The supply of chemical fertilizers is small and the price is high. How to ensure the normal production of autumn and winter plants

Fourth, the supply is probably tight during the autumn and winter planting period. About 2.3 million tons of nitrogen fertilizer will be newly put into production in the second half of the year. However, considering the strong industrial demand for sheet materials and other energy and environmental protection restrictions in winter, the supply of nitrogen fertilizer in agriculture has weakened; A slight decrease, but the volume of imported goods will shrink; compound fertilizer companies generally face shortages of potash fertilizer raw materials, and rising raw material prices also make small-scale compound fertilizer companies poorly stocked in the early stage. Overall, the supply of fertilizers for autumn and winter this year is tighter than in previous years.

2. Fertilizer prices will continue to run at a high level

Since spring plowing this year, the price of chemical fertilizers has been at the highest level in the past ten years, and will probably remain high in the later period. According to the monitoring of the National Supply and Marketing Cooperative, the wholesale price of urea in the fourth week of August was 2702.8 yuan per ton, down 1.78% month-on-month and up 53.3% year-on-year; diammonium phosphate was 3558.1 yuan per ton, down 0.06% month-on-month and up 38.6% year-on-year; domestic chlorine Potassium was 3601.0 yuan per ton, down 4.6% month-on-month and up 90.1% year-on-year; compound fertilizer was 2902.7 yuan per ton, up 0.23% month-on-month and up 16.0% year-on-year. Although the current price has shown a trend of peaking and falling for two consecutive weeks, the room for loosening is limited.

There are two main reasons why fertilizer prices remain high: On the one hand, raw material prices have increased. Due to the implementation of quantitative easing monetary policies in some countries, the prices of commodities required for fertilizer production have climbed. In early August, the prices of anthracite and LNG were 1447.1 yuan and 5402.5 yuan, respectively, up 73.3% and 111.6% year-on-year.

On the other hand, international high prices are driving. Affected by the epidemic, the international food trade has been reduced, and countries have increased their food support policies, which has significantly increased the demand for fertilizers. On August 19, the average offshore prices of Baltic small granular urea, U.S. Port Tampa diammonium phosphate, and Baltic potassium chloride were US$412.5, US$672.5, and US$345 per ton, up by 64.0%, 100.8%, and 109.1, respectively. %. The high prices of chemical fertilizers in the international market have not only spurred the increase in fertilizer exports of Chinese companies but also raised the price expectations in the domestic market.

3. Analysis of unfavorable factors in the autumn and winter fertilizer market

First, the tight price of potash fertilizer affects the stocking and use of fertilizer. China is highly dependent on potash fertilizer imports. The contract price of potash fertilizer imports signed in February this year was US$247/ton, while the current CIF price of Belarusian potassium chloride exports to Brazil is US$680/ton and exports to Southeast Asia are US$450/ton. China has become the price. In depressions, international suppliers have delayed shipments, leading to an overall downward trend in China's potassium chloride port inventory this year. From the end of May to now, it has fallen below 2.2 million tons, while it remained at about 2.85 million tons in the same period last year. In addition, the European Union imposed sanctions on Belarusian potash exports and restricted Belarusian potash exports via the Port of Klaipeda, Lithuania. The market situation in the later period is not optimistic. According to monitoring, China's domestic potash fertilizer prices have risen by 48.9% since the beginning of June. High-priced potash fertilizers have delayed the stocking of distributors and compound fertilizer companies during the autumn and winter planting periods to a certain extent.

Second, the cost is too high and the price is upside down, and the stock of compound fertilizer is tight. Compound fertilizer companies mostly produce according to orders, and the high price of raw materials makes companies reduce their reserves to resist risks caused by large fluctuations in raw materials. At present, there has been an upside-down phenomenon where order prices are lower than production costs, and some companies have indicated that they may postpone fertilizer reserves. If the concentration is postponed, it is necessary to be wary of the combination of factors such as tight supply of natural gas and other energy sources and centralized procurement of raw materials, which will continue to push up the price of chemical fertilizers. The tight price of potash fertilizer required by compound fertilizer companies for material preparation is high, which has a greater impact on fully fed processing companies and small and medium-sized enterprises. The late stocking up in the early stage may lag the supply of fertilizers in areas where the autumn and winter planting period is late.

Third, environmental protection pressure and coal indicators affect the supply chain structure. As the province with the highest urea output, due to environmental protection and coal restrictions, the production capacity of Inner Mongolia has decreased significantly, which has led to a decrease in nearby purchases from the northeastern region of the “large users of fertilizers”. Phosphate fertilizer companies in southwestern China have difficulty purchasing coal, so they buy from Xinjiang and other places, and they cannot form long-term fixed contracts.

