Anhui Liuguo Chemical Co Ltd

The phosphorus chemical sector strengthened again on July 23, with the sector index closing up 3.52 percent. Hubei Yihua, Liuguo Chemical, and Chuan Jinnuo were among the top gainers. On the news front, Iran announced a complete blockade of the Strait of Hormuz, which handles one-third of global sulfur shipments. The blockade has kept sulfur supply tight, with the reference price for sulfur granules at Yangtze River ports reported at 9,170 yuan per tonne, near historical highs, pushing up production costs for phosphorus chemical companies. Cost-driven support has kept ammonium phosphate prices firm, improving earnings expectations for integrated producers. Meanwhile, the State Council's Implementation Regulations for the Mineral Resources Law took effect on June 15, adding phosphate rock to the national strategic mineral resources catalogue and imposing full-chain coordinated control. Approvals for new exploration and mining rights have been elevated, and in principle, new standalone phosphate mines will no longer be approved, with exports of high-grade phosphate rock restricted. Global phosphate rock output in 2025 is estimated at around 250 million tonnes, with China leading at about 110 million tonnes, but its reserve-to-production ratio is only about 31 years, far below the global average of around 292 years. In the first half of 2026, China's phosphate rock imports reached 998,200 tonnes, up 29.66 percent year-on-year, but Longzhong Information expects imports to shrink in July as high sulfur prices force downstream operating rates lower. With mining rights approvals tightening, resources are concentrating among leading players. Yuan'an Xinghua Mining plans to build the Yangliu East phosphate mine with a 4 million tonne per year mining project, with a total investment of 5.32 billion yuan and retained resources of 206 million tonnes. Xingfa Group holds a 45 percent stake, Wanhua Chemical holds 40 percent, and Yichang Urban Development Group holds 15 percent. On the demand side, new energy vehicles and energy storage are twin drivers. In the first half of 2026, new energy vehicle production and sales reached 7.438 million and 7.446 million units respectively, with a penetration rate of 49.6 percent. Zhongtai Securities estimates that lithium iron phosphate will drive an incremental demand of nearly 3.4 million tonnes of phosphate rock, raising its share of total demand to 12 percent. AI computing demand also opens new space, as high-purity red phosphorus is a core raw material for indium phosphide substrates, and Japanese firms tightening quotas for China pose supply disruption risks. Kaiyuan Securities expects domestic phosphate rock supply-demand gaps of 320,000 tonnes, 1.31 million tonnes, and 9.75 million tonnes in 2026, 2027, and 2028 respectively, with tight conditions this year and next. Domestic phosphate rock capacity under construction or planned totals about 59.29 million tonnes per year, concentrated in Guizhou, Sichuan, Hubei, and Yunnan.