SMM August 7 News:
Key Points: In the short term, the supply and demand of phosphate ore will remain in a tight balance, with prices supported by new energy demand. In the long term, attention should be paid to resource sustainability and technological upgrades. The industry trend is shifting towards "mineralization integration" (such as Yuntianhua integrating the phosphate ore - fertiliser - new energy industry chain) and high-end transformation.
China has abundant reserves of phosphate ore resources, but the overall grade is medium, mainly applied in the agricultural sector (such as phosphate fertiliser production), while new energy (such as lithium iron phosphate) is becoming the core driving force for future demand growth.
From the perspective of capacity and demand trends, the industry exhibits the following characteristics:
Characteristic 1 of Phosphate Ore: Steady Capacity Expansion and High Regional Concentration
China's phosphate ore capacity is mainly concentrated in Hubei, Yunnan, Guizhou, and Sichuan provinces, accounting for over 80% of the national total. In recent years, with the development of projects such as Guizhou Motianchong (2.5 million mt/year), the newly explored resources in Leibo County, Sichuan (1.3 billion mt), and ore allocation for new energy-related enterprises, the capacity in south-west China has continued to increase. SMM forecasts that phosphate ore production will reach 1.19 billion mt in 2025, up 4.8% YoY, but long-term growth rates may be constrained by declining resource endowments and environmental protection policies.
Most of the new capacity is concentrated in ore allocation for the new energy industry or enterprises with significant incremental demand, such as Wintrue's Leibo phosphate mine in Sichuan, Hunan Yuneng's Guizhou phosphate mine, CNNC Titanium Dioxide and Guizhou Phosphate Chemical's Guizhou phosphate mines, CNGR's phosphate mine, Shidai Mining's Guizhou phosphate mine, Huayou's Bijie phosphate-coal chemical integration project, etc.
Characteristic 2 of Phosphate Ore: Demand Structure Transformation and Increasing New Energy Share
The share of traditional demand (phosphate fertiliser) has decreased from over 60% to around 55%, with growth slowing due to saturated agricultural demand. New energy demand: Benefiting from the explosion of lithium battery materials (such as LFP cathode materials), the share of wet process phosphoric acid demand has further expanded. Fine chemicals: Demand for high-end products such as food-grade and electronic-grade phosphates remains stable, but the technical threshold is high.
Characteristic 3 of Phosphate Ore: Tight Balance in Supply and Demand, Prices Fluctuating at Highs
The supply-demand ratio has been generally tight in recent years. Although new capacity additions in 2025 may alleviate pressure, the rapid growth of new energy demand may maintain price resilience.
Characteristic 4 of Phosphate Ore: Policy-Driven and Controlled Allocation Quotas
Factors such as environmental protection policies for phosphate ore, export quotas for phosphate fertiliser, and circulation restrictions on phosphate ore in some regions will maintain a tight state.
With the popularization of green mines, environmental protection requirements have become stricter. For example, the Guizhou Motianchong project adopts green mining standards, pushing up industry costs. Resource constraints have emerged, with high-grade phosphate ore decreasing, and future capacity increments relying on breakthroughs in comprehensive utilization technologies for low-grade ore. Although continuous exploration processes have led to a continued increase in domestic phosphate ore reserve data, high-grade, low-impurity, and low-cost ore sources are hard to find. However, due to cost reasons in the short term, imported ore still partially supplies some coastal phosphate chemical enterprises, posing no significant impact on domestic phosphate ore supply.
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