However, such a prosperous situation did not last long. By the end of March, with the end of stocking of major diammonium use areas in the northeast, northwest, etc., market sales have clearly become flat. Monoammonium phosphate is also falling due to the reduction in the operating rate of compound fertilizer companies, or the conversion of production, the market transaction volume is gradually decreasing, and the price is gradually falling. In April, the situation of oversupply in the ammonium phosphate market has been fully revealed. With the domestic market entering the off-season and the international market still closing its doors, the development of the ammonium phosphate industry is under tremendous pressure.
Poor domestic sales
As we all know, chemical fertilizers are products that are produced year-round and seasons, and ammonium phosphate is also limited by the area of ​​application and application habits, and its seasonality is stronger. According to past practice, the ammonium phosphate market will welcome an off-season sales season after the end of the spring plough and fertilizer in the northeast, northwest and north China. But this year's situation seems even more severe.
According to incomplete statistics, from January to March this year, the output of phosphate fertilizer was approximately 2.6 million tons (equivalent to pure), together with 3.32 million tons of original inventory (refined) last year, and the total resources amounted to 5.92 million tons (equivalent). Due to the relatively low prices this year, the application amount of ammonium phosphate during spring farming should be the largest in the past. The actual application amount will be 3.3-3.5 million tons, minus the 659,600 tons of total exports of ammonium phosphate in January-February, and the remaining phosphorus will be converted. The amount of ammonium is at least about 1.5 to 2 million tons. Aside from the data, from the current situation where distributors in the Northeast and other places started selling ammonium phosphate, it can be known that there are still many leftovers in the northern market after the spring plowing. The current ammonium phosphate production enterprises have started to reduce the operating rate, it is understood that many ammonium phosphate companies to maintain the driving rate of 70% -80%. Even so, the monthly output of ammonium phosphate will be around 700-800,000 tons.
Since most of the northeast and northwest regions are planted for one season, ammonium phosphate will not be applied until the start of the next year's fertilizer preparation. The sales of ammonium phosphate will be concentrated in areas such as Hebei, Shandong, and Henan. At present, there are nearly half a year from the autumn cropping period in these regions. However, Guizhou Guokai Zhu, Marketing Director of Guizhou Kaifeng Fertilizer Co., Ltd., said that more than 2 million tons of ammonium phosphate fertilizer in some areas in the summer and autumn seasons could not digest the ammonium phosphate production capacity accumulated in the off-season.
The situation of serious oversupply in the market is that the production enterprises will have to restrict production, reduce production, and stop production. At present, many ammonium phosphate production companies choose to reduce the load, and some companies choose to stop production and maintenance. “Since the recent market pressure is relatively large, Six Nations Chemicals will suspend production and repair of some of the devices in the near future, and the period may be about half a month,†Liu Xiaowang, deputy general manager of Anhui Six Kingdoms Chemical Marketing Co., told the reporter. Wang Fang, deputy general manager of sales company of Guizhou Shengfu Group Co., Ltd., said: “If the operating rate is too low, the average cost per ton of product will be very high, and it is extremely uneconomical. The large state-owned enterprises have production and business plans, have corresponding assessment tasks, and must not produce. Many companies are now very confused."
A salesman of an ammonium phosphate production company told the reporter that due to the potential losses caused by high-priced raw materials last year, it will become a real loss this year. Large-scale ammonium phosphate enterprises are facing large losses, and the severe oversupply and long-term sales in the future market. Poor and overstocked inventory will further seriously affect the survival and development of ammonium phosphate production enterprises.
Looking for a way out of season to become "required"
In the domestic market, sales will enter the off-season, and there will be a serious oversupply in the market outlook. The choice of companies for export seems to be a small choice. Li Zhenqi, head of the sales department of Hubei Dagukou Chemical Co., Ltd., has a clear-cut position. Under the current circumstances, it is necessary for enterprises to prepare for export, and losses are always stronger than parking. Wang Fang also said that at present, most of the ammonium phosphate companies should be prepared to export part of the price, even if the international market price is not high. If you rely entirely on the domestic market for sales, there will be more market supply and the possibility of a domestic price war will increase.
Under the current 110% export tariff for the established peak season, domestic ammonium phosphate exports are almost impossible. The tariff adjustment will not begin until June 1st. However, under the huge sales pressure, many manufacturers are actively moving to the port to prepare for the coming export.
At present, the international market of diammonium phosphate has FOB340-360 US dollars. Experts in the industry have calculated that the cost of diammonium phosphate produced using low-priced raw materials this year should be around RMB 2,000-2,200. It should be exported at the export tax rate of 10% in the off-season. There is still a certain amount of profit, and the worst can also protect the cost. However, if it is diammonium produced from high-priced raw materials last year, it will suffer greater economic losses. "Although some companies in the international market can now accept the price of ammonium phosphate, but after entering in June, the price of the international market may continue to decline, the following may be less than 300 US dollars." Luan Guozhuo is not optimistic about the outlook for exports. “At present, India, Vietnam and other markets still have a part of demand. At that time, the price is lower and then it must be exported, so as to ensure the normal production of enterprises.†said Wang Fang.
At present, most of the ammonium phosphate producers place their hopes on exports. At the same time, they also expect the country to release tariff policies earlier and faster. After all, there is still more than a month left before the original off-season export portal opens.
According to the reporter’s understanding, the China Phosphate Fertilizer Industry Association and the China Sulfuric Acid Industry Association reported to Premier Wen Jiabao and relevant government agencies after the two sessions “Report on requesting resolution of the plight of the phosphate fertilizer industryâ€. On March 18, the report was approved by Premier Wen: Please The Development and Reform Commission studied with the Ministry of Industry and Information Technology and the Ministry of Finance. Afterwards, the ministers of Li Yizhong, Ou Xinxuan and Miao Wei of the Ministry of Industry and Information Technology also gave instructions.
From the end of February to the beginning of March, the Ministry of Commerce and the China Petroleum and Chemical Industry Association formed a joint investigation team to investigate fertilizer issues in Shandong, Shanxi, and Henan. The China Phosphatic Fertilizer and Nitrogen Fertilizer Industry Association also participated in the survey. In the first half of April, the “Report on Chemical Fertilizers†formed on this basis received important instructions from the leaders of the State Council.
It is understood that the two reports involved “inclining chemical fertilizers to storage companiesâ€, “moderately increasing fertilizer exportsâ€, “reducing off-season export tariffs and appropriately extending off-season time,†“establishing national fertilizer special funds,†and “high The cost of ammonium phosphate to give appropriate financial subsidies" and other related recommendations. Wu Xiyan, chairman of the China Phosphate Fertilizer Industry Association, said that the Phosphate Fertilizer Association represents the industry on behalf of the industry and is currently waiting for responses from relevant government agencies.
Many industry personnel interviewed have said that they are not optimistic about the market outlook. If there is no major change in national policies, the ammonium phosphate industry will be difficult to advance this year, or this year will be the most difficult year for the development of ammonium phosphate industry.
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