Nitrogen Fertilizer Industry Defines the Next Steps for Development

Sinochem’s new network news, as the opening year of the “12th Five-Year Plan”, has achieved good results in the nitrogen fertilizer industry in 2011, but under the background of the declining international economic situation, the industry will also face more challenges. On November 29th, at the Second Session of the Standing Committee of China Nitrogen Fertilizer Industry Association held in Beijing, the delegates believed that structural adjustment and scientific and technological innovation will be the core of China's nitrogen fertilizer industry in the future.

From January to October of this year, the country's nitrogen fertilizer production was 32.22 million tons (refined), an increase of 4.5% year-on-year. The association expects annual domestic nitrogen fertilizer production will reach 38.6 million tons. The overall efficiency of nitrogen fertilizer companies this year is better than last year, but the profit rate is still at a low level. From January to September, the main business income of the nitrogen fertilizer industry was 215.17 billion yuan, an increase of 34.6% year-on-year; the profit was 9.36 billion yuan, an increase of 350.3% year-on-year, and the sales margin was about 4.35%. The overall industry benefit is expected to decline in the fourth quarter.

"Insist on chemical fertilizers, get out of chemical fertilizers, and get out of a new way of fattening." At the meeting, Li Shousheng, chairman of the China Nitrogen Fertilizer Industry Association, emphasized. He said that in 2012 the global economy is at a very dangerous juncture. There are also many uncertain and unstable factors in the domestic economy. The domestic demand structure has changed; energy and resource constraints, excess production capacity, and macro-control policies are facing challenges. The focus of the industry's work next year will be on vigorously advancing technological advancement, accelerating industrial restructuring, focusing on energy conservation and emission reduction, and innovating agrochemical services.

Zhang Rong, secretary-general of the Nitrogen Fertilizer Association, said in an analysis of the urea market this winter and next spring, according to this year's production situation, it is estimated that the domestic urea market will supply 30.81 million tons from October 2011 to April 2012, and the total domestic demand for urea will be 31.65 million tons. Combined with the China Association of Agricultural Assets Circulation, the end of September social inventories provided by the Association for the end of September was 5.38 million tons. The total supply of urea was slightly higher than the same period of last year. It is expected that the supply and demand of urea will be basically balanced this winter and next spring. She believes that the tight supply of natural gas, the high price of coal, the change in export tariffs next year, the impact of short-term funding on light reserves, and the impact of urea price trends on the later operating rate will be the major factors affecting the market.

Despite the current crisis in the domestic nitrogen fertilizer industry, Tan Fuyuan, chairman of Jiangsu Linggu Chemical Co., Ltd., believes this is both a challenge and an opportunity. "Regardless of how the country's macroeconomic policies change, the key to development is still the company itself. Continuously strengthening its own management, promoting technological progress, and improving market competitiveness will be invincible."

After the meeting, the reporter interviewed Zhang Rong, Secretary-General of the Nitrogen Fertilizer Association, about the electricity price adjustment policy just announced. She said: “Since December 1, the national average selling price will increase by 3 cents per unit, which will increase the cost per ton of urea production by 30. ~40 yuan or so, some support for urea prices, but there may be some companies stop production due to losses. Nitrogen Fertilizer Association will pay close attention to changes in operating rates to more accurately assess the impact of this adjustment policy."