Recently, international fertilizer prices have risen sharply, and prices of domestic fertilizer companies have continued to rise in the secondary market. During the year, the domestic chemical fertilizer