EB SECURITIES: The export window for phosphate fertilizer has arrived, and we continue to have a positive outlook on the phosphorus chemical industry chain.

EB SECURITIES released a research report stating that the export of phosphate fertilizers in 2025 will be carried out in stages, with the window concentrated from May to September, and the inspection period is expected to be about half a month. With the domestic demand for phosphate fertilizers in the off-season, prices are facing downward pressure, and exports are expected to increase the profitability of enterprises. In recent years, the international market supply and demand situation has been favorable, with a considerable price difference between domestic and foreign phosphate fertilizers. In 2024, the export volume of monoammonium phosphate and diammonium phosphate in China decreased year-on-year, and the export volume from January to April 2025 decreased significantly. However, with the arrival of the export window period, the export volume is expected to rebound, supporting the price of phosphate fertilizers. The price of phosphate rock remains high, and leading phosphorus chemical companies have invested in high-grade phosphate rock resources, giving them cost advantages in the integrated industry chain. The views of EB SECURITIES are as follows: The export window period of phosphate fertilizers has arrived, and the profitability of phosphate fertilizer companies is expected to be maintained. In May 23, 2023, the General Administration of Customs issued the "Regulations for the Inspection of Import and Export Fertilizers," which took effect on December 1, 2023. This is the first time that China's import and export inspection department has issued technical specifications for the inspection work procedures of exported fertilizers. It is expected that by improving the quality of exported fertilizers, the quantity of fertilizer exports will increase. The normalization of the inspection policy regulates the export volume of phosphate fertilizers, maintaining a certain price difference between domestic and foreign phosphate fertilizers. According to Baichuan Yingfu, recent association guidelines on phosphate fertilizer exports have been published, as follows: 1. The export of phosphate fertilizers in 2025 may be carried out in stages. The first stage requires customs clearance before October 15, and the export window period is concentrated from May to September; the second stage of export situations is to be determined, and will be adjusted flexibly based on the first stage. 2. The inspection time is shortened, with an estimated time of about half a month. The inspection policy will be implemented in mid-May. 3. The total export quota of phosphate fertilizers in 2025 is expected to be lower than last year. Currently, China's domestic spring farming has ended, and the domestic demand for phosphate fertilizers has entered the off-season, leading to a certain downward pressure on domestic phosphate fertilizer prices. With the expansion of fertilizer exports during the off-season, further profitability of phosphate fertilizer companies can be maintained. In recent years, the international market for phosphate fertilizers has maintained a favorable supply and demand relationship, and the price difference between domestic and foreign phosphate fertilizers in 2025 is considerable. According to Baichuan Yingfu data, as of May 23, 2025, the average prices of domestic 55% monoammonium phosphate and 64% diammonium phosphate were 3,330 and 3,526 yuan per ton, respectively, representing increases of 9.8% and 6.7% from the beginning of the year. At the same time, as of May 23, 2025, the average prices of bulk Baltic Sea FOB monoammonium phosphate and Gulf of Mexico FOB bulk diammonium phosphate were 660 and 695 US dollars per ton, respectively, representing increases of 14.8% and 13.0% from the beginning of the year. In terms of profitability, since the beginning of 2025, the average gross profit margins of 55% monoammonium phosphate and 64% diammonium phosphate in China have continued to decline and both are in a loss-making state. The export volume of phosphate ammonium in China in 2025 has decreased significantly year-on-year, and is expected to increase with the arrival of the export window period. According to Baichuan Yingfu data, in 2024, the export volumes of monoammonium phosphate and diammonium phosphate in China were 200.47 and 456.32 million tons, representing year-on-year decreases of 1.6% and 9.4% respectively. Since 2025, the export volumes of monoammonium phosphate and diammonium phosphate in China have decreased significantly year-on-year. From January to April, the export volumes of monoammonium phosphate and diammonium phosphate in China were 75.3 and 79.8 thousand tons, respectively, representing year-on-year decreases of 75.7% and 85.3%. With the arrival of the export window period, driven by export demand, the export volume of phosphate fertilizers in China is expected to gradually increase, providing support or boost to the price of phosphate fertilizers. The price of phosphate rock remains high, and leading companies in the phosphorus chemical industry have invested in high-grade phosphate rock resources. Regarding phosphate rock, since 2021, due to the tight supply and demand of phosphate rock, the price of phosphate rock has risen significantly and has been maintained at a high level in recent years. According to Baichuan Yingfu data, as of May 23, 2025, the price of domestic phosphate rock is 1,020 yuan per ton. In China, most of the phosphate ore reserves are of medium to low grade, with the average grade of P2O5 in national phosphate rock reserves at around 17%, and only about 20% of the reserves are of medium to high grade phosphate rock with 25% or higher. Leading companies in the phosphorus chemical industry have invested in high-grade phosphate rock resources, and many of these companies have production capacity layouts for phosphorus ammonium, iron phosphate, and other phosphate chemical products. Therefore, companies with high-quality phosphate ore resources can better ensure the production of high-quality phosphate chemical products, providing cost advantages in the integrated industrial chain. Risk Analysis: Risks of rapid decline in raw materials and maintaining high levels; Risks of downstream demand falling short of expectations.