Everbright Securities: The release of new phosphate rock production capacity may be delayed, and the industry's prosperity is expected to continue

According to the Zhitong Finance APP, Everbright Securities released a research report stating that considering the tightening of environmental protection policies in recent years and the actual construction situation of various enterprises' phosphate rock production capacity, the progress of new phosphate rock production capacity will be delayed. In the short to medium term, the high prosperity level of high-grade phosphate rock is expected to continue. In the future, China's phosphate fertilizer exports will be concentrated in Q3, and based on the high overseas prices of phosphate fertilizers, domestic phosphate fertilizer export enterprises will achieve higher profit returns.

Everbright Securities' main viewpoints are as follows:

Phosphate and potash fertilizer companies show impressive performance growth in 2025H1, with both volume and price increases driving profit growth

In the phosphate fertilizer industry, there is a certain degree of performance differentiation among listed companies in the phosphate fertilizer and phosphate chemical industry in 2025H1, with Chanhen, BATIAN, and KMCJNC achieving significant performance growth. Against the backdrop of high prosperity in phosphate rock, companies like Chanhen can achieve higher profitability due to their ample phosphate rock supply capacity. According to Baichuan Yingfu data, the average price of domestic 30% grade phosphate rock in 2025H1 is approximately 1019 yuan/ton, a slight increase of about 9.8 yuan/ton compared to the average price in 2024H1.

In the potash fertilizer industry, companies such as Yara International, Dongfang Tower, and Zangge Mining have all achieved high profit growth in 2025H1, with Yara International's net profit attributable to shareholders increasing by 207% year-on-year in 2025H1. The core reason for the profit increase in potash fertilizer companies is the significant rise in potash prices in 2025H1. According to iFinD data, the average price of domestic potash in 2025H1 increased by about 14.8% compared to 2024H1.

New phosphate rock production capacity may be delayed, industry prosperity may be maintained, and the widening price gap of ammonium phosphate benefits phosphate fertilizer export companies

Regarding phosphate rock, according to Baichuan Yingfu statistics, approximately 65.25 million tons/year of new phosphate rock production capacity will be added in China from 2025 to 2029, with about 80.5% of the capacity expected to be completed and put into production in 2026 and 2027. However, considering the tightening of environmental protection policies in recent years and the actual construction situation of various enterprises' phosphate rock production capacity, the report believes that the progress of new phosphate rock production capacity will be delayed, and the high prosperity level of high-grade phosphate rock is expected to continue in the short to medium term.

Regarding ammonium phosphate, the current overseas prices of ammonium phosphate are significantly higher than domestic levels. According to iFinD data and based on an exchange rate of 1 USD = 7.3 RMB, on July 18, the prices of monoammonium phosphate and diammonium phosphate overseas were 57.2% and 42.5% higher than domestic prices, respectively. The report believes that China's phosphate fertilizer exports will be concentrated in Q3, and based on the high overseas prices of phosphate fertilizers, domestic phosphate fertilizer export enterprises will achieve higher profit returns.

Relevant departments held a meeting to announce the strengthening of potash fertilizer market supply, and leading enterprises will still maintain good profitability

According to Renmin Caixun news, on July 15, relevant departments held a meeting on ensuring potash fertilizer supply and stabilizing prices. Key circulation enterprises believe that the recent abnormal rise in potash fertilizer prices has seriously deviated from the fundamentals, and they will strengthen market supply in the future to promote fertilizer prices to return to a reasonable level as soon as possible. With the increase in potash fertilizer market supply in the future, domestic potash prices will gradually decline. However, considering the current significant risks of international geopolitical friction, there remains a certain degree of uncertainty in the overseas potash supply side. Coupled with the price support provided by previous large contracts for potash fertilizer in China, the report believes that the overall decline in potash prices will not be too large At the same time, even in the case of price declines, our country's potash fertilizer companies will still maintain a good level of profitability, relying on excellent cost control on one hand and continuous improvement in production on the other.

Risk Analysis: Risks of rapid declines in raw material prices and maintaining high levels; risks of downstream demand not meeting expectations