Fertilizer industry this year and next year

This year, the nitrogen fertilizer industry's profit margin has improved compared to last year, but excess capacity is still an old problem. The picture shows the urea products being shipped by the port.

Sinochem New Network News The first year of the 12th Five-Year Plan will soon be over. How do domestic fertilizer companies pass this year? At the high-level forum on fertilizer market and agricultural development held in Xi'an recently, some managers of domestic fertilizer companies gave their views on the three products of nitrogen fertilizer, phosphate fertilizer, and potassium fertilizer respectively. They summarized their experiences and experiences during the past year, and talked about their current concerns. topic of.


Nitrogen Fertilizer: Overcapacity is still in the shadow of talks about the production and sales of nitrogen fertilizer this year, and companies generally feel that it is not bad. According to Li Baoquan, Manager of Nitrogen Fertilizer Co., Ltd. of Shandong Luxi Chemical Group, the urea market is running well before September this year. The price is basically stable at 1900-2200 yuan per ton; the prices of small nitrogen fertilizers such as ammonium, ammonium bicarbonate and ammonium chloride are also All of them are higher. The profit rate of the entire nitrogen fertilizer production industry is better than last year. According to relevant data, the profit rate of the industry last year was about 1.73%, which is about 4.3% this year.

This situation was also approved by Mao Guobin, manager of the sales company of Hubei Saning Chemical Industry Co., Ltd. He said that this year, the nitrogen fertilizer market is in a tight balance in the first half of the year, and it will become saturated in the second half of the year. In general, the nitrogen fertilizer market this year showed three characteristics. First, the operating rate was significantly higher than last year. The second is that the increase in cost drives up the rigid rise in product costs. This year, the price of raw natural gas for gas-headed enterprises has generally risen; the price of raw coal for coal-head enterprises has increased by 200-300 yuan per ton compared with the same period of last year. At the same time, electricity and labor costs also rose. Therefore, the cost of ammonia for this year rose by 200 yuan (ton price, the same below), and the cost of urea rose by 200 to 300 yuan. Third, the increase in product sales prices is greater than the cost increase. This year, the sales price of urea was 300 yuan higher than that of last year, and the sales price of synthetic ammonia rose by more than 400 yuan over the same period.

China National Nitrogen Fertilizer Industry Association statistics also confirmed this. It is understood that from January to October this year, the country's nitrogen fertilizer production was 32.22 million tons (refined), an increase of 4.5% year-on-year. The association expects annual domestic nitrogen fertilizer production will reach 38.6 million tons. This year, the overall efficiency of nitrogen fertilizer companies was better than last year. From January to September, the main business income of nitrogen fertilizer industry was 215.17 billion yuan, an increase of 34.6% year-on-year; the profit was 9.36 billion yuan, an increase of 350.3% year-on-year, and the sales margin was about 4.35%.

Although the current sales situation is not bad, for nitrogen fertilizer companies, the topic they talk about most is the old problem that has constrained the industry for several years - excess capacity.

Shen Wende, general manager of sales headquarters of CNOOC Chemical Co., Ltd., said that in recent years, there are many new nitrogen fertilizer installations in China, and the production capacity is far greater than the domestic demand for agriculture and industry. Moreover, the production companies both inside and outside the industry have joined this field one after another this year. There are many projects and the production capacity is increasing. He believes that from the perspective of current production capacity and projects under construction, the overcapacity of nitrogen fertilizer production in China in the next 3 to 5 years is a serious problem. "Last year, the nitrogen fertilizer production capacity reached 66 million tons, and it will reach 70 million tons or more by the end of the 12th Five-year Plan, but it is getting harder and harder to digest the urea surplus through exports. The main reason is that the global supply will increase substantially in the next five years. Except for China, the global expansion of urea capacity in resource-constrained countries is relatively large, with a global urea supply of 152 million tons in 2010, close to 200 million tons by 2015, and an annual increase of more than 5%, while the increase in demand over the same period is only 3%.” Shen Wende said. He said that according to statistics from China Nitrogen Fertilizer Industry Association, 3 million tons of nitrogen fertilizer production capacity will be withdrawn in 2010, and 3 million to 5 million tons of production capacity will be withdrawn this year. The country will use chemical fertilizer as a strategic resource. It will be increasingly difficult to adjust excess capacity through exports. Even if China's tariffs are liberalized, the competitiveness of enterprises will become weaker and weaker. At present, the price of urea is dropping, coal prices are rising, and natural gas is also rising in price. By the end of the winter, companies are basically halving their production or stopping production. It is unrealistic to want to adjust excess capacity through exports.

In response to this, many business executives proposed countermeasures to treat excess nitrogen.

