The Phosphate Chemical Industry in China Sees a Recovery in the First Half of 2024, with 30 Companies Reporting Profit Growth
Summary:
As of the first half of 2024, the overall prosperity of the A-share phosphate chemical industry has recovered. Out of 46 companies, 30 reported profit growth, with China Molybdenum achieving over 9 times profit growth, followed by Luxi Chemical and Lubei Chemical, both exceeding 300% growth. The rise in product prices and increased demand were the main drivers of profit growth. Companies responded to cyclical industry fluctuations by optimizing management and expanding into new materials and new energy sectors, boosting their performance.
Profit Growth Driven by Market Recovery
The key reason for profit growth in phosphate chemical companies is the changing supply-demand dynamics, leading to higher phosphate chemical product prices. In the first half of 2024, products such as phosphate rock, monoammonium phosphate (MAP), and urea performed well in the market. By the end of June, the ex-factory price of MAP (55 powder) in Central China reached RMB 3,300 to RMB 3,350 per ton, with domestic production increasing by 14.36% year-on-year, reaching 5.3 million tons. The average capacity utilization rate rose to 56.59%.
Strategies for Dealing with Cyclical Fluctuations
Despite the cyclical nature of the phosphate chemical industry, which saw fertilizer prices skyrocket in 2022, resulting in explosive profit growth, the market returned to a rational state in 2023, putting pressure on the performance of some companies. However, many companies adopted measures such as diversifying product lines and expanding into new markets to address these challenges. For example, Xingfa Group completed several subsidiary projects in the first half of 2024, including a 20,000-ton-per-year 2,4-D project, a 400,000-ton-per-year organic silicon new material project, and a 300,000-ton-per-year lithium iron phosphate project. The commissioning of these projects has significantly strengthened Xingfa Group's competitiveness in green pesticides, new materials, and new energy fields.
Green, Low-Carbon, and Circular Economy Development
Xinxiangfeng reported that the proportion of new fertilizers in its total fertilizer sales increased to 30.43% in the first half of 2024, with revenue accounting for 35.41% of total fertilizer income, effectively boosting overall gross profit margins.
Major phosphate chemical companies are also actively promoting the transition to green, low-carbon, and intelligent operations. For example, Hubei Yihua's ammonia synthesis project, launched in the first half of 2024, adopted advanced coal slurry gasification technology, achieving industry-leading energy consumption levels and further enhancing the competitiveness of its fertilizer products. The company also plans to extend the downstream industrial chain of by-product phosphoric acid through the construction of a fluorosilicon industrial park.
Outlook
As companies continue to invest in new fertilizers and new energy materials, China's phosphate chemical industry is expected to enter a new growth curve. The overall industry prosperity is likely to remain on an upward trend, driven by technological advancements and increasing market demand.