Guosen: Potash fertilizer demand is expected to increase, phosphorus ore prices are stable with a slight increase, and glyphosate prices are rising rapidly.

Guosen released a research report stating that the global potassium fertilizer industry is dominated by an oligopoly, with scarce resources and a continuously optimized supply-demand pattern in the medium to long term. At the same time, potassium fertilizer demand is expected to benefit from the growth in demand for biofuels due to high oil prices, and product prices are expected to moderately increase. On the other hand, domestic phosphate ore is facing the problem of declining grade due to many years of unregulated mining. New capacity and the import of phosphate ore are difficult to increase in the short term, and the scarcity of phosphate ore resources is increasingly prominent. The bank is optimistic about maintaining a high level of long-term phosphate ore prices. The production costs of pesticide companies are increasing, and outdated capacity will be accelerated to clear out, and the bank is bullish on the future price increase of glyphosate. The main points from Guosen are as follows: - The demand for potassium fertilizer for oilseed crops is expected to increase in the background of high oil prices - China is the largest consumer of potassium fertilizer globally, while potassium fertilizer resources are insufficient, with an import dependency of nearly 70%. By 2025, China's production of potassium chloride will be 5.82 million tons, a decrease of 6% year-on-year, while imports will be 12.614 million tons, which is essentially unchanged from the previous year. As of the end of March 2026, domestic potassium chloride port inventories were 2.4154 million tons, a decrease of 48.3 thousand tons year-on-year, a decrease of 1.96%. In the future, with the increasing emphasis on food production security, it is expected that the domestic potassium fertilizer safety inventory will increase to over 4 million tons. on March 30, the average price of potassium chloride in the Baichuan Yingfu market was 3,274 yuan/ton, a decrease of 1.33% from the previous month, an increase of 6.09% year-on-year. With the approach of spring fertilization, the release of end-user replenishment demand, coupled with recent disruptions in the Middle East region, the downstream compound fertilizer market is bullish. In the international market, the recent conflict in the Middle East has been the focus of the market, and the uncertainty caused by geopolitical conflicts has provided some support to market sentiment. The United States will lift all sanctions on Belarusian potassium fertilizers, and the purchasing side has shown increased acceptance of current prices. Additionally, against the backdrop of high oil prices, the consumption and prices of biodiesel have strong support. With the rise of palm oil prices, the affordability of fertilizers for oil palm plantations significantly improved, and the incentive for fertilization may be greatly enhanced, thus driving an increase in potassium fertilizer consumption. - Optimistic about the long-term maintenance of elevated levels of phosphate ore prices - In the past two years, China's mineable phosphate ore grade has decreased, making mining more challenging and costly. The addition of new capacity takes a long time, and new downstream demand is steadily growing, with phosphoric acid Symbiosis, the supply-demand balance of domestic phosphate ore is tight, and the resource scarcity of phosphate ore is becoming increasingly prominent. The market price of 30% grade phosphate ore has remained in the high price range of 900 yuan/ton for more than three years. According to Baichuan Yingfu, as of April 6, 2026, the ex-factory price of 30% grade phosphate ore in Hubei was 1,080 yuan/ton, an increase of 4% from the previous month, while in Yunnan, the ex-factory price of 30% grade phosphate ore is 970 yuan/ton, staying the same as the previous month. - The demand for energy storage continues to improve, and the price of lithium iron phosphate consistently rises - According to Baichuan Yingfu, China's lithium iron phosphate production capacity has reached 5.945 million tons per year, with a production volume of 3.82 million tons in 2025, a year-on-year increase of 48.59%. As of March 2026, China's lithium iron phosphate production capacity has reached 7.23 million tons per year, with a production volume of 450,000 tons in March, an increase of 170,000 tons year-on-year, an increase of 50,000 tons month-on-month. The market price of lithium iron phosphate was around 57,000 yuan/ton as of early April 2026, an increase of 2% from the previous month. Driven by the positive demand for downstream energy storage and power batteries, the demand for lithium iron/phosphate, lithium hexafluorophosphate, and other phosphorus-containing new energy materials has significantly increased. In addition to industry initiatives to prevent internal