Wang Nairen, deputy general manager of Henan Xinlianxin Fertilizer Co., Ltd., said: “There are two ways. One is to carry out agrochemical services and technological innovation in a down-to-earth manner; the other is to vigorously implement a low-cost strategy. Fertilizer as a supportive agricultural product requires high quality. It is also cheap. Product innovation is the inevitable requirement for adapting to the competition in the future."

Huang Xiaobing, general manager of Huanong Agricultural Resources Chain Co., Ltd., said that the next two to three years will be the key period for the adjustment, transformation, and upgrading of the nitrogen fertilizer industry in China. At present, many enterprises have relied on the dependence on Shanxi anthracite and started to use resources such as pulverized coal and bituminous coal. In addition, the technical structure of the company is also being adjusted. The coal-water slurry pressure gasification technology and aerospace furnaces are all promoting technology upgrading in the entire industry. The process of such transformation is very painful. Enterprises with poor competitiveness will be eliminated and new batches of enterprises suitable for future development will gradually rise up.

Domestic and international prices of yellow are at a relatively high price this year, which brings cost pressure to phosphate fertilizer companies. The picture shows a yellow imported by a company.

Phosphate fertilizer: Looking at exports for next year According to statistics from the China Phosphate Fertilizer Industry Association, China's phosphate fertilizer output continues to grow this year. In the first eight months, phosphate fertilizer output was 10.99 million tons (recovered), which was an increase of 4.1% year-on-year. It is expected that the annual output will reach 16 million to 16.5 million tons, and the total production capacity will reach 22 million tons, while the largest domestic demand is 12 to 13 million tons.

Many phosphate fertilizer companies report that the greatest difficulty encountered at present is that the cost pressure is high. The important production raw materials, yellow, are mainly imported at high prices, which results in high business costs. It is understood that due to the fact that the resources are not abundant, the self-sufficiency ratio of Huang is only about 20%, and China is one of the world's largest * yellow importers. From January to October 2011, China imported 7.85 million tons, a large part of which was used for phosphate fertilizer production. Compared with the recent 4 years of international * yellow price, after undergoing a dramatic dive in 2008, it has been in a step-by-step rise. In 2008, the average yellow price was 490 US dollars in 2009, 45 US dollars in 2009, and 140 US dollars in 2010. The average price from January to November is 216 USD. Domestic yellow prices have also been at higher prices this year.

Yang Huafeng, general manager of Hubei Xinyangfeng Fertilizer Industry Co., Ltd., said that, generally speaking, the raw materials of yellow phosphorus fertilizer companies mainly rely on imports. Since the beginning of this year, the prices of raw materials have risen very rapidly. In particular, domestic companies have spent high prices on the international market to purchase *yellow and produce high-cost phosphate fertilizers. The national policy has strict control over agricultural products and food, and has not liberalized grain prices. This has led to the price of raw materials for fertilizer products being in line with international standards, but product prices have not been able to meet the pressures of companies. If all of the phosphate fertilizer is digested in the country and sold in line with the domestic fertilizer and grain prices, companies cannot sustain it.

Under such circumstances, many companies place their hopes of solving difficulties on exports. They said that because of the high price of imports, high prices must be higher. If companies can successfully export next year, it will help to divert the pressure on the domestic market.

Li Rugang, chairman of Yunnan Yuntianhua International Chemicals Co., Ltd., said that it is necessary to solve the difficulties of the phosphate fertilizer industry with a combination of lengths and measures. He believes that in terms of short-term policies, enterprises should be allowed to export appropriately. Judging from the medium and long-term policies, it is necessary to promote industrial upgrading through the adjustment of industrial structure and product structure. This will reduce the export of basic, resource-based fertilizer products. At the same time, it can increase the export of high value-added, high-tech and high-end products, and accelerate the elimination of excess production capacity.

Some company officials also said that if they cannot export next year, the phosphate fertilizer companies will have no choice but to increase their competitiveness and transform themselves through innovation.

Liu Xiaoxia, vice president of Chengdu Xindu Chemical Industry Co., Ltd., said that in the long run, it is still necessary to solve the problem of the phosphate fertilizer industry through product innovation. “One idea is to develop new types of fertilizers to adapt to modern agricultural development; the second is to develop products that are suitable for water and fertilizer integration; the third is to combine organic fertilizer and inorganic fertilizer series.” Liu Xiaoxia said.


