From the economic environment or the natural conditions for agricultural development, the fertilizer market in 2009 will experience unusual year.

Affected by drought and the impact of economic environment, the fertilizer market in 2009 was a surplus of products that may arise. As a result of warm winter weather in the north, one to open in 2009, the country's million mu of farmland have suffered a severe drought, dryhemaio. Chemical fertilizers in 2009 despite the downturn in the domestic market have a certain chance, but through the surface, China's nitrogen and phosphate fertilizer production overcapacity situation has taken shape, the contradictions between supply and demand has begun to show some of the more prominent areas of imbalance between supply and demand, which will inevitably fertilizer market in China have an impact on development.

Despite the objective factors, but the fertilizer market in 2009 is faced with the same favorable policies. In 2008, the country exported in a number of chemical fertilizer tariff adjustment policy, in early 2009 to promote the reform of the fertilizer price. January 24, National Development and Reform Commission, the Ministry of Finance jointly issued the "fertilizer on the price formation mechanism reform," which decided to push forward the reform of chemical fertilizer prices, the establishment of market-oriented pricing mechanism of chemical fertilizers.

Can be predicted that this year and the next few years, China's chemical fertilizer industry will be in a period of structural adjustment, a new round of the upcoming wave of consolidation, integrated intensity will be higher than any time in the past. Judging from the product structure, soil testing recipes, economic rationality will be the trend of fertilization.

At present, due to excess production capacity of chemical fertilizers, chemical fertilizers in China has been exporting countries to importing countries, how to grasp the international market, to make good use of both domestic and international markets become a compulsory course. In the new competitive environment, enterprises will be a good place, how to plan their development prospects, in order to adopt the correct response is the fundamental way to solve the problem.

Policy implications

Analysis of the chemical fertilizer market in 2009, the impact of market policies are mainly two points: the first is to reduce export tariffs, and the second is the opening up of the price of fertilizer.

Lower export tariffs. 1 December, 2008, the state once again adjusted the export tariffs on fertilizer policy. Under the new tax program, China's fertilizer products from December 1, 2008 to set up the base price by the end of 2009, monoammonium phosphate and diammonium the benchmark price of 3700 yuan / ton and 4,000 yuan / ton, the benchmark price of urea 2,300 yuan / ton.

Urea, monoammonium phosphate and diammonium during the off-season, if not higher than export prices, benchmark prices, the tariff rate is 10%; when the export price above the benchmark price, the tax rate will be calculated in accordance with the formula [(1.1-benchmark prices / export price) × 100] to calculations.

Liberalization of fertilizer prices. Fertilizer in accordance with the new pricing mechanism, since January 25, 2009, the ex-factory price of fertilizer will be made, with the exception of potash fertilizer imports outside the portzhidaojieprices changed by the Governmentshichangtiaojie. The removal of the fertilizer prices have been liberalized to declare the implementation of price increases, the record price, the price-cap as well as the circulation of chemical fertilizer prices slip control of the implementation of the temporary price intervention measures. Continue to import potash fertilizer prices in general the implementation of appropriate supervision.

Fertilizer price formation mechanism reform, the country temporarily to retain the fertilizer production of electricity, gas and rail transport, as well as the implementation of preferential policies for the price of fertilizer production, the flow of the implementation of the preferential taxation policies.

In addition, my Government will consider fertilizer, diesel and other agricultural prices and food price changes on earnings grain farmers the impact of the implementation of agricultural prices and increase in the integrated agricultural subsidies, the lowest increase food prices, linked to the provisional priceshouchumechanism for integrated agricultural subsidies by reducing only to ensure that the receipts from grain farmers due to decline in agricultural prices.

It can be seen that from a policy point of view, it can be said that frequently blow heaters. To this end, after the Chinese New Year, fertilizer market and the wholesale prices manufacturers offer a general pick-up in 20 to 50 yuan / ton, with various policies aimed at Dongfeng and the arrival of season sales boost market confidence.

Supply and demand situation

From a macro perspective, the total amount of China's basic balance between supply and demand of chemical fertilizers, including nitrogen, phosphorus and other major varieties are the oversupply. To urea as an example, according to statistics, as at the end of 2008, the National urea production capacity has reached 59 million tons. The total demand for urea in 2008 to around 52 million tons, the market for about seven million tons of surplus, the basic need to rely on exports to digest. New capacity in 2009 is about the country 4.3 million tons, total capacity will reach 63 million tons. However, the total demand for urea in 2009 rather pessimistic. Such as industrial urea, urea industrial demand in 2008 for 7.5 million ~ 800 million tons of urea is expected industry demand in 2009 is slightly higher than 4,000,000 tons. The country's total industrial and agricultural use of fertilizer and about 52 million ~ 53 million tons, production capacity surplus of more than 10 million tons.

Due to the vast majority of industrial fertilizer used in the production of fertilizer, so the final analysis, the decision of fertilizer demand is the purchasing power of farmers and land moisture.

