Under the global energy transition, phosphorus chemical industry ushered in a strong cycle of agrochemicals

1. Under the global energy transition, phosphorus chemical industry ushered in a strong boom cycle of agrochemicals

The downstream of phosphate ore includes phosphorus compound fertilizer, various phosphates (dicalcium phosphate, calcium dihydrogen phosphate, iron phosphate), yellow phosphorus (mainly used in the production of pesticides and thermal phosphoric acid), etc. The phosphorus element in phosphate fertilizer is an important part of the plant body, participates in each process of plant cell growth and development, is the most important substance indispensable for cell division, and is widely used in various grain crops (rice, wheat), oil crops (soybeans, peanuts, rape), cash crops (cotton, tobacco, sugar), melon fruit crops (watermelon, cucumber) and leafy vegetable crops. Coal and natural gas are important raw materials for fertilizer production, and since the European natural gas price first rose, global natural gas and coal prices quickly rose to record highs, while phosphate ore and sulfur prices continued to reach new highs, coupled with the impact of sea freight, since October 2021, many fertilizer companies around the world have successively announced production cuts and shutdowns, further reducing fertilizer supply and promoting fertilizer prices. While fertilizer prices have risen, the pandemic and the impact of extreme weather since 2021 have led to an upward trajectory for global food prices.

2. Under the trend of new energy, the utilization of phosphorus and fluorine resources opens up the growth space of phosphorus chemical industry

We believe that new energy is an important opportunity for the transformation and upgrading of the phosphorus chemical industry in the next 10 years. The outbreak of demand in the new energy vehicle and energy storage market in 2021 has led to a significant increase in the demand for upstream materials such as lithium iron phosphate, PVDF, and lithium hexafluorophosphate, and since the second half of 2021, many phosphorus chemical companies have planned a large expansion plan around the new energy field. According to our calculations, considering the development and utilization of iron phosphate and associated fluorine resources (excluding lithium iron phosphate, PVDF, lithium hexafluorophosphate), the market size of the entire phosphorus chemical industry will grow significantly by 2030, bringing important growth opportunities for companies in the industry.