Report Producer:Guohai**
The following is an excerpt from the original report.
Supply side: The process of capacity expansion is slow, and high-grade phosphate rock resources are tight.
China's phosphate rock resources are not strong in sustainable guarantee capacity.
China is the world's largest producer of phosphate rock and phosphorus chemicals. In 2022, China's phosphate rock output will reach 10.5 billion tons, accounting for 4371%, but China's phosphate rock reserves are only 36900 million tons, accounting for 499%, the reserve-production ratio is 35, far lower than the global average of 309, and the North African region, which is rich in phosphate rock resources, has a low overall development degree of phosphate rock, and Morocco's phosphate rock reserves will reach 50 billion tons in 2022, accounting for 67 percent of the world61%, but the output is only 39 million tons, accounting for 1628%。
According to China's fertilizer information, compared with other phosphorus-producing countries, China's phosphate rock is rich in rich ores and poor in ore, and the average grade of phosphate rock is about 17%, which is much lower than that of Morocco (33%) and the United States (30%).
Only 3600 million tons, less than 10% of the total reserves, all distributed in Hubei, Yunnan, Guizhou and Sichuan.
The production capacity of phosphate rock is relatively concentrated.
According to the 2022 National Mineral Resources Reserves Statistical Table, China's phosphate rock reserves in 2022 are mainly distributed in Yunnan, Guizhou, Sichuan, and Hubei provinces, with the reserves accounting for 93% respectively. Affected by the uneven geographical distribution of phosphate rock resources, China's phosphate rock production enterprises are mainly concentrated in Yunnan, Guizhou, Sichuan and Hubei provinces, and because the phosphate rock industry has strong access barriers and capital barriers, phosphate rock production capacity is mainly concentrated in Guizhou Phosphate, Yuntianhua, Xingfa Group, Chuanfa Long Python and other large state-owned enterprises. However, there are still some small production capacity, according to Baichuan Yingfu data, as of February 2024, China's phosphate rock production capacity of less than 500,000 tons reached 15.43 million tons, accounting for 1427%。The overall plan for the development of phosphorus industry in Yichang City (2017-2025) clearly puts forward the requirements for the total amount of phosphate rock mining, that is, by 2025, the scale of phosphate mining will be controlled below 10 million tons, and no new phosphate mines with an annual production capacity of less than 500,000 tons will be built. According to Baichuan Yingfu data, as of February 2024, there are still 3.63 million tons of phosphate mineral energy below 500,000 tons in Yichang, Hubei Province. With the increase of the entry threshold of phosphate rock and the elimination of backward production capacity, the concentration of phosphate rock industry is expected to be further improved.
In recent years, phosphate rock production has increased significantly.
Since 2016, China has listed phosphate rock as a strategic resource to be protected, and the annual output is controlled at 1500 million tons or less, and limited planning for the development of new phosphate rocks. From 2016 to 2020, China's phosphate rock production decreased year by year, and the output increased from 14.4 billion tonnes fell to 08.9 billion tons. Since 2021, China's phosphate rock production has increased significantly, mainly because since the second half of 2021, with the further standardization of mining and the successive commissioning of some phosphorus chemical projects, the overall demand for phosphate rock has increased. The annual phosphate rock production in 2023 will be 10.5 billion tons, a year-on-year increase of 054%, basically maintaining an output of more than 100 million tons in the past three years.
Similar to the phosphate rock resource endowment, phosphate rock production is also highly concentrated. In 2023, the total output of phosphate rock in the four provinces of Yunnan, Guizhou, Sichuan and Hubei will be 10.4 billion tons, accounting for 9888%。Hubei is the largest phosphate rock production province, accounting for 44% of phosphate rock output, followed by Yunnan, Guizhou and Sichuan, accounting for % of phosphate rock output respectively. In 2023, the output of phosphate rock in Hubei will be 4614740,000 tons, down 8 percent year-on-year32%；The output of phosphate rock in Yunnan, Guizhou, Sichuan and other regions has increased in different ranges.
The construction period of new phosphate rock production capacity is long.
Generally speaking, it takes 3-5 years for new mines to carry out environmental protection construction before they can be put into production, and it takes 1-2 years to complete the production capacity ramp-up after completion. According to our incomplete statistics, as of the end of 2023, the planned construction of phosphate rock production capacity in China will reach 35.5 million tons, of which no new production capacity will be put into operation in 2024, and 15.7 million tons of production capacity is expected to be added in 2025, and the rest of the production capacity will be put into operation in 2026.
Imports of phosphate rock have increased significantly.
China's imports of phosphate rock mainly come from Morocco, Tunisia, Egypt and other countries, mainly used to manufacture phosphoric acid and phosphate and other high-level phosphorus products. In 2022, China's phosphate rock imports will be small, only 320,000 tons, and China's phosphate rock imports will be 140 in 2023690,000 tons. In 2023, China's phosphate rock imports will increase significantly, and imported phosphate rock will be mainly used to make up for the demand gap caused by new energy.
According to Baichuan Yingfu, as of March 4, 2024, CFR India (70-72%BPL) phosphate rock** was 232 US dollars, equivalent to about 1,648 yuan**, and China's 30% grade phosphate rock** was 1,007 yuan tonnes.
Overseas phosphate rock expansion plan.
According to the USGS, the world's consumption of P2O5 in fertilizers will be 45.7 million tons in 2023, compared with 43.8 million tons in 2022; World consumption of P2O5 in fertilizers is expected to increase to 50 million tonnes by 2027, with the fastest growing regions being Asia and South America. Global phosphate production capacity is expected to increase from 63.6 million tonnes in 2023 to 69.1 million tonnes in 2027 in terms of P2O5 content.
