Good depth! Production declined, exports declined, prices soared... How will businesses survive in 2019?
This year's fertilizer market is characterized by a decline in output, a decrease in exports, soaring prices and a rise in imports. Since this year, the price of single fertilizer has risen in an all-round way. Among them, the price of nitrogen fertilizer has risen the most, reaching a new high in the same period in the past five years. Potassium fertilizer and phosphorus fertilizer have also risen sharply. Influenced by the rising price of mono-fertilizer, the production cost of compound fertilizer production enterprises has greatly increased, but the price of agricultural products has been depressed and the demand for chemical fertilizer has declined. Compound fertilizer is facing cost pressures.
The year 2018 is coming to an end. It is expected that urea will continue to fluctuate at a high level, phosphorus fertilizer or potassium fertilizer will rise steadily, and potassium fertilizer will run at a high level for a long time.
_Raw material rising pressure highlights
_Since 2009, the supply of potassium chloride in China's market has increased sharply, tending to be relatively stable in the past three years. After the rapid growth of domestic production, the bottleneck has been formed, and the self-sufficiency rate has remained around 50%. Resource-based potassium fertilizer production growth slowed down, future output will remain stable, import supply to supplement the domestic market will continue for a long time.
In 2017, China imported 7.61 million tons of potassium fertilizer. In 2018, it is estimated that 7 million tons of potassium chloride will be imported. The amount of potassium fertilizer imported is relatively stable every year. In the past year, domestic potassium fertilizer output fluctuated, and the overall starting rate maintained at 60% - 70%. In some areas, production was stopped and construction was not good, and the supply was reduced in stages. In 2018, the price of potash fertilizer showed a situation of first restraining and then rising. With the decrease of domestic potash fertilizer and imported potash fertilizer supply and tight balance of supply and demand, the market price rose steadily, and has been operating at a relatively high level. International prices of agricultural products continue to rise, to a certain extent, to stimulate the demand for potash fertilizer, while the supply of suppliers is on the tight side, so international prices of potash fertilizer continue to improve. The international supply of potash fertilizer will further increase, which will be constrained by the contract price of potassium hypertrophy and run at a high price.
_International nitrogen fertilizer production capacity has declined, urea supply is now greatly reduced, next year prices or high. In 2017, the average cost of urea enterprises keeps rising, and the starting rate of urea industry will reach a low of 48% in recent years, which will lead to a steady rebound in urea ex-factory prices. Urea production will gradually decline in 2018, and urea ex-factory prices will remain high. According to the data of the National Bureau of Statistics, a total of 4.7 million tons of new urea production capacity were added in 2015-2017, 11.6 million tons were withdrawn, and the total production capacity was reduced by about 6.9 million tons. At the end of 2017, China's urea production capacity was 74.17 million tons, and in 2018, 2 million tons were added, of which 10.4 million tons were parked for a long time. At present, the effective production capacity is about 65.77 million tons.
_Phosphorus fertilizer is now difficult to increase production capacity, is in the price depression. This year, the average annual increase of diammonium phosphate in domestic market is 13.7%, and that in international market is 17.7%. It is expected that the market of diammonium phosphate in spring 2019 will be tightly balanced due to the sharp rise in raw material costs and other factors, and prices will rise steadily due to sensitive factors from all sides. In 2018, the output of phosphate ore will be reduced by 10 million tons on the basis of 120 million tons in 2017, while the output of phosphate fertilizer will be maintained at 23.4 million tons per year. In the future, the possibility of phosphorus fertilizer productivity change is small, and the possibility of structure optimization is higher. In addition to raw materials, inadequate international production capacity is also one of the main factors driving up the price of phosphate fertilizer
_Compound fertilizer winter storage market has been reorganized and operated, and the winter storage market has been pushed forward slowly. Now the enterprises begin to fulfill the previous orders, and the market has a large shipment volume. However, the downstream distributors are cautious in their operation, so they lack the support of rigid demand and few new orders in the market. Although the offer of enterprises is firm, there is no sense of delivery at the grass-roots level. Traders have a general enthusiasm for manure preparation, coupled with high price resistance, the atmosphere of wait-and-see is diffuse.
_Current Situation Foretells Product Adjustment
At present, the chemical fertilizer industry is in a critical period of change. The disappearance of the external grain growth dividend, the enhancement of environmental awareness, the upgrading of consumption, the policy change, the low price competition of internal manufacturers, the lack of research and development, the lag of traditional marketing channels, the transformation of production mode are all the practical problems facing the whole chemical fertilizer industry. Increasing R&D efforts, strengthening joint efforts, establishing efficient marketing channels, shifting from single product sales to crop nutrition solutions, strengthening agrochemical services, and helping farmers solve practical problems in production process in a timely and effective manner will be an important guarantee for fertilizer enterprises to achieve counter-trend growth under the background of "structural reform of agricultural supply side" in the future.
With the development of facility agriculture, water-soluble fertilizer and foliar fertilizer have become new types of fertilizer growth points. With the promotion of water-fertilizer integration and the implementation of "two reduction and one control" by the Ministry of Agriculture, the problems of soil consolidation and pollution caused by simple fertilizer have also prompted manufacturers to start transforming and developing new high-efficiency fertilizers such as compound fertilizer, controlled release fertilizer, biological fertilizer, water-soluble fertilizer, foliar fertilizer and mixed fertilizer. With the improvement of people's living standards and the enhancement of environmental awareness, China has begun to vigorously promote low-carbon emission reduction fertilization to develop modern agriculture, requiring chemical fertilizer products to be compound, specialized and refined to meet the requirements of improving quality and efficiency of agricultural products.
_transformation reveals the direction of development
First, industrial integration, R&D, transformation and upgrading are gradually accelerated. Secondly, Internet +, expanding channels and embracing change become the mainstream. Internet can provide efficient and fast access to information, reduce the cost and risk of information asymmetry. The fertilizer industry is also aware that the Internet will become one of the indispensable roles of the industry in the future, so actively through the introduction of the Internet as a tool to enhance the efficiency of information dissemination and sales of the fertilizer industry as a whole.
In addiion, Soil-testing formula, precise fertilization, and upgrading services are needed to solve the dilemma. Traditional fertilization methods have been unable to meet the requirements of improving agricultural quality and efficiency. Scientific fertilization, such as soil testing and formula fertilization, may become the main fertilization methods in the future. With the emergence of large-scale and technical professional growers, the selection of chemical fertilizer brand gradually concentrates on large-scale, resource-based, innovative and service-oriented enterprises. Enterprises that can strengthen products and services will have obvious advantages in future competition. Many enterprises vigorously promote deep tillage and deep loosening, deep fertilizer application, straw returning to the field, water and fertilizer integration and other scientific fertilization technology, which not only promotes their own fertilizer sales, but also helps farmers improve fertilizer utilization efficiency and save fertilization costs.
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