Guotou Securities: Focus on the marginal changes in the fertilizer sector after the spring plowing, and pay close attention to the anticipated rise in potassium fertilizer prices.

Guotou Securities released a research report stating that against the backdrop of the continued conflict between the US and Iran, the supply of natural gas is still constrained by the Hormuz Channel, energy disturbances restrict fertilizer production, and the start of fertilizer stocking in India adds to the demand, widening the international supply-demand gap and driving up global fertilizer prices. With the end of domestic spring fertilizer use approaching, in a context of significant price differentials both domestically and internationally, the focus can be on export opportunities for phosphate and urea-related varieties and the expected increase in potash fertilizer prices. Main points of Guotou Securities: Urea Energy crises restrict overseas supply and attention should be paid to export opportunities as the spring farming season ends. According to statistics from the International Fertilizer Association (IFA), the global urea production capacity is expected to be around 200 million tons by 2024, with gas-based processes accounting for about 75%; major exporting countries such as Russia, Qatar, and Saudi Arabia all use natural gas as raw material. Affected by the US-Iran conflict, about 20% of global crude oil and liquefied natural gas supply is unstable because it passes through the Hormuz Strait, restricting overseas urea production. In contrast, according to Reuters data, China's total urea production capacity is expected to be around 75 million tons by 2026, with coal-based processes accounting for about 78%; coal costs are relatively low and domestic reserves are abundant, giving significant advantages in material stability. From January to March 2026, domestic urea overall capacity utilization rate was about 90%, higher than the same period in 2025, providing a stable supply foundation. In terms of price differentials, as of April 30, according to Baichuan Yingfu, the price of Persian Gulf small granule urea, which accounts for nearly half of global production, has reached $905 per ton, equivalent to 6184 yuan per ton, while the average domestic market price during the same period was only 1857 yuan per ton, less than one-third of the international price, with a potential export profit of over 4000 yuan per ton. In terms of demand, according to Baichuan Yingfu, from January to March 2026, domestic apparent consumption was 1897 million tons, lower than the production of 1945 million tons during the same period, as the end of spring farming approaches, the pressure to ensure supply gradually weakens; in terms of exports, total urea exports in 2025 were 489 million tons, while in January to March 2026 only 48 million tons were exported, indicating a potential for urea to enjoy sufficient export arbitrage space. The bank believes that as the end of the spring farming season approaches, it is advisable to continue monitoring changes in domestic urea export policies and top coal-based urea companies. Recommended focus: Shandong Hualu-Hengsheng Chemical, Yunnan Yuntianhua, Hubei Yihua Chemical Industry, CHINA XLX FERT, etc. Export of Phosphate The high price differential between domestic and foreign phosphate sources continues to drive strong exports. In terms of supply, international phosphate supply continues to tighten, with traditional phosphate fertilizer exporting countries such as Morocco and Russia implementing quantity control and price stabilization strategies since March, prioritizing domestic supply while also facing an impact from interruptions in sulfur supply from the Middle East, resulting in passive reductions in phosphate fertilizer facilities, weakening the role of global fertilizer supply as a "ballast". In terms of price differentials, as of April 30, according to iFind, the FOB price range of 64% diammonium phosphate in major exporting regions such as Morocco, the US Gulf, and Florida has reached $745-838 per ton, equivalent to 5605-5724 yuan per ton; while the average domestic market price for 64% diammonium phosphate during the same period was only 4099 yuan per ton, with a significant price differential between domestic and international markets. In terms of demand, phosphate, as a core product related to phosphate fertilizers, is not affected by the restrictions on Chinese phosphate fertilizer exports implemented since March 14th. According to the General Administration of Customs, the restrictions apply to ammonium phosphate, diammonium phosphate and all phosphorus-containing compound fertilizers, while purified phosphoric acid, yellow phosphorus, iron phosphate, feed-grade phosphates, and other non-agricultural phosphorus chemical products are not restricted and can be exported normally. The bank pointed out earlier that the significant increase in Chinese phosphate exports in 2025 was mainly due to arbitrage activities driven by price differentials domestically and abroad; since 2026, the shortage of overseas fertilizers has continued and the price differentials between domestic and international markets have been maintained, with this driving logic still valid. According to the latest customs data, in January to March 2026, China's exports of other phosphoric acid and phosphorous acid reached 130,000 tons, a 33% increase year-on-year, maintaining a strong growth trend. China, as the world's largest producer of phosphate chemicals, has a complete industry chain, with leading enterprises enjoying cost advantages in "mining, electricity, and phosphate" integration and geographic export advantages. Recommended focus: Hubei Xingfa Chemicals Group, Guizhou Chanhen Chemical Corporation, Kunming Chuan Jin Nuo Chemical, etc. Potash Fertilizer The global supply-demand tight balance situation is established, and international prices may maintain an upward trend. According to Ags, global demand for potassium chloride is expected to reach 76.88 million tons in 2026, an increase of 2.0% year-on-year, with subsequent annual increases of around 1 million tons, highlighting its essential nature. The development of new potassium salt mining projects worldwide is constrained by technology, capital, and national policies, in addition to the EU sanctions on Belarus and the risks of geopolitical disturbances in the Middle East. Global potassium chloride production is expected to be 76.54 million tons in 2026, a mere 0.2% increase year-on-year, with a corresponding supply-demand gap of about 340,000 tons. The global tight balance between supply and demand for potassium chloride is solidifying, laying a foundation for economic prosperity. Looking at recent trends, by mid-April, global potassium fertilizer prices had risen by 15% compared to before the US-Iran conflict, mainly due to escalating geopolitical risks, a 30%-50% increase in Middle East shipping costs, a 300%-400% increase in war risk insurance premiums, and an additional $3000 in costs per container, seriously affecting global potassium salt trade. If future potassium salt production facilities in the Middle East are further affected, leading to a tighter supply or exceeding expectations, international potash fertilizer prices may still accelerate upwards. According to the China Inorganic Salt Industry Association, in April, the Uralkali company in Russia raised the contract prices for two types of potassium chloride at the Manzhouli port by $8 per ton compared to the previous month, reflecting Russia's intention to support prices, which may maintain the expectation of upward prices for international potassium fertilizers. Recommended focus: Asia-Potash International Investment, Qingdao East Steel Tower Stock, Qinghai Yanhu Industry, etc. Risk warning: Risks of macroeconomic downturn, significant fluctuations in raw material prices, lower-than-expected downstream demand, risks associated with significant capacity expansion, operational risks in safety production and environmental protection, and enterprise management risks, etc.