consolidation, product prices continue to rise. - With the rapid expansion of the global energy storage industry, the demand for lithium iron phosphate for upstream phosphorus resources continues to rise - Assuming that the global energy storage battery shipments will increase to 600/800/983 GWh in 2025-2027, corresponding phosphate ore demand will rise to 600/800/983 million tons, accounting for 4.7%/5.9%/7.0% of China's predicted phosphate ore production. The energy storage-grade lithium iron phosphate has high purity requirements (low iron, low magnesium, low heavy metals), and actual adaptable high-grade phosphate ore resources are far scarcer than the total amount, coupled with the continuous contribution of power batteries, the consumption share of phosphorus resources in the field of new energy batteries is expected to continue to rise. Therefore, companies with high-quality ore sources and integrated mining capabilities will have a significant strategic advantage in the competition for new energy materials. - Glyphosate prices are rising rapidly, and the bank is optimistic about increasing export demand - Since March, influenced by the US-Iran conflict, raw material prices have risen significantly, increasing the production costs of glyphosate. As of April 8, 2026, the price of glyphosate in the East China region was 33,500 yuan/ton. In addition, in February, the United States announced the inclusion of elemental phosphorus and glyphosate among other key herbicides in its strategic key commodities, which effectively supported the rise in glyphosate prices. China's glyphosate is mainly used for exports, with a cumulative export volume of 628,200 tons of other non-halogen organic phosphorus derivatives in 2025, an increase of 4.36% year-on-year, a significant improvement from the industry's low point in 2023. In January and February 2026, the cumulative export volume of other non-halogen organic phosphorus derivatives from China was 113,200 tons, an increase of 20.93% year-on-year. The end of each year to January of the next year is the seasonal peak season for China's herbicide exports to North America, and June to August is the seasonal peak season for China's herbicide exports to South America. Considering the inclusion of elemental phosphorus and glyphosate among other key herbicides in the United States' strategic key commodities, the ongoing uncertainty facing overseas Monsanto from litigation, and the cost-effectiveness of Chinese glyphosate, the bank is bullish on the continued increase in exports of Chinese glyphosate/glyphosate ammonium in 2026, which will effectively drive prices throughout the year. Investment recommendations: 1) Potassium fertilizer: China's potassium fertilizer faces a supply-demand gap with a high reliance on imports. The bank focuses on recommending Asia-Potash International Investment, which owns the potassium salt mining rights in Laos' Ganneng Province covering 263.3 square kilometers, with estimated pure potassium chloride reserves of about 1 billion tons, and is entering a full potassium chloride production capacity deployment cycle, offering vast long-term growth potential. 2) Phosphorus chemicals: Starting with phosphate ore, downstream focuses on agricultural chemical products and has essential properties. In recent years, with the expansion of new applications such as phosphorus-containing new energy materials, the bank recommends companies with clear plans for expanding phosphorus ore capacity, abundant phosphorus ore reserves, and industry-leading companies in the phosphate chemical full industry chain, suggesting attention to Hubei Yihua Chemical Industry and Chengdu Wintrue Holding, with their continuous improvements in phosphorus ore production capacity. 3) Pesticides: A group of pesticides including glyphosate will have their export tax rebates canceled. The bank recommends companies with leading glyphosate production capacity and technology, such as Lier Chemical and Limin Group, with significant profit elasticity from glyphosate. Meanwhile, as the world enters a new round of inventory cycles, the bank is optimistic about the systemic competitive advantage of China's pesticide industry, with the potential for increased global raw pesticide production capacity, and after the slowdown in industry capital expenditures and the promotion of anti-internal consolidation work, pesticide prices are expected to rebound, recommending comprehensive pesticide suppliers Jiangsu Yangnong Chemical and Hubei Xingfa Chemicals Group, and suggesting attention be paid to the segmented industry leader in China's plant growth regulators, Sichuan Guoguang Agrochemical. Risk warning: Risks related to safety production and environmental protection risks; risks related to lower-than-expected demand for agricultural chemical products; market risks caused by capacity expansions; risks related to fluctuations in raw material prices; international trade risks, etc.