Soochow Securities recently released a research report on chemical raw materials: Phosphate rock: In 2024, China's phosphate rock production capacity, effective production capacity, and output were 194.47 million tons, 119.16 million tons, and 113.53 million tons respectively. We expect that in 2025 and 2026, the production capacity of phosphate rock will be 217.32 million tons and 247.62 million tons, the effective production capacity will be 133.10 million tons and 151.58 million tons, the output will be 123.07 million tons and 132.80 million tons, and the actual new output will be 9.54 million tons and 9.73 million tons.

The following is the abstract of the research report:

Core viewpoints

Demand side: 1) Phosphate rock: In 2024, the demand for phosphate rock in China was 113.20 million tons. We expect that in 2025 and 2026, the demand for phosphate rock will be 118.02 million tons and 124.14 million tons, with actual new demands of 4.82 million tons and 6.12 million tons. The demand in emerging fields is increasing, while the demand in traditional fields is decreasing. ① Emerging demand: Power and energy storage batteries drive the upward prosperity of the phosphate chemical industry chain. We expect that in 2025 and 2026, the total incremental demand for phosphate rock from power and energy storage will be 3.93 million tons and 4.31 million tons. Among them, the incremental demand for phosphate rock from ferric phosphate will be 3.64 million tons and 4.07 million tons, and the incremental demand for phosphate rock from lithium hexafluorophosphate will be 0.29 million tons and 0.24 million tons, which strongly supports the demand for phosphate rock. ② Traditional demand: Due to the increase in the prices of upstream raw materials, the profitability of China's phosphate fertilizer production enterprises has weakened, and the output of phosphate fertilizers in China from January to September 2025 declined year - on - year. We expect that the possibility of a recovery in the demand for phosphate fertilizers in 2025 and 2026 is weak, while the demand for phosphates and phosphorus compounds will develop steadily. 2) Ferric phosphate: In 2024, the demand for ferric phosphate in China was 2.14 million tons. We expect that in 2025 and 2026, the demand for ferric phosphate will be 3.25 million tons and 4.49 million tons. Among them, the total incremental demand for ferric phosphate from power and energy storage will be 1.11 million tons and 1.24 million tons, and the demand for ferric phosphate has increased significantly.

Supply side: 1) Phosphate rock: In 2024, China's phosphate rock production capacity, effective production capacity, and output were 194.47 million tons, 119.16 million tons, and 113.53 million tons respectively. We expect that in 2025 and 2026, the production capacity of phosphate rock will be 217.32 million tons and 247.62 million tons, the effective production capacity will be 133.10 million tons and 151.58 million tons, the output will be 123.07 million tons and 132.80 million tons, and the actual new output will be 9.54 million tons and 9.73 million tons. The supply of phosphate rock in China is mainly affected to a large extent by environmental protection and safety incidents, and the production capacity also needs ramp - up time, resulting in a large gap between the planned production capacity and the actual landed production capacity of phosphate mines. 2) Ferric phosphate: The industry has long - term overcapacity, and the industry players are mainly ferric phosphate lithium manufacturers. In 2024, the effective production capacity and output of ferric phosphate in China were 4.26 million tons and 2.05 million tons respectively. We expect that in 2025 and 2026, the effective production capacity of ferric phosphate will be 4.99 million tons and 5.40 million tons, the output will be 2.99 million tons and 4.32 million tons, and the actual new output will be 0.94 million tons and 1.33 million tons.

Price outlook: 1) Phosphate rock: In 2024, the capacity utilization rate of phosphate rock in China was 58%, and the effective capacity utilization rate was 95%. We expect that in 2025 and 2026, the overall supply - demand of phosphate rock will be balanced, with the capacity utilization rate at 57% and 54%, and the effective capacity utilization rate at 92% and 88%, still remaining at a relatively high level. The price of low - grade phosphate rock may be slightly under pressure, while the price of high - grade phosphate rock will remain high. 2) Ferric phosphate: We expect that the supply - demand of ferric phosphate will be relatively tight. The effective capacity utilization rate of the industry has started to pick up in the third quarter of 2025. Assuming that the effective capacity utilization rates of ferric phosphate in 2025 and 2026 are 60% and 80%, there will still be a supply - demand gap for ferric phosphate in China (in 2024, the effective capacity utilization rate of ferric phosphate in China was only 48%). With the restoration of the profitability of downstream ferric phosphate lithium enterprises, the prosperity of ferric phosphate is expected to pick up.

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