Analysis Of Compound Fertilizer Operating Rate
June 12, 2024, 9:21 AM
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Since mid-November, China's compound fertilizer operating rate has risen steadily, reaching 45% by late December—18% higher than early November—but remains below last year’s level. Regional disparities exist: Shandong, Hubei, and Northeast China saw rapid increases, driven by resumed production and strong enterprise operations, while Hebei faced delays due to the epidemic and Jiangsu-Anhui saw load reductions in late December. Weak raw material trends, particularly in urea and monoammonium phosphate, have dampened market sentiment, leading to delayed deliveries and sluggish order follow-ups. High dealer inventories—over 550,000 tons—reflect weak demand. A premature Chinese New Year and extended post-holiday operation window further reduce urgency for restocking. Additionally, shortened pre-Spring Festival production time and rising COVID-19 cases have disrupted workforce availability, forcing some plants to cut output or halt temporarily. Going forward, little improvement is expected b
With the improvement of the market, the operating rate of compound fertilizer has been steadily rising since the middle of November, especially in the middle and first ten days of December. However, the good times didn't last long. Since the end of the year, the increase of operating rate has slowed down, and there has been a decline in some parts. By the end of December, the operating rate of compound fertilizer industry had reached 45%, which was 18% higher than that in the first ten days of November, but still lower than that in the same period of last year.
The operating rate varies greatly in the region. From the perspective of specific regions, in the past two months, Shandong, Hubei and Northeast China are the main regions where the operating rate has increased rapidly. Among them, Hubei is the main distribution center of compound fertilizer production in China. With the rebound of raw materials, the acceleration of winter storage advance and the improvement of market atmosphere, the early parking devices have been resumed and restarted since mid-November. At the same time, in order to ensure supply, the operating rate of large enterprises has also been improved. However, due to the epidemic situation in Hebei this year, the production of winter storage has been delayed, and some of them were restarted in December. In Jiangsu-Anhui area, before the middle of December, the running load of local installations was relatively stable, but from the end of December, some large enterprises started to reduce the load.
The raw materials are weak, and the expected volume of goods in the market was poor years ago. In the past two weeks, urea and monoammonium phosphate, the main raw materials of compound fertilizer, have been in a weak trend. Although the decline is not significant, it has had a significant impact on the market mentality of compound fertilizer. First, in terms of delivery, some dealers delayed delivery for fear that the market will not be optimistic after the year. At present, the inventory of sample enterprises is still above 550,000 tons, and most of them remain at a high level except for the decline of individual enterprises. Second, it is reflected in the replenishment of positions. According to the reaction of major enterprises, the follow-up of new orders is generally poor recently. Although some dealers planned to replenish positions years ago, the raw materials were weak, which suppressed the enthusiasm of their operations. Some of them were only inquiry and price exploration, and had no firm intention. Third, the Chinese New Year is early this year, and the operating time after the year is more plentiful than in previous years, giving dealers more choices.
The production window before the Spring Festival is shortened. According to the traditional custom, the parking time of compound fertilizer enterprises' installations during load reduction is longer than that before and after the small year, that is, around January 14th, small and medium-sized enterprises will enter the parking holiday state one after another. In recent two weeks, the number of infections in COVID-19 has increased, and the production, loading and unloading, and logistics of the plant have all been affected to some extent. Some of them have to reduce the load or stop temporarily because of the shortage of workers. At the same time, considering that many places were still at the peak of infection years ago, the improvement of operating rate will inevitably be affected.
To sum up, it is predicted that the operating rate of compound fertilizer before the year may hardly be significantly improved. It is predicted that the operating rate of enterprises will remain at the current level in early January, and from the middle of January, the number of load-shedding parking devices will gradually increase. In the latter part of the year, except for some large enterprises running at low load, most enterprises stop, and the overall operating rate will drop to around 20%.
The operating rate varies greatly in the region. From the perspective of specific regions, in the past two months, Shandong, Hubei and Northeast China are the main regions where the operating rate has increased rapidly. Among them, Hubei is the main distribution center of compound fertilizer production in China. With the rebound of raw materials, the acceleration of winter storage advance and the improvement of market atmosphere, the early parking devices have been resumed and restarted since mid-November. At the same time, in order to ensure supply, the operating rate of large enterprises has also been improved. However, due to the epidemic situation in Hebei this year, the production of winter storage has been delayed, and some of them were restarted in December. In Jiangsu-Anhui area, before the middle of December, the running load of local installations was relatively stable, but from the end of December, some large enterprises started to reduce the load.
The raw materials are weak, and the expected volume of goods in the market was poor years ago. In the past two weeks, urea and monoammonium phosphate, the main raw materials of compound fertilizer, have been in a weak trend. Although the decline is not significant, it has had a significant impact on the market mentality of compound fertilizer. First, in terms of delivery, some dealers delayed delivery for fear that the market will not be optimistic after the year. At present, the inventory of sample enterprises is still above 550,000 tons, and most of them remain at a high level except for the decline of individual enterprises. Second, it is reflected in the replenishment of positions. According to the reaction of major enterprises, the follow-up of new orders is generally poor recently. Although some dealers planned to replenish positions years ago, the raw materials were weak, which suppressed the enthusiasm of their operations. Some of them were only inquiry and price exploration, and had no firm intention. Third, the Chinese New Year is early this year, and the operating time after the year is more plentiful than in previous years, giving dealers more choices.
The production window before the Spring Festival is shortened. According to the traditional custom, the parking time of compound fertilizer enterprises' installations during load reduction is longer than that before and after the small year, that is, around January 14th, small and medium-sized enterprises will enter the parking holiday state one after another. In recent two weeks, the number of infections in COVID-19 has increased, and the production, loading and unloading, and logistics of the plant have all been affected to some extent. Some of them have to reduce the load or stop temporarily because of the shortage of workers. At the same time, considering that many places were still at the peak of infection years ago, the improvement of operating rate will inevitably be affected.
To sum up, it is predicted that the operating rate of compound fertilizer before the year may hardly be significantly improved. It is predicted that the operating rate of enterprises will remain at the current level in early January, and from the middle of January, the number of load-shedding parking devices will gradually increase. In the latter part of the year, except for some large enterprises running at low load, most enterprises stop, and the overall operating rate will drop to around 20%.
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June 12, 2024, 9:21 AM
June 12, 2024, 9:21 AM
