacity of phosphorus chemical industry and other factors, the scarcity of phosphorus ore in China has gradually increased, and the price has generally risen.

　　Chuanheng said that China's phosphorus ore output has declined significantly since 2016. In 2020, China's phosphorus ore output will be 88.933 million tons, down 38.41% from 144.398 million tons in 2016. Hubei, Guizhou, Yunnan and Sichuan are the main provinces producing phosphorus ores in China. In 2020, the output of the four provinces will be 38.28 million tons, 21.33 million tons, 18.08 million tons and 8.42 million tons respectively, accounting for 97% of the total output. The annual export volume of phosphate rock in China is basically maintained at 200000~400000 tons, and the import volume is below 100000 tons.

　　On July 21, Founder Securities Research Report pointed out that most mainstream enterprises of phosphate rock are mainly for their own use, with less outflow of goods to the market and tight supply, while the downstream is in short supply. It is expected that prices will remain firm in the short term due to supply.

　　Strong downstream demand

　　From the demand side, Baichuan Yingfu data shows that in the downstream application field of phosphorus ore, phosphate fertilizer, yellow phosphorus and phosphate account for 71%, 7% and 6% respectively.

　　According to the consulting data of Smart Research, since January 2022, monoammonium phosphate (the main variety of phosphate fertilizer) in China has continued to grow for six consecutive months. As of June 2022, the price of monoammonium phosphate (factory quotation) is 4661 yuan/ton; The year-on-year growth rate was 54.73%, 36.439% higher than the average.

　　According to the analysis of Hua'an Securities Research Report, on June 23, 2022, six departments jointly released the Action Plan for Industrial Energy Efficiency Improvement, which mentioned strict control of new capacity in ammonium phosphate, yellow phosphorus, calcium carbide and other industries. The new capacity of phosphate fertilizer is limited, superposing the high global food price, the demand for phosphate fertilizer is growing rapidly, and the global price of phosphate fertilizer is at a high level.

　　Thanks to the rise in prices, the performance of phosphorus chemical enterprises has improved significantly.

　　On July 21, Yuntianhua announced that, in the first half of 2022, the company actively fulfilled its responsibility of ensuring the supply and price of domestic fertilizer, paid full attention to production and operation, and actively coordinated the resource allocation of domestic and international phosphate fertilizer markets. The company is expected to achieve a total operating income of about 36.63 billion yuan, an increase of about 18.43% year on year; It is estimated that the net profit attributable to shareholders of the listed company will be about 3.45 billion yuan, an increase of about 119.47% year on year.

　　On July 30, Chuanheng Shares released the 2022 semi annual report, which showed that the company's operating income was 1.587 billion yuan, up 57.77% year on year; The net profit attributable to the parent company was 371 million yuan, up 254.08% year on year.

　　Chuanheng Shares said that during the reporting period, the operating income of phosphorus chemical products increased by 52.92% over the same period last year, and the operating income of phosphate rock increased by 105.73% over the same period last year.

　　The Minsheng Securities Research Report pointed out that the phosphorus chemical industry will still be at a prosperous high level. The demand for agricultural materials at home and abroad will drive the growth of ammonium phosphate, and the overseas supply will shrink. The domestic supply of phosphate rock is limited, and phosphorus chemical related companies are expected to maintain high profits.

　　Extend the industrial chain

　　Under the background of rapid development of new energy industry, listed companies of phosphorus chemical industry, such as Chuanheng Co., Ltd., have deployed lithium iron phosphate field.

　　Chuanheng said that in the first half of 2022, the company will consolidate the production and operation of phosphorus chemical products, and actively promote the construction of Guangxi Pengyue Phosphorus Resources Deep Processing Project and Hengxuan New Energy 100000 t/a Iron Phosphate Project.

　　Lithium iron phosphate is mainly used in new energy power vehicles, energy storage and other fields, of which the largest and most widely used is the new energy vehicle industry.

　　Yuan Jingmei analyzed that under the current situation of tight supply of phosphate rock, sufficient phosphate rock resources of phosphate chemical enterprises will provide support for the development of existing businesses and guarantee the exploration of new businesses. Layout a variety of new products with high added value in the downstream of the industrial chain, and stimulate the new growth potential of traditional phosphorus chemical industry.

　　In addition to Chuanheng, in recent years, many phosphorus chemical enterprises have also laid out iron phosphate production capacity. Among them, Xingfa Group's 2.8 billion yuan convertible bond financing plan is mainly used for the 200000 t/a battery grade iron phosphate project and the supporting 100000 t/a wet process phosphoric acid refining technology transformation project; Yuntianhua's iron phosphate project with an annual output of 500000 tons, the first phase of which is expected to produce 100000 tons of iron phosphate by the end of August this year; Yuntu Holding (002539. SZ) has a capacity of 350000 tons of iron phosphate under construction, which is expected to be put into production gradually in 2023; Chuanfa Longmang (002312. SZ) has a capacity of 450000 tons of iron phosphate under construction; Xinyangfeng (000902. SZ) also has 300000 tons of iron phosphate capacity under construction.

　　Xingfa Group said that, 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 continued to rise, and the industry's operating rate remained high. According to statistics, since November 2021, the operating rate of iron phosphate enterprises has remained above 90%. It is expected that the tension at the iron phosphate supply end will be difficult to ease throughout 2022, and the high boom cycle will continue.