The Zhitong Finance App learned that in the fourth quarter of 2023, as domestic demand for winter storage was released and procurement demand continued in some regions such as Southeast Asia and Europe, phosphate fertilizer prices picked up in the fourth quarter of 2023. Entering the first quarter of 2024, domestic and foreign demand declined, and phosphate fertilizer prices were weak. The bank believes that in the future, with the start of demand for fertilizer for spring farming and the release of chemical fertilizer subsidies in India, phosphate fertilizer trading sentiment is expected to pick up and maintain the industry's “gain” rating. Currently, the winter storage demand for phosphate fertilizer is nearing its end. In the future, we will gradually usher in the peak season for fertilizer for spring farming and a new year of overseas tendering demand. We recommend Xingfa Group (600141.SH), which benefit targets such as Yuntianhua (600096.SH) and Chuanheng Co., Ltd. (002895.SZ).
Guotai Junan's views are as follows:
Phosphate fertilizer exports increased year-on-year in 2023.
According to customs data, monoammonium phosphate: The export volume in December 2023 was 122,300 tons, down 10.04% year on year and 44.04% month on month. The cumulative export volume for the full year of 2023 was 2,036,200 tons, up 0.27% year on year. The average export price in December was 627.11 US dollars/ton. The top three countries with annual exports are Brazil, Argentina, and Australia, with export volumes of 7303, 24.30, and 224,300 tons respectively, accounting for 35.87%, 11.93%, and 11.02% of annual exports, respectively. Diammonium phosphate: The export volume in December 2023 was 367,200 tons, up 45.43% year on year and down 40.36% month on month. The cumulative export volume for the full year of 2023 was 5.035,800 tons, an increase of 40.69% over the previous year. The average export price in December was 575.09 US dollars/ton. The top three countries with annual exports were India, Vietnam, and Thailand. The export volumes were 300.24, 39.80, and 304,200 tons respectively, accounting for 59.62%, 7.90%, and 6.04% of the annual export volume, respectively.
Industry inventories are low, and the market is running weak in the short term.
Phosphate fertilizer prices picked up in the fourth quarter of 2023 as domestic demand for winter storage was released and procurement demand continued from overseas regions such as Southeast Asia and Europe. Entering the first quarter of 2024, domestic and foreign demand declined, and phosphate fertilizer prices were weak. According to Baichuan statistics, as of January 19, 2024, domestic stocks of monoammonium phosphate and diammonium phosphate were 14.01 and 102 thousand tons, respectively. The operating rate remained at 50%-60% due to weakening demand and restrictions on upstream phosphate ore mining. The bank believes that in the future, with the start of demand for fertilizer for spring farming and the release of chemical fertilizer subsidies in India, phosphate fertilizer trading sentiment is expected to pick up.
The “Implementation Plan for Promoting Efficient and High-value Utilization of Phosphorus Resources” promotes the high-quality development of the phosphorus chemical industry.
At the beginning of January 2024, eight departments including the Ministry of Industry and Information Technology jointly issued the “Implementation Plan for Promoting Efficient and High-Value Utilization of Phosphorus Resources”, which clarified specific development goals in four areas, including innovation-driven, structural optimization, green development, and ecological cultivation. The price center of phosphate ore has increased markedly since 2021, which is supported by the dual support of traditional phosphate fertilizer and iron phosphate demand. At the same time, the supply side is affected by factors such as increased environmental requirements and declining grades of existing ore stocks. The bank believes that under the guidance of the “Plan”, the phosphorus chemical industry will develop to a higher quality.
Risk warning: Demand for phosphate fertilizer is slowing down, and phosphate ore prices are falling.