Potash fertilizer: market prices will not rise and fall According to Feng Mingwei, deputy general manager of Sinochem Fertilizer Co., Ltd., this year's domestic demand for potash fertilizer is lower than expected. From January to September this year, China imported a total of 4.77 million tons of potash, including 1.07 million tons of border trade and 3.7 million tons of shipping. It was originally estimated that the total demand for potash this year will reach 10 million tons, and it now appears to be estimated at 8 million to 8.5 million tons. There are multiple reasons for the reduction in demand. First, the price of potash continued to rise, rising from last year's 350 US dollars per ton to the current 470 US dollars, which has affected the demand of farmers to some extent. After all, Chinese farmers grow low-value crops and cannot afford such expensive fertilizers. The second is the decline in demand caused by severe weather such as drought and high temperature. Third, the compound fertilizer plant produced a large amount of nitrogen and phosphorus two-element compound fertilizer for export, which reduced the demand for potash fertilizer. Fourth, scientific fertilization and straw returning reduce the amount of potash fertilizer.

The statistical data of China Potassium Salt (Fertilizer) Industry Branch also confirmed this point: In 2011, the total domestic potash fertilizer production capacity was 4.793 million tons (in kind), an increase of 12.33% over the same period of last year; the total annual output was estimated to reach 3.803 million tons, an increase of 13.81% over the same period of last year. Self-sufficiency rate rose from 47.2% to 58.1%. At the same time, the national demand for potash this year fell slightly from last year.

Talking about the potash situation in the next year, many company officials said that they will be stable, but there are also some uncertainties.

According to Yuan Gong, the chief representative of BPC (Belarus Potash Corp.) China, the potash market next year will not fluctuate drastically. He said that due to the financial crisis and the European debt crisis, the global economic situation is not good, but the agricultural sector is the least affected one. In addition, the current global food prices are at the highest level in history, and the price index for rice prices in Chicago has exceeded the 2008 level. Therefore, international potash fertilizer prices will not be greatly adjusted, and suppliers do not have the conditions for such adjustment.

Feng Mingwei believes that the domestic potash fertilizer market will continue to be stable next year. The reasons are as follows: First, this year's agriculture has achieved a bumper crop for eight consecutive years. Therefore, national policies will continue to support agriculture. Second, companies are highly motivated, regardless of whether production, marketing, or services are performing well. Third, large environmental stability, and current price It is much more rational than in 2008 and there are no major structural problems, so the price will be relatively stable. However, he also stated that due to the current unstable international economic situation, the potash price in the international market remains high, and there will be some uncertain factors in the future market.

Potash contract negotiations for imports is one of the uncertainties in the potash market next year. Regarding the progress of potash fertilizer import negotiations next year, Si Yuangong stated that India’s price is US$530 per ton. If China is to discuss China with US$530 as a price parameter, China will certainly not accept it. However, if we must discuss, BPC's offer to China must not be lower than India's, because the potash fertilizer spot market price in Southeast Asia will reach 570-630 US dollars per ton next year. Therefore, next year's negotiations on potash in China will be very difficult and will take a long time.

Many corporate officials said that in order to increase the competitiveness of potash fertilizer companies, the process of overseas potassium search can be accelerated. According to Zhao Sijun, president of Sichuan Kaiyuan Group, in recent years, domestic companies have been looking for potassium overseas. This is a hot topic. Seven or eight companies have gone overseas, mainly in Laos, Canada and Congo. There are four Chinese companies looking for potassium in Laos: China National Hydro Power Group, Yuntianhua Group, Zhongnong Group and Kaiyuan Group. After exploration in recent years, Laos has developed conditions and it can form 800,000 tons of production by next year. The production of potash fertilizer projects in Laos in China is expected to change the supply pattern of potash fertilizer in China.

“At present, there are many voices in the industry looking for potassium overseas. One view is that so many companies are looking for potassium abroad, so the supply of potash will soon be surplus. Another voice is questioning the overseas search for potassium and it is in vain. I think these two kinds of sounds are biased. First of all, so many companies have only just acquired the right to explore, they need to go through long-term exploration to find out if there is any potassium, and then conduct a series of work such as feasibility studies and environmental assessments before products can come out. Generally speaking, it takes at least 8 to 10 years to achieve the target output, so the world's potash supply exceeds demand until 8 years later. In addition, problems such as immature technology and non-compliance with environmental protection have been solved. Mining technology and mineral processing technology are very mature. For the treatment of large amounts of sodium chloride and magnesium chloride in mining, after long-term repeated studies in the country, the filling technology has been invented, and it can fully meet environmental protection standards and is recognized internationally.” Zhao Siyu said.

Finding potassium overseas has become an effective means to increase the competitiveness of the potash fertilizer industry. The picture shows the construction of a potash fertilizer project site in Yunnan Province in Laos. (Image courtesy of CFP)