Their purchasing power: on the one hand, the state introduced continuously Funong and strong agricultural policies to ensure an integrated agricultural subsidies by reducing only to ensure that the receipts from grain farmers due to decline in agricultural prices. On the other hand, by the financial crisis and the impact of the downturn in the economy, a large number of unemployed migrant workers, according to recently released government figures, China's 20 million migrant workers, about the unemployed, accounting for one-sixth of the total number of migrant workers. This is the purchasing power of farmers will have no small influence on the demand for fertilizer this spring will also have a certain degree of negative impact.

Land soil moisture content: According to the China Meteorological Administration website, November 1, 2008, the subject of the continuing effects of La Nina phenomenon, the precipitation anomaly from the low and average high temperatures lead to more year-round weather in the same period of drought has affected 12 provinces in China. Winter drought in northern areas for a return period of 30 years, drought in major wheat-producing areas for a return period of 50 years.

According to statistics, as of February 7, the national area of 2.99 million mu of arable land have been affected and more than 1.10 million mu more than the same period in the year, of which 1.61 million hectares of crops have been affected area, dry weight 4996 mu. Hebei, Shanxi, Anhui, Jiangsu, Henan, Shandong, Shaanxi, Gansu Province, eight drought-hit area of the total winter wheat area 1.52 million mu, accounting for the size of crops affected by the drought, 94%, of which 4879 mu of dry weight.

After filling all levels of government to stealbaomiao, as of February 15, winter wheat area Northern Province, has completed 8 drought watering times an area of 1.94 million mu, of which 1.83 million mu of irrigated winter wheat meeting. Crops affected by the drought area decreased to 1.04 million mu more than the peak on February 7 at the time of reduction of 1.61 million mu more than 5700 mu, dry weight decreased to 3033 mu area; dry area but increased to 421 million, 468 million people , 250 million head of livestock drinking water drought occurred.

The severe drought is expected, will result in China's winter wheat harvest is not a small impact, while reducing fertilizer use is about 10% ~ 20%.

Willingness of farmers to buy: In recent years, although the Government continued to improve integrated agricultural subsidies and the level of food subsidies, countries have also come up with this year's 10 billion yuan of subsidies for agricultural machinery, and the minimum purchase price of wheat to increase 0.1 yuan catty, but , as a result of less and more of our people's basic national conditions, to rely solely on the proceeds of grain it is difficult to convince the farmers become rich. According to statistics, China's farmers rely on farm income to total income accounted for only 20% ~ 30%, and rely on the workers and a variety of operating income of total income accounted for more than 70%. Therefore, the majority of farmers for land inputs, including fertilizers, pesticides and less and less labor input.

As a result of reduced income and double the impact of drought, it is estimated that this year the district north of the fertilizer demand of winter wheat decreased by 15% to 20%.

Export situation: according to industry estimates, if the average price of coal this year, 950 yuan / ton or so, power generation using coal prices at 550 yuan / ton or so, international oil prices in 60 U.S. dollars ~ 65 U.S. dollars / barrel, the domestic price of urea to urea with the international line prices, international oil prices below 60 U.S. dollars / barrel, the domestic urea on the go. Therefore, to some extent, depend on fertilizer exports of lower coal prices. If you can not export in June after the pick, then the release of excess capacity this year, more than 1000 million tons of urea, urea will lead to the grim situation of the market.

Production costs

China's urea production enterprises, to coal as raw materials account for 60% to 70%, using natural gas as raw materials account for about 20% to heavy oil as raw materials account for about 10%.

With natural gas as raw material urea enterprise. As a result of fertilizer production enterprises enjoy the use of natural gas has been the country at preferential prices, coupled with low long-term domestic natural gas prices, international crude oil and natural gas prices drop did not affect the price of domestic natural gas. From 2008 to the present, domestic gas prices had remained stable. Therefore, the use of natural gas as raw material production costs of enterprises are still 1300 ~ 1400 yuan / ton.

Heavy oil as raw materials to enterprises of urea. Since August 2008, the international crude oil and natural gas prices lower, in January of this year, a cumulative decline of over 70%. As a result, domestic crude oil, refined oil, fuel oil and heavy oil prices have decreased substantially. As of February 21, Shanghai domestic price of heavy oil 2,700 yuan / ton, representing a decrease over the same period in 2008 about half. Heavy oil as raw materials and therefore the cost of urea production declined 500 yuan / ton, the current cost of production should be 1,300 yuan / tons.

Market Forecast

From the supply and demand situation, this year a serious surplus of domestic fertilizer supply, the market as a whole will enter the adjustment period, fertilizer prices will be significantly below last year's level; not met by the multi-year drought and the macroeconomic impact of the first quarter of this year's winter wheat growing areas north of fertilizer demand will be reduced by 15% to 20%, the second quarter to improve gradually; in July, the fertilizer into the off-season sales, fertilizer exports of chemical fertilizers can pick become a key market.

Top-dressing of winter wheat and oilseed rape market. February to April is winter wheat in northern China's top application season. However, due to severe winter Drought this year, the northern areas of the fertilization of winter wheat will be decreased by 20% ~ 30%. Therefore, this year's winter wheat-producing areas is basically the situation of supply exceeding demand of fertilizer in the affirmative. At the same time, start-up time of the fertilizer market will also be postponed, it is estimated that before the end of March, with the exception of the western areas of the Northeast and Northwest, the northern areas of chemical fertilizer market will not significantly improve the possibility of busy season is not great, urea prices may be rising less.

