Sinolink: Policy restrictions coupled with supply fluctuations may continue the upward trend in strontium carbonate prices.

Sinolink released a research report stating that under the clear policy to eliminate outdated production processes and require the transformation of existing production capacity, there will be a certain degree of restriction on the supply side of strontium carbonate. Some production capacity is in a state of suspension, and the price of strontium carbonate may continue to rise. Strontium carbonate has a wide range of downstream applications, with a high concentration of supply in the industry. It is recommended to pay attention to relevant targets that have strontium carbonate production capacity layout and are still in normal production status. Event: According to Baichuan Yingfu data, as of January 15, 2025, the average price of domestically produced 98% strontium carbonate was 15,000 yuan/ton, representing a 3.4% increase compared to January 10, with a 7.1% increase since the beginning of the year (January 2), when the price increased by 1,000 yuan/ton. Key points from Sinolink: - Strontium carbonate has a wide range of downstream applications, with a high concentration of supply in the industry. - According to an announcement from Guizhou Redstar Developing Company, strontium carbonate is mainly used in magnetic materials, liquid crystal glass substrates, metal smelting, fireworks, and other deep processing of strontium salts, as well as in industries such as sweeteners, energy-storing phosphors, automotive airbags, and aerosol fire equipment, with magnetic materials being the main application area. From the supply side, according to Baichuan Yingfu data, as of December 2024, the total domestic production capacity of strontium carbonate was 205,000 tons, with Hebei Xinjiu Chemical's production capacity accounting for about 60,000 tons, approximately 29.27% of the industry's total production capacity. - In addition, production capacities of Shenzhou Jiaxin Chemical, Chongqing Qinglong Fine Strontium Salt Chemical, Chongqing Dazu Hongdie Strontium Industry, and Luoyang Lida Chemical are all 30,000 tons, indicating a high concentration in the industry. According to Baichuan Yingfu data, the total domestic production of strontium carbonate in 2024 was approximately 87,200 tons. Meanwhile, since 2017, there has been a certain degree of fluctuation in the import and export volumes of strontium carbonate in China. According to Wind and customs data, in 2023, China's imports of strontium carbonate amounted to approximately 22,000 tons, an increase of 52.55% compared to the previous year, with cumulative imports reaching about 22,800 tons in the first 11 months of 2024, a 15.05% year-on-year increase. Meanwhile, exports in 2023 were approximately 3,642 tons, a decrease of 21.62% compared to the previous year, with cumulative exports reaching about 5,707 tons in the first 11 months of 2024, a 74.33% year-on-year increase. - Policy requirements to eliminate outdated production processes have led to a certain degree of supply-side restriction on strontium carbonate. - In March 2024, the Ministry of Emergency Management issued the "Catalog of Outdated Dangerous Chemical Production Processes and Equipment (Second Batch)" which includes the elimination of outdated technologies such as "intermittent carburizing method for strontium carbonate and barium carbonate production (using hydrogen sulfide wet gas holders)". The specific reason for this is that the use of wet gas holders to store hydrogen sulfide in the intermittent carburizing method for strontium carbonate and barium carbonate production can lead to corrosion and jamming of the gas holder, causing leakage and poisoning accidents. The policy explicitly states that new (expansion) projects are prohibited, and existing strontium carbonate intermittent carburizing production processes must be transformed within one year, while existing barium carbonate intermittent carburizing production processes must be transformed within two years. The alternative technologies are continuous carburizing method for strontium carbonate and barium carbonate production or multi-tower carburizing production process, canceling the use of hydrogen sulfide wet gas holders. - Some production capacity is in a state of suspension, leading to a continuous rise in the price of strontium carbonate. - According to Baichuan Yingfu data, looking at the entire year of 2024, the overall operating rate of the strontium carbonate industry fluctuated around 45% until the end of August. However, starting from the 36th week (August 31 - September 6), due to the suspension of some production capacity, the industry's operating rate dropped to below 40% and continued until the second week of 2025. As of the second week of 2025, the strontium carbonate products of Hebei Xinjiu Chemical were in a state of suspension, while Luoyang Lida Chemical and three other companies were in a state of suspension or partial facility shutdown. - Meanwhile, the price of strontium carbonate entered a rapid upward trend from September 2024. According to Baichuan Yingfu data, at the beginning of September 2024, the average price of domestically produced 98% strontium carbonate was 7,850 yuan/ton. Subsequently, by the end of September, October, November, and December, the prices rose to 8,250, 8,750, 9,250, and 13,500 yuan/ton, with cumulative increases of 5.1%, 11.5%, 17.8%, and 72.0%, respectively. As of January 15, the price had risen to 15,000 yuan/ton, with a cumulative increase reaching 91.1%. With the clear policy to eliminate outdated production processes, require the transformation of existing production capacity, and the current suspension of some production capacity, the price of strontium carbonate may continue its upward trend. Risk warning: Downstream demand falling short of expectations; significant fluctuations in raw material prices; the risk of industry production process transformation progressing faster than expected; the risk of new production capacity entering operation faster than expected.