Phosphate mineral capacity expansion in Brazil, Kazakhstan, Mexico, Morocco and Russia is expected to be completed in 2026. Australia, Canada, Congo (Brazzaville), Guinea-Bissau and Senegal are developing major new mining projects planned for completion beyond 2027. The new mine plans in Australia and Canada are mainly used for the manufacture of cathode active materials for lithium iron phosphate batteries.
Demand side: The demand for fertilizer is rigid, and new energy is the main increment.
The output of major phosphorus chemical products and the corresponding demand for phosphate rock.
The main demand area for phosphate rock is phosphate fertilizer.
Phosphate rock is mainly used to produce phosphate fertilizer, yellow phosphorus, phosphate and other products, of which phosphate fertilizer is the largest downstream demand for phosphate rock. According to the "Status and Development Trend of China's Phosphate Rock Industry", in 2022, phosphate fertilizer will account for 59% of the downstream demand for phosphate rock, 8% for feed-grade phosphate, 9% for yellow phosphorus, and 5% for iron phosphate7%。
As China began to protect phosphate rock as a strategic resource in 2016, the output and apparent consumption of phosphate rock decreased year by year until 2020, when the apparent consumption dropped to 8854450,000 tons, the lowest level in recent years. From 2021 to 2022, the improvement of the prosperity of agricultural products will drive the demand for chemical fertilizers**, and at the same time, under the expectation of demand for new energy and the successive commissioning of iron phosphate and its supporting wet phosphoric acid purification devices, the consumption of phosphate rock has increased significantly.
Phosphate fertilizer: The sown area of crops in China has increased steadily, and the yield per mu has continued to increase.
Affected by multiple factors such as frequent extreme weather, rising protectionism and geopolitical turmoil, international food has fluctuated sharply in recent years. China attaches great importance to food security, according to the National Bureau of Statistics, since 2019, the total planting area of crops in China has been increasing year by year, and as of the end of 2022, it is 17 billion hectares, an increase of 077%。By the end of 2023, the total planting area of grain crops in China will be 11.9 billion hectares, an increase of 05%, achieving growth for 4 consecutive years; Total grain production 69.5 billion tons, an increase of 1 from 20223%；The yield per unit area was 5,845 kg hectares, an increase of 43 compared to 20226 kg hectares.
Phosphate fertilizer: monoammonium phosphate and diammonium phosphate** price spread.
Phosphate fertilizer: domestic demand is relatively rigid, and exports are the main influencing factors.
In 2022, the apparent consumption of phosphate fertilizer in China will be 12.04 million tons of P2O5, a year-on-year increase of 6%. Overall, the apparent consumption of phosphate fertilizer in China fluctuated between 11 million and 12 million tons of P2O5 from 2018 to 2022, and reached a high level in recent years in 2022.
In 2023, China's phosphate compound fertilizer exports will continue to implement the legal inspection policy, and priority will be given to ensuring domestic importance.
In 2023, China's exports of monoammonium phosphate and diammonium phosphate will be respectively. 580,000 tons, a year-on-year increase. 69%, but the export volume is still lower than that in 2019 before the epidemic and the legal inspection. 23%。In the future, China's phosphate compound fertilizer exports are still facing great uncertainty, and the export legal inspection policy will still be implemented for a long time.
Phosphate fertilizer: industry concentration and operating rate are expected to rise.
Ammonium phosphate is located in the national restricted production capacity list, and the "Implementation Plan for Promoting the Efficient and High-value Utilization of Phosphorus Resources" proposes to strictly control the new production capacity of ammonium phosphate and yellow phosphorus, ensure the production and supply of phosphate fertilizers, and significantly improve the capacity utilization rate of traditional products such as ammonium phosphate and yellow phosphorus; Increase the concentration of phosphate mining and primary phosphorus chemical production. According to the statistics of the China Phosphate Compound Fertilizer Industry Association, in 2022, China's phosphate fertilizer production capacity will net withdraw from P2O5 200,000 t A, and the total production capacity will drop to P2O5 21.2 million t A. China's phosphate fertilizer production capacity has been declining year by year after reaching its peak in 2016 (P2O5 24.7 million t A), and the average annual production capacity has decreased by 26%。
Through the supply-side reform and removal of excess capacity, the oversupply of phosphate fertilizers in China has been greatly improved, and the capacity utilization rate of the industry will reach the equivalent level of the international industry in 2021, with the capacity utilization rate approaching 80%. In 2022, the capacity utilization rate fell to 71 due to the decrease in exports8%。In 2023, with the recovery of diammonium phosphate exports, the operating rate will further rise, but the operating rate of monoammonium will still be relatively low. With the continuous clearance of backward production capacity, the industry concentration and operating rate of China's phosphate fertilizer industry are expected to rise. We expect that the operating rate of monoammonium phosphate in 2024-2026 will be %; The operating rates of diammonium phosphate were %.
Wet phosphoric acid: The new capacity of phosphoric acid is mainly wet process.
There are two main types of phosphoric acid production processes: thermal and wet. With the dual control of energy consumption and the tightening of environmental protection policies, the domestic yellow phosphorus has been reduced, and with the continuous increase in phosphate rock, coke and electricity costs, the yellow phosphorus has been high, and the production capacity of thermal phosphoric acid in China has been declining in recent years.
Wet phosphoric acid is decomposed from phosphate rock through inorganic acids (sulfuric acid, nitric acid, hydrochloric acid) to obtain crude phosphoric acid for fertilizer, and then purified and impurities removed through various steps, and concentrated into industrial-grade phosphoric acid with purity equivalent to thermal process. The cost of wet phosphoric acid is relatively low, with the continuous improvement of the wet phosphoric acid production process and the increasing demand of the new energy industry, the demand for purified phosphoric acid is increasing rapidly, and the new phosphoric acid production capacity in China in the future is mainly wet phosphoric acid.
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