Fertilizer production in China increased by 8.3% in the first half of the year

In the first half of 2011, in the first half of 2011, fertilizer production remained stable and rapid growth under the complicated economic environment at home and abroad. Statistics show that the production of chemical fertilizers in January-March was 30.624 million tons, an increase of 8.3% year-on-year; of which, nitrogen fertilizer production was 21,536,000 tons (equivalent), which was a year-on-year increase of 2.3%; urea production was 13.368 million tons, a year-on-year increase. The decrease was 4.0%; the output of phosphate fertilizer was 7.173 million tons (P2O5), an increase of 29.8% over the same period; the production of potash fertilizer was 1.914 million tons (K2O), an increase of 17.4% over the same period of last year. The economic situation of the fertilizer industry in the first half of the year released by the Ministry of Industry and Information Technology is expressed.


According to the Ministry of Industry and Information Technology, the demand for chemical fertilizers increased significantly in the first five months of the year, and the apparent consumption of chemical fertilizers across the country totaled 25.331 million tons, an increase of 6.9% year-on-year. Among them, the apparent consumption of urea was 108.21 million tons, a slight decrease of 0.03% year-on-year; the apparent consumption of phosphate fertilizer was 5.312 million tons, an increase of 18%; the apparent consumption of potassium fertilizer was 2.894 million tons, an increase of 15.1% year-on-year. The substantial increase in the consumption of phosphorus and potassium fertilizers has contributed to the overall increase in fertilizer demand.


According to market monitoring, in May, prices of major chemical fertilizers were mixed, urea prices were adjusted back, and phosphate fertilizers and potassium fertilizers rebounded. Fertilizer prices generally rose steadily. The average price of urea market was 1960 yuan/ton, down 2.5% month-on-month and up 21% year-on-year. The average price of diammonium phosphate was 3,410 yuan/ton, up by 3.3% month-on-month and up by 21.4% year-on-year; the domestic average price of potassium chloride was 2,980 yuan/ton. It was up 2.8% from the previous quarter and 9.6% year-on-year. In June, due to the continuous demand for industrial urea, the urea market continued to increase substantially, and the urea market price rose to 2,200 yuan/ton. The price of phosphate fertilizer is not obvious.


The data from the Ministry of Industry and Information Technology shows that from January to May, the cumulative export of urea was 658,000 tons (in kind), a year-on-year decrease of 54.8%, and the output of diammonium phosphate was 311,000 tons, which was a year-on-year decrease of 9.8% and imported potash fertilizer was 1.5246 million tons (K2O, January-June data ), a year-on-year increase of 18.0%. From January to April, the main business income of the nitrogen fertilizer industry was RMB 91.845 billion, the profit was RMB 2.905 billion, and the sales profit rate was about 3.16%. The phosphate fertilizer industry realized sales revenue of RMB 100.833 billion, total profit of RMB 4.84 billion, and sales profit ratio of approximately 4.8%.


The Ministry of Industry and Information Technology pointed out that due to the increase in prices of raw materials, the cost of urea has increased significantly, and the loss of fertilizer companies has increased. This year, the prices of electricity, natural gas, and transportation for fertilizer production have risen, resulting in a significant increase in the cost of urea production. According to the statistics of industry associations, from January to May, the average national average raw coal for plants was 1,456 yuan per ton, which was 340 yuan more than that of the same period of last year; natural gas for chemical fertilizers began to adjust by 40% from June 2010, and the supply was still tight. According to the statistics of the association, in May there was still urea production capacity of 10,800 tons/day, which accounted for 30.6% of the urea production capacity. In the first half of this year, the utilization rate of urea companies was only 76.5%, and the cumulative capacity utilization rate was only 84.3%.


Sulfur prices have risen, leading to increased production costs of phosphate fertilizers. At present, domestic sulphur prices have reached as high as 1800 yuan/ton, which is basically the same as foreign prices of 265 US dollars/ton. The association reflects that Sinopec’s high price of sulphur procurement and raising the price of domestic sulphur have seriously affected the domestic industry’s safety of phosphate fertilizers.


Potash fertilizers are difficult to transport and there is a backlog of products. China's potassium resources are mainly distributed in two regions of Qinghai and Xinjiang, and its potassium fertilizer production accounts for 95% of the country. According to the association, at present, the transportation of potash fertilizers in Qinghai and Xinjiang is difficult and there are more backlogs of products. By the end of June, the accumulated potassium pressure in the Qinghai region was 1.8 million tons, and the accumulated potassium pressure in Xinjiang was 180,000 tons.


The Ministry of Industry and Information Technology predicts that the peak of domestic fertilizer consumption will have passed in the second half of the year, and the reduction in domestic demand for chemical fertilizers will appear. Coupled with the shortened export window period, the supply will exceed demand, and the prices of urea and diammonium phosphate will fall. However, due to the rigid demand for chemical fertilizers, it has a certain pulling effect on the domestic market. In the second half of the year, fertilizer production and market demand may maintain a steady growth trend.


The Ministry of Industry and Information Technology estimates that the annual output of urea will be 55 million tons (physical quantity, the same below), a year-on-year decrease of 5.8%, and exports are expected to reach 4 million tons, a decrease of 43% year-on-year. The annual output of phosphate fertilizers was 1550-16 million tons (P2O5, the same below), a slight increase from the previous year, with an export of 2 million tons, a year-on-year increase of 29.8%. It is estimated that the annual potash fertilizer output will be 3.9 million tons (K2O, the same below), with a year-on-year increase of 16.5% and import volume of 5.5 million tons, a year-on-year increase of 5%.

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