On July 12, 2019, the concept stocks of phosphorus chemical industry in the market were really excellent, with an average increase of 6.6%. Among them, Chengxing shares, six chemical companies rose and stopped, and other shares followed. Among them, Chengxing shares are already three contiguous boards, leading the board to become a hot spot in the market. In the current market which lacks the hot spots of rotation, the emergence of new concepts is often warmly sought after by the market.
The logic behind the concept of phosphorus chemical industry is simple and violent enough. That is the unprecedented surge in yellow phosphorus prices in the domestic market. According to the Wind database, yellow phosphorus prices were still 15,500 yuan per ton on Tuesday, but soared on Wednesday to 17,000 yuan per ton, and reached 20,000 yuan per ton on Thursday, yesterday. In just three days, the price of yellow phosphorus soared by 4,500 yuan per ton, up 29%.
Generally speaking, yellow phosphorus production does not have strong barriers, or even very simple. In short, we only need to put phosphate ore, silica and coke into the electric furnace in a certain proportion, decompose and reduce at 1000 degrees of high temperature, and then cool and rinse the phosphorus vapor and dust to get yellow phosphorus.
Through this production process, we can know that one of the main costs of yellow phosphorus production is electricity. The electricity consumption per ton of yellow phosphorus is about 15,000 degrees, and because of the low cost of hydropower, yellow phosphorus production prefers water and electricity. Therefore, the price of yellow phosphorus is generally affected by electricity and Hydropower charges, and there are seasonal fluctuations, such as the high water period in June-August, the low production cost of yellow phosphorus, the high start-up rate of enterprises, the increase of supply, and the price is relatively stable. Therefore, it is still early July, and the soaring price of yellow phosphorus in recent days is obviously not affected by the season.
As mentioned above, the production of yellow phosphorus likes to use water and electricity, so the producers of yellow phosphorus prefer to open their factories in areas with regional advantages, such as along rivers. Because along the river, there will be black-hearted businessmen in order to save money by secretly discharging production waste directly into the river. Recently, CCTV Focus Interview exposed the pollution problem of yellow phosphorus plants in the upper reaches of the Yangtze River. The tail gas from electric furnace of yellow phosphorus plants was directly discharged into the atmosphere, and wastewater containing phosphorus was discharged wantonly.
This is a big problem. According to Cao Liping, Director of the Bureau of Ecological Environment Law Enforcement, the Yangtze River Economic Zone concentrates most of China’s phosphorus chemical production capacity, and the regulation of “three phosphorus” is one of the most important elements in the battle of protecting and restoring the Yangtze River. The Ministry of Ecological Environment strives to find out the quantity of “three phosphorus” in two years and complete the environmental improvement of yellow phosphorus enterprises first this year.
We know that in Yunnan-Guichuan region of the Yangtze River Basin, the yellow phosphorus production capacity accounts for 90% of the country’s total.
Therefore, in the current state vigorously grasp the general trend of environmental protection, the irregular yellow phosphorus production enterprises directly hit the muzzle. Therefore, we can foresee that in the future, there will be a large number of irregular yellow phosphorus production enterprises will be shut down or rectified in the near future. At the same time, with the end of the flood season, supply will be further tightened. In addition, the current domestic market stock is not much, yellow phosphorus prices are bound to rise. Therefore, at present, many enterprises in production are reluctant to sell, so they will not report directly. And the quoted companies directly overwhelmed the price, so there is a two-day surge in yellow phosphorus prices.
For investment opportunities, if the price of yellow phosphorus is still in its current position or moving higher, then the most beneficial thing is to have a large amount of yellow phosphorus stocks, or enterprises whose production of yellow phosphorus is unaffected. In addition, the downstream of yellow phosphorus is mainly used for phosphoric acid, phosphate, red phosphorus, phosphorus trichloride, phosphorus pentosulfide and so on. Driven by the rising price of yellow phosphorus, it is expected to drive up the prices of organophosphorus herbicides such as glyphosate, glyphosate, phosphorus ammonium, and organophosphorus insecticides such as chlorpyrifos and trichlorfon. We can keep an eye on the subject matter.
In addition, other chemical products manufacturers with similar production modes as yellow phosphorus may face similar situations in the future, so we might as well study them in depth.