The high boom in chemical fertilizers is expected to continue, and the new energy track has provided new profit growth points. The past year has been really “smiley” for phosphorus chemical companies.
On the evening of March 30, “phosphorus chemical leader” Yuntianhua (600096.SH) disclosed its 2021 annual report, and its performance increased by 12 times year-on-year, setting a record high since its listing in 1997.
The reason, Yuntianhua’s explanation is that “the global fertilizer industry is affected by the epidemic, the market supply is insufficient, and the supply and demand relationship continues to be tight, which promotes the price of fertilizer products. With the recovery of the domestic economy, it promotes polyoxymethylene and yellow phosphorus. The market price of chemical products of companies such as feed calcium has risen.”
In fact, judging from the disclosed performance of phosphorus chemical companies, the explosion of demand for lithium iron phosphate directly drives the prosperity of “phosphate rock-yellow phosphorus-phosphoric acid-iron phosphate”, the resonance of the entire phosphorus chemical industry chain is obvious, and the performance increases It is clear that the performance of upstream companies in particular is explosive growth.
The phosphate chemical industry chain uses phosphate ore as raw material, and chemically processes the phosphorus element in the ore into various products such as phosphate fertilizer, yellow phosphorus, phosphoric acid and phosphate. Among them, phosphoric acid, monoammonium phosphate, diammonium phosphate and other products are based on purity. Differently divided into fertilizer grade, industrial grade/food grade, etc., related products are widely used in chemical fertilizer, pesticide, daily chemical, food, electronics, medical and building materials industries, and the downstream demand is broad.
According to Baichuan Yingfu and the document “Development Status of Phosphorus Chemical Industry in my country and Suggestions for Measures”, phosphate fertilizer, yellow phosphorus and phosphate account for 73%, 12% and 15% of the downstream of phosphate rock, respectively, and phosphoric acid and phosphorus pentachloride downstream of yellow phosphorus. , phosphorus pentoxide accounted for 56%, 25%, and 8%, respectively.
According to Yuntianhua’s 2021 annual report, the company’s phosphate fertilizer production capacity ranks second in the country and fourth in the world. Among them, the company’s diammonium phosphate products have a domestic market share of about 27%, ranking first in the country.
Judging from the operating results in 2021, Yuntianhua has effectively leveraged the “integrated advantages of the whole industry chain with a high degree of self-sufficiency in bulk raw materials such as phosphate rock, phosphoric acid, and synthetic ammonia”, and has transformed and upgraded to non-fertilizer businesses such as fine phosphorus chemicals and fluorine chemicals. The results are gradually emerging.
During the reporting period,Yuntianhua achieved operating income of 63.249 billion yuan, a year-on-year increase of 21.37%; net profit attributable to the parent was 3.642 billion yuan, a year-on-year increase of 1238.77%. In particular, the data of net profit attributable to the parent has hit a record high since its listing.
In fact, not only Yuntianhua, but also other related listed companies in the phosphorus chemical industry that have disclosed their 2021 performance are also doing well.
Prior to this, the 2021 annual report of Xingfa Group (600141.SH) showed that the company achieved operating income of 23.607 billion yuan, a year-on-year increase of 28.88%; net profit attributable to the parent was 4.247 billion yuan, a year-on-year increase of 583.58%. According to the 2021 annual report of Chuan Jinnuo (300505.SZ), the company achieved operating income of 1.536 billion yuan, a year-on-year increase of 46.30%; realized a net profit of 189 million yuan attributable to the parent, a year-on-year increase of 355.83%;
“We are definitely optimistic about the development prospects of the phosphorus chemical industry, otherwise we will not invest.” On March 31, a relevant person from Chuan Jinnuo told the 21st Century Business Herald reporter that last year’s performance growth mainly came from feed-grade phosphate and phosphate fertilizer. “There is not a lot of phosphoric acid, but we have invested in the construction of new energy materials, and we will realize the combination of phosphates and new energy materials in technology and technology as soon as possible.”
The logic of industrial chain growth is clear
“Double carbon” will become one of the most important tasks for my country’s development for a long time in the future. Therefore,Institutional investors believe that investment opportunities in new chemical materials in the future will mainly come from the continuous mismatch between the continuous growth demand brought by new energy and the limited supply brought by the upgrading of the industrial structure, so they are optimistic about the incremental demand driven by new energy. , while the supply side is limited.
“For example, the investment opportunities in the phosphorus chemical industry, the industry’s growth logic is very clear.” A private equity fund manager in Shanghai told the 21st Century Business Herald reporter that there has always been a shortage of domestic phosphate rock resources, but the downstream demand for iron phosphate Very big, “At the same time, the high prosperity of chemical fertilizers still exists, and it is no problem to maintain the industry prosperity for at least one or two years.”
According to the data, phosphate rock is a strategic mineral resource, mainly used for the production of phosphate fertilizers, and also used to manufacture yellow phosphorus, phosphoric acid and phosphate fields. Minerals such as phosphate rock are listed in the strategic expansion catalog.
The rise of lithium iron phosphate has brought a new growth space for phosphorus chemical companies. Lithium battery giants including CATL (300750.SZ) have begun to actively embrace phosphorus chemical companies.