Fourth, some companies have switched to production in pursuit of higher profits. At present, the average ex-factory price of synthetic ammonia for nitrogen fertilizer-related products is 4,319 yuan/ton, up 79.9% year-on-year; the average ex-factory price of melamine is 13,152 yuan/ton, up 157.9% year-on-year, and the increase far exceeds that of nitrogen fertilizers. Some nitrogen fertilizer companies choose to switch production to reduce nitrogen fertilizer output. The sulfur resources required for the production of phosphate compound fertilizers are more than 2/3 dependent on foreign sources. The average CIF price of sulfur in August was US$215/ton, a year-on-year increase of 198.6%. The phosphoric acid produced from sulfur (sulfuric acid) is more inclined to new energy batteries with high added value, which also squeezes the raw material space for phosphate compound fertilizer production.

4. Relevant suggestions

One is to continue to refine the measures to ensure the supply of chemical fertilizers. For fertilizer products, as well as essential products for fertilizer production such as elemental fertilizers and packaging bags, during the epidemic period, railways should give priority to guarantee transportation; announce the coordination hotline of transportation departments to drivers in long-distance transportation routes of agricultural materials and high-risk areas; guide state-owned raw materials and energy supply companies Sign long-term agreements with key fertilizer companies.

The second is to strictly control the quality of fertilizer products during the autumn and winter planting period. Due to the high cost of raw materials, individual companies may adjust the original high-concentration compound fertilizer products to lower the nutrient content, especially the potassium content. It is necessary to be vigilant against false standards secretly reduce nutrients by compound fertilizer companies, and strengthen the quality supervision of compound fertilizer products during the autumn and winter planting period.

The third is to appropriately release a certain amount of potash fertilizer reserves. Given the discrepancy between the price increase of potash and other fertilizers and the conventional trend of the market, relevant departments have conducted interviews with some fertilizer companies to investigate suspected price hikes. It is recommended that given high market prices, further coordination of major potash fertilizer import companies, increase market launch efforts and stabilize prices.

The fourth is to coordinate enterprise production during the Winter Olympics in advance. The Winter Olympics coincides with the peak season of spring farming fertilizer production in 2022. During this period, energy supply and environmental protection requirements may cause the production of some fertilizer companies in the surrounding area to tighten. It is recommended to negotiate as soon as possible and propose measures to meet environmental protection requirements and ensure the production and supply of fertilizers during the Winter Olympics.1. The supply of chemical fertilizers in autumn and winter is expected to be less than normal in recent years, China's domestic fertilizer industry has sufficient production capacity and overall balance between supply and demand. However, this year, due to the high price of raw materials, the new crown epidemic, the significant year-on-year increase in exports, and the continuous increase in fertilizer prices, the output has decreased compared with the same period of normal years. First, the overall output declined in the first half of the year. From January to June, China's chemical fertilizer output was 27.817 million tons (reduced in pure form, the same below), a year-on-year decrease of 2.1%. In terms of varieties, the output of nitrogen fertilizer, phosphate fertilizer, and potash fertilizer was 19.413 million tons, 4.882 million tons, and 3.46 million tons, respectively, representing an increase of 2.8%, a decrease of 17.2%, and a decrease of 2.1% year-on-year. The output of phosphate fertilizers dropped significantly. Second, production and circulation inventory has decreased. At the beginning of August, the inventory of urea production enterprises was about 246,000 tons, a year-on-year decrease of 249,000 tons, which was at a relatively low level; the inventory of diammonium phosphate production enterprises also decreased by 2.6% compared with the same period last year. In the circulation link, the overall inventory of fertilizers in the national supply and marketing cooperative system at the end of July decreased by 32.8% year-on-year, of which potash fertilizer decreased by 57.6% year-on-year. Some manufacturers report that the current unit price of fertilizers is relatively high, and many downstream distributors have reduced inventories compared with previous years. The third is the increase in the number of net exports of chemical fertilizers. From January to July, China’s cumulative export volume (physical volume) of chemical fertilizers was 2.01 million tons, a year-on-year increase of 39.7%; cumulative imports were 5.98 million tons, a year-on-year increase of 1.7%, of which the cumulative import of potassium chloride was 5.07 million tons, a year-on-year increase of 7.9%. It accounts for 84.8% of total fertilizer imports. The net export volume of chemical fertilizers was 14.03 million tons, a year-on-year increase of 66.2%. The increase in exports has reduced domestic fertilizer supply to a certain extent.