According to Securities Times, phosphate rock-a key raw material-has maintained high prices amid the ongoing surge in chemical product costs. On December 2, the domestic market average price for 30% grade phosphate rock stood at RMB1,016 per ton, 28% grade at RMB945 per ton, and 25% grade at RMB758 per ton.
Phosphate rock production capacity is currently expanding overall, with listed companies significantly accelerating their pace of securing phosphate resources. Notably, this wave of resource allocation is driven by industry expectations that phosphate rock prices will maintain a “tight balance” in the short term. Companies with integrated mining and processing capabilities, leveraging resource self-sufficiency and cost control advantages, are poised to become the primary beneficiaries.
Resources Accelerate Toward Leading Players
On the evening of November 23, Batian Co., Ltd. officially announced favorable news regarding its expansion plans. The company announced that the safety facility design review for its Xiaogaozhai Phosphate Mine expansion project—increasing annual capacity from 2 million tons to 2.9 million tons—has been approved. This upgrade “will enable the company to boost phosphate ore production, expand and optimize its upstream and downstream industries, further advance its integrated phosphorous chemical strategy, and maximize extraction of high-grade ores while enhancing resource efficiency.”
Xingfa Group recently disclosed that Xinghua Mining—a joint venture with Wanhua Chemical (in which the company holds a 45% stake)—has secured exploration rights for the Yangliudong mining area in Yuan'an County. Exploration is expected to be completed within the year. Meanwhile, its wholly-owned subsidiary Baokang County Yaozhihe Qiaogou Mining Co., Ltd. has obtained a mining license for 2 million tons per year and is advancing preparatory work for mining operations.
Phosphate ore is a non-renewable resource. Data indicates China's annual phosphate ore production has declined from a peak of 140 million tons to approximately 100 million tons in recent years. With phosphate ore prices remaining elevated, controlling resources translates to securing cost advantages and profit guarantees. Listed companies are pursuing clear and diversified pathways to acquire resources.
The most direct method is the “major shareholder support model,” where controlling shareholders inject high-quality phosphate resources into listed companies and commit to further resource injections.
Another pathway involves market-driven mergers, acquisitions, and joint ventures. Enterprises rapidly expand equity-based production capacity through controlling stakes, equity participation, or establishing joint ventures.
From a policy perspective, the Ministry of Industry and Information Technology (MIIT) and seven other departments previously issued the Implementation Plan for Promoting Efficient and High-Value Utilization of Phosphorus Resources, mandating the “construction of a high-end, intelligent, green, integrated, and clustered phosphorous chemical industry system.” Against this backdrop of policy encouragement for integration and resource concentration, local governments explicitly support on-site consumption of phosphate rock. The presence of supporting deep-processing facilities has become an implicit prerequisite for obtaining mining rights and expanding production capacity.
Consequently, leading enterprises are universally reducing the proportion of phosphate rock sold externally, redirecting resources for their own downstream production. Yang Yitao cited examples such as Yuntianhua, which has essentially ceased external phosphate rock sales, and Chuanheng Co., whose external sales ratio will drop from 42% to 25.2%.
The aforementioned phosphate mining enterprise executive also noted that the core logic of policy regulation lies in ensuring stable supply and controllable prices for phosphate fertilizers, an agricultural necessity.
Tight Supply-Demand Balance to Persist Next Year and Beyond
Amid accelerating resource concentration, market concerns persist that the gradual release of new capacity could trigger a collapse in the current high-growth trajectory of the phosphate ore market. According to incomplete statistics, China's listed and unlisted companies currently have phosphate mine projects under construction with a combined planned capacity exceeding 40 million tons—accounting for 40% of the National Bureau of Statistics' annual production figures in recent years.
From the supply side, the path from securing mining rights to generating effective supply faces numerous constraints. Phosphate rock supply will remain in a “tight balance” over the next two years, a trend that will prevent prices from rising sharply or falling significantly.
Over the past two years, the grade of China's exploitable phosphate deposits has declined, increasing mining difficulty and costs. New production capacity requires a 3-5 year cycle from planning to operation, and is constrained by environmental, safety, and other factors, often resulting in actual capacity releases falling short of expectations. With significant environmental pressure and tailings treatment posing challenges, supply releases are slower than market expectations, and annual new capacity additions have limited impact on the overall supply-demand landscape.
From the perspective of downstream applications and consumption composition, the explosive demand in new energy sectors such as energy storage and power batteries has expanded the market's growth potential. We are optimistic about the potential for upward revisions in the phosphorous industry chain's growth trajectory amid rapidly expanding energy storage demand. One ton of lithium iron phosphate corresponds to approximately 3.5 tons of raw phosphate ore consumption. By 2025, energy storage shipments are projected to drive demand for about 4.4 million tons of raw phosphate ore, accounting for over 4% of China's current total phosphate ore production. Furthermore, each additional 100Wh of energy storage shipments is expected to stimulate nearly 1% growth in phosphate ore demand.
Phosphate fertilizers remain the core market, while new energy demand acts as a “slow variable.” Currently, over 70% of phosphate ore is used for fertilizer production. Downstream fertilizer prices cannot rise, and sulfur—another upstream raw material for fertilizers—is internationally priced. Its sustained price increases elevate fertilizer costs, indirectly suppressing phosphate ore prices. Regulatory considerations suggest phosphate ore prices may consolidate.
Currently, new energy-related demand accounts for about 10% of total consumption. As companies in the iron phosphate and lithium iron phosphate supply chains expand production, capacity continues to grow, and the consumption of phosphate rock for wet-process purified phosphoric acid is expected to rise annually. However, it is unlikely to replace phosphate fertilizers as the dominant demand driver within the next two to three years, and its long-term trajectory requires further observation.
Integrated mining and processing enterprises show promising performance
Benefiting from robust phosphate rock demand and widening price differentials between domestic and international phosphate fertilizers, leading enterprises with phosphate rock resources and integrated industrial chains have sustained gains in the first three quarters of this year.
Resource endowment disparities are driving price divergence. High-grade phosphate rock, suitable for applications like lithium iron phosphate batteries, maintains firm pricing, while low-grade ore faces pressure. However, the limited total supply of high-grade resources presents primarily structural opportunities. “Integrated mining and processing” has become a key competitive barrier. Companies lacking resource integration face persistent low operating rates due to cost pressures, accelerating industry consolidation.
The current industry consensus is that under increasingly stringent resource and environmental constraints, enterprises possessing scarce phosphate resources and achieving integrated industrial chain development hold the long-term competitive advantage. They are not only the main drivers of industrial upgrading but also the core forces propelling the phosphorous chemical industry toward green, efficient, and sustainable development.
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