On October 12, 2021, Hubei Yihua (000422.SZ) announced that it will invest with Ningbo Bangpu, a subsidiary of CATL, to invest in the construction of the Bangpu Integrated Battery Materials Industrial Park project, with a total amount of no more than 32 billion yuan to build integrated battery materials. chemical raw materials. On December 24 of the same year, Ningde Times announced that the industrial cooperation project with Guizhou Phosphate Group will start simultaneously in Kaiyang, Xifeng and Fuquan. Advantages in the field of phosphate rock co-use of associated resources.
“The joint venture project with Ningde Times is in normal progress.” On March 31, a relevant person from Hubei Yihua told the 21st Century Business Herald reporter that the cooperation project will help the company seize the development opportunities of the new energy market and optimize and upgrade the phosphorus chemical industry. Chain layout, give full play to the synergistic effect of coal chemical industry, phosphorus chemical industry, and chlor-alkali chemical industry, and improve the company’s market competitiveness and sustainable profitability.
Therefore, in the opinion of a private equity fund manager mentioned above, the growth logic of the phosphorus chemical industry chain is clear. First, in the context of the big agrochemical cycle, the high profits of chemical fertilizers will continue to increase the profits of related companies; second, in the rapid growth of lithium battery demand. In the background, there is a situation of “supply less than demand” in the industrial chain of “phosphate rock-yellow phosphorus-phosphoric acid-iron phosphate”, “both logics make sense, so continue to be optimistic about the investment opportunities in this industry .”
Supply-demand tensions remain unresolved
Entering 2022, the prosperity of the phosphorus chemical industry continues the trend in 2021, but the tight supply and demand of phosphate rock has not been resolved.
From January to March 2022, the domestic phosphate rock market will undertake the stable market conditions in the early stage as a whole, and the market price will not fluctuate greatly. Due to safety inspections, the supply in many places is unstable, and the market supply and demand is tight. At present, most companies in Guizhou have suspended external quotations, and the follow-up volume of new orders is limited, and the supply in Yunnan is limited. Mining companies in Yichang City have suspended production for some reason, exacerbating market supply tensions.
Therefore, the supply capacity of the phosphate rock market is unstable at the stage, the market is in short supply, and prices are rising. In the case of tight supply and demand, mining companies still have expectations to increase in the later stage.
Recently, Xingfa Group released an announcement on the pre-increase of its first quarter results, “It is expected that the net profit attributable to the parent company in the first quarter of 2022 will be about 1.7 billion yuan, an increase of 1.345 billion yuan over the same period of the previous year, and a year-on-year increase of 379.35%”, one of the reasons That is, “the chemical industry has generally continued the boom cycle since 2021, and the company’s main products such as glyphosate, yellow phosphorus, and phosphate fertilizers continue to maintain high sales prices.”
In March this year, the market price of yellow phosphorus first fell and then rose. After the price rose to a high level at the end of the month, downstream purchases waited and saw, and traders lowered prices, etc., the focus of yellow phosphorus market transactions turned downward. In March, the average price of yellow phosphorus in the southwest China market was 34,864 yuan/ton, an increase of 2,030 yuan/ton compared with the average price of the previous month (32,834 yuan/ton), an increase of around 6.18%.
Ren Hairong, an analyst at Longzhong Information, believes that the yellow phosphorus market is currently running in a weak state, the enthusiasm for downstream purchases and inquiries is low, and traders and other purchases are lowering prices, and the focus of yellow phosphorus market transactions is slightly loose. There are few downstream inquiries and orders, and traders are buying at low prices. Yellow phosphorus companies mainly supply pre-orders. “Before and after the Qingming holiday, the trading on the market was light, the sales of yellow phosphorus enterprises were under pressure, and the price remained weak and sorted out.”
At the end of February this year, although the market price of phosphoric acid pushed up to a high level, the raw materials fell again after March, mainly with minor adjustments. Zong Ni, an analyst at Longzhong Information, believes that the current upstream yellow phosphorus has declined slightly, and the high prices of phosphoric acid enterprises are even more lacking in support. In addition, due to the impact of the epidemic, the local shipments are expected to be limited.
Judging from the reaction of the secondary market, the leading phosphorous chemical companies have risen for 2 months. Take Yuntianhua as an example. After hitting a low price of 16.40 yuan on January 28 this year, the stock began to rise all the way. On March 29 The day hit a stage high of 27.58 yuan, and the rebound rate has reached 68%.
Yang Hui, a researcher in the chemical industry of Western Securities, believes that the current domestic phosphate rock resources are facing shortage pressure, and with the joint restrictions of various supply-side control measures such as carbon neutrality, dual control of energy consumption, and production capacity indicators, “we will see some Enterprises with leading resource endowment layout will show stronger competitiveness. While industry profits are more upstream, the industry competition pattern will also be continuously optimized. At present, the leading enterprises of phosphorus chemical industry have basically completed the integration of upstream resources and integrated the industrial chain It has the advantages of sufficient resources, cost and energy consumption indicators.”
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