Phosphorus Chemicals: Resources Rule, Divergence Widens

2025 annual reports show that companies with captive phosphate rock (BATIAN, Chuanjinnuo, Xingfa) posted profit growth of 122%-158%, while those relying on purchased raw materials (LiuGuo Chemical lost RMB 456 million, Lubei Chemical profit fell 85%) struggled. The pattern of "who owns mines, owns profits" is entrenched.

Raw material costs surged: sulfur price reached RMB 6,167/t in April, up 51% from January, pushing wet-process phosphoric acid above RMB 9,000/t. Yellow phosphorus rose 24%, and thermal-process phosphoric acid showed price inversion. New energy demand is strong: Hunan Yuneng sold 1.137 million tonnes of LFP cathode in 2025 (+60%), and LFP price averaged RMB 57,727/t in April (+6%).

Companies accelerated phosphate mine expansion: Yuntianhua added 4 Mt/a mining rights; Xingfa holds 625 Mt reserves. New capacities will be concentrated from H2 2026. In new energy deployment, Xingfa locked orders with BYD, Hunan Yuneng enjoys 15-20% cost advantage, and Yuntianhua partnered with Easpring.

Outlook: phosphoric acid supported by costs near-term; yellow phosphorus to fluctuate. Risks include geopolitics, capacity oversupply, and downstream cost tolerance limit (cell price near RMB 0.35/Wh).

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