Fertilizer Year may be slightly improved this year

The fertilizer market has been sluggish for a long time. Will there be any improvement in 2015? What will be the year? At the peak season of spring tillage and fertilizer use, on April 14th, China** Industrial Association and China Phosphate Compound Fertilizer Industry Association held a 2015* and fertilizer market seminar in Beijing. According to the meeting, due to sluggish growth in demand at home and abroad, weakening of preferential policies, rising costs, and upgrading of environmental protection pressures, the fertilizer market as a whole is still unlikely to undergo major changes this year, but some areas and varieties are getting warmer and the overall performance may be better than last year.

Representatives of nitrogen fertilizer companies such as Luxi Chemical Group and Hubei Yihua attended the meeting unanimously agreed that the Ministry of Agriculture has formulated a zero-growth action plan for fertilizer use by 2020. It is expected that the demand for agricultural nitrogen fertilizer will maintain stable or slightly increase this year. In terms of industrial fertilizers, the demand for urea in the fields of man-made panels, thermal power fumes, vehicle urea, etc. is expected to reach 16 million tons this year, an increase of 1 million tons year-on-year.

In February, the international urea price has been falling all the way, and is currently lower than China's FOB price. The participants in the industry believe that the international urea price has basically bottomed out. From the domestic situation, prices may decline further in April and may fall below 1,500 yuan/ton in early May. The price of urea may start to increase after mid-to-late May, and the market outlook is generally bullish. The reasons are: First, the growth in demand for fertilizers has led to growth; second, the increase in gas prices and electricity prices has led to rising costs, resulting in price linkages. “The level of cost is still the key to the survival of nitrogen fertilizer companies. Enterprises that use natural gas and white coal as raw materials must accelerate the adjustment of raw material structure, and preferentially use low-priced raw coal such as pulverized coal and bituminous coal,” said Jiang Jitao, deputy general manager of Luxi Chemical Group.

“According to the current situation, the market demand for phosphate fertilizer is stable this year,” said Qi Tong, chairman of the China Industry Association. She believes that although the domestic phosphorus fertilizer export policy is relaxed, there is hardly a large increase in domestic phosphate fertilizer use. Intensified competition in the international market and limited export growth are expected to result in a slight increase in national phosphate fertilizer output this year, while prices will hardly improve and the industry will continue to Hard to run.

Zhao Zhaoying, Deputy Secretary-General of the Potassium Salt (Fertilizer) Branch of China Inorganic Salt Association, analyzed that China's potash fertilizer production capacity and production will maintain its growth momentum this year. The production of potassium chloride is maintained at about 9.5 million tons, and the import volume is 6 million to 7 million tons. The export volume will be further enlarged. In the first half of the year, the price of potassium chloride will increase by about 10%, and the import CIF of US$300-350/ton may be the new norm for the import of potassium chloride in the coming years. In contrast, the oversupply of **potassium is unavoidable and prices may fall back.

The participating companies generally reflected that the external environment for the development of the fertilizer industry is further tightening. For example, on February 25, the East China Environmental Supervision Center conducted an interview with the main leaders of Linyi City in Shandong Province. Due to environmental pressure, many local compound fertilizer plants stopped production and when the production resumed. In addition, the restoration of chemical fertilizers to levy VAT has become a general trend, and preferential policies such as electricity price, gas price, and freight tariff will gradually fade out, which will bring considerable pressure to the fertilizer industry.

Industry perspective

Preferential policies will gradually fade out

The relevant person in charge of the Department of Economic Affairs of the National Development and Reform Commission: At present, the process for recovering VAT on chemical fertilizers has been accelerated. The preferential tariff rates, gas prices, and freight rates enjoyed by the fertilizer industry will be further adjusted. At present, relevant departments are studying how to return chemical fertilizers to general merchandise management. The current policy of intervention in many fertilizer market will gradually fade out, and the focus of fertilizer companies should be placed on efforts to produce quality products that meet market needs.

Fertilizer industry is changing

Wen Feng, vice president of Stanley Fertilizer Co., Ltd.: The fertilizer industry is undergoing tremendous changes. At present, the land circulation area has grown rapidly, reaching approximately 63.72 million mu in 2007 and approximately 340 million mu in 2013, accounting for 26% of the total area. The major changes in agricultural operations are cooperatives, family farms, etc. The unit area is larger and the decision is more rational. The market demand changes rapidly, and the original market channels will be gradually subverted; the importance of agrochemical services will be highlighted, and crop-oriented comprehensive solutions will become a trend; the Internet, big data, O2O, etc. will gradually be accepted by the market.

Anhui Sierte Fertilizer Co., Ltd., general manager of ammonium phosphate company Nie Xuanliang: Agricultural electricity supplier is the industry's development trend. Due to the relative backwardness of informationization and information asymmetry in the agricultural resources industry, agricultural electricity suppliers became blue oceans in the area of ​​e-commerce. In recent years, with the acceleration of land transfer process, the structure of agricultural producers has changed, and the demand for fertilizers and related services has undergone major changes. In particular, higher demands have been placed on the agrochemical services such as soil testing and fertilization. The agricultural e-commerce platform centered on the O2O model has significant advantages such as open and transparent information, smooth sales channels, reduced intermediate links, and easy to meet regional individual needs.

Squeezing the moisture of the "new product"

Xu Dingguo, Manager of Yunnan Yuntianhua Agricultural Technology Co., Ltd.: Now almost all companies are developing “new products”, but in fact most companies are doing the same thing, that is, copying, whether it is a phosphate fertilizer company or a compound fertilizer company, though All say innovation, but few companies are unique. Almost all companies are analyzing competitors, but they rarely research customers seriously. Most of our companies rely too much on the value of the resources themselves. It is imperative to continually adjust the product structure, innovate business models such as sales models, operating models, and capital models, and improve agrochemical service capabilities and levels.