The Dominance of Vietnam In Yellow Phosphorus-Based Chemicals | The Case of Duc Giang Chemicals
- Van Nguyen
- 4d
- 3 min read
Updated: 1d
This post is contributed by BACKD Capital Research Team:
Pham Khanh Chi | Email
In this short post, we will discuss Vietnamese Yellow Phosphorus Giant - Duc Giang Chemicals and its future outlook, as of September 2025. Suggesting a high potential investment to add into your portfolio. Whether you are a PM who want to diversify your client’s portfolio, or a retail investor just want to expand your knowledge about emerging market, its return and potential risks, this post is worth reading.
Business And Industry Overview
Business: Duc Giang Chemicals (DGC) is Vietnam's leading vertically integrated producer of yellow phosphorus (P4) and phosphorus-based chemicals, controlling the entire value chain from raw material to diversified, high-value downstream products.
Industry: The global chemical industry in 2025 is experiencing slow growth and margin pressure, with production growth forecast at just 1.9-2% in 2026 due to persistent overcapacity and volatile demand in key end markets (automotive, construction, consumer goods). Semiconductor-driven chemicals is expected to remain a key driver, offering targeted growth opportunities even in a slow overall market.
Vietnam is the world’s largest exporter of phosphorus (and P4 specifically), with export value reaching $268M (2023) and DGC accounts for around 70% of the country’s production capacity and 1/3 of global exports.
Duc Giang's Supply Chain And Its Cost Optimization
Apatite ore is the main input in the production of P4 and other phosphate-based products.
DGC self-supplies 80% of its apatite ore demand using high quality ore (i.e. low levels of impurities) from mining areas 19B and 25 in Lao Cai. In the April 2025 AGM, DGC announces bidding for mining licenses for areas 20, 22, and 23 (Lao Cai). This will create an additional 30m tons of apatite ore and will help supply stability in the next 20 years.
Furthermore, DGC’s the only company in the world capable of producing P4 from powdered apatite, which is around 46% cheaper than lump form apatite. The lowered COGS allows DGC a much better margin compared to its peers.
Duc Giang's Management Vision For Long-Term Growth
Duc Giang Chemicals have consistent larger-scale investments, indicating strong believe in the business by management team.
Financial Analysis of Duc Giang Chemicals
Our Valuation
We think P4 ASP rises 2% annually in 2026–2027, then stabilizes. In 2025 production aligns with management guidance. In 2026 to 2027, their new factory will add 10% to Food Grade, MAP, Fertilizer, and DCP output, maintaining prior growth rates. We also think P4 production grows 15.7% in 2026–2027, then declines 5% in 2028–2029.
Risks
We think there are five main risks from our assumption.
Risk 1: Ambitious projects face high delay risks or unmet revenue goals.
Risk 2: Dependence on exports makes DGC vulnerable to global shocks and trade restrictions.
Risk 3: Price recovery of core products worse than anticipated.
Risk 4: Vietnam's 2025 Law on Chemical include stricter environmental regulations which can drive up operational costs.
Overall, if you are thinking to invest into Vietnam we think Duc Giang Chemical is a safe choice of stock compare to other high volatile stocks in the financial, or real-estate sectors, it will offer diversification benefit into your emerging-market portfolio.
Our financial model for Duc Giang Chemicals can be found here
This post is contributed by BACKD Capital Research Team:
Pham Khanh Chi | Email
Disclaimer: This is a research project and not investment advice and should not be used as the sole basis for any financial decision.
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