Spring market. March to May is spring season in our country. Due to differences in climatic conditions, in the north, the Huang-Huai, Jianghuai the eastern and the north-west, early in March to early April for the spring season; the northwest and northeast areas of the western region will be later, spring generally from mid-April to mid-May end.

During this period, the north is mainly planting corn, spring wheat, potatoes, cotton and soybeans. In the north, the Huang-Huai, Jianghuai the eastern and the north-west, as is experiencing serious Drought winter, spring fertilizer to be affected to a certain extent; while in the west and the vast majority of the north-west of the northeastern region is a year with fertilizer the largest amount of time, the annual spring fertilizer with about 70% fat.

In the South, mainly in rice seedlings. Double-crop rice cultivation in the southeast coastal areas, rice planting from mid-March, early April to the end; the southwest region, Hubei and Jiangsu provinces, generally from mid-April planting to the beginning of the end of May.

Therefore, from the southern region is expected by the end of February to enter the fertilizer sales season; the end of March in the Yangtze River into the sales season. In the south and the north-west, north-east, driven by the market, in April, the majority of the northern region will also be entering the peak season for fertilizer sales. Liberalization of fertilizer in the current market conditions, do not rule out the market there will be an up market, but will not increase too much, will not be too long duration.

Spring crop fertilizer market. Spring-sown crops in general in May to June period for the top dressing. In the northwest and northeast areas of the western region, which is the last one year period with manure, fertilizer during this period accounted for 40% of the year. Winter wheat in the northern area (rape) and the southern half of the year, a familiar area, fat accounts for the period of the year with 10% ~ 15%. Two crops a year in the south of the region, this period accounts for the whole year of fertilizer by 20%. This period, the fertilizer price will be highest in the whole year.

After the July market. July-September first half, with the exception of the south part of the demand for chemical fertilizers, the northern most areas have full access to off-season, in addition to coal prices, fertilizer prices will be begin to come down. Depends on the rate of decline of production plants with a total inventory of society, some manufacturers do not rule out the cost or even below cost price dumping.

After the end of October, the autumn in northern China, double-crop rice south end of the fertilizer, chemical fertilizer into thetongchustage, there is no sales market. Even if manufacturers take the limit of the price policy of the middle class, fertilizer prices will still continue toyindieunder inertia.

Enterprises

North China, Central China manufacturers. Urea from the domestic market this year, supply and demand situation, in the north, the Central Plains region, the majority of coal as raw materials to manufacturers facing the greatest pressure: by the North District, an area of winter wheat Drought impact of winter and spring, spring season fertilizer demand Wang, sales slow, resulting in high inventory levels. Chemical fertilizers in the region is the most concentrated production areas, the country accounts for about 60% of capacity, under normal circumstances, about half of the output to be transferred outside the northeast, the southern provinces or exported, but this year, Hubei, Hunan, Yunnan and Guangdong Province have experienced varying degrees of drought, chemical fertilizers are a greater impact on the province. And under the new tariff regulations, 2 to 6 month period of high tariffs, export tax rate for the 110% blocked exit routes. In addition, the region's fertilizer producers are almost all based on coal as raw materials manufacturers, the cost of production is relatively high, and are subject to price risk is also the weakest. Therefore, this part of this year's fertilizer business will be less than a day.

For North China, Central China's manufacturing enterprises, the opportunities for enterprises to seize the first opportunity to take the lead in the occupied provinces markets, tighter liquidity at the same time, as far as possible within the resources area. In addition, in June to find ways to expand exports in the article do a good job.

Northeast manufacturers. Whole, the northeastern region of fertilizer production capacity larger gap. To urea as an example, this property can be about three million tons per year, while demand in five million to 600 million tons. Compound also has a certain gap. Therefore, the Northeast this year, fertilizer manufacturers and dealers are still more profitable space.

Northwest, Southwest manufacturers. Using urea, from the total, the capacity of the region is slightly larger than the demand. Under normal circumstances, 10% ~ 15% of the production needs of the province transferred. Relatively speaking, the Ningxia autonomous region of the more prominent of excess production capacity, about 70% of the production needs of external sales.

The advantage of manufacturers in the region is almost all used (except Shaanxi Province) of natural gas as raw material, production cost is relatively low, only 1300 ~ 1400 yuan / ton. Generally speaking, therefore, urea sales pressure is not great, as long as the proper arrangements for the province and the timing of fertilizer prices, there will be room for considerable profit.

Manufacturers of the southern provinces. Using urea, the apparent shortage of the southern region. Local resources is less than 10 million tons, while the amount of 10,000 tons over 2000. Therefore, this year's drought and the decline in the purchasing power of farmers for fertilizer consumption is almost no impact, once the arrival of spring season, will enter the season immediately. However, because of the massive influx of imported urea, the market is relatively abundant resources, this year's fertilizer prices will be maintained at a reasonable level in 2008 will not reproduce the high-priced market. The local manufacturer of fertilizers is still a good year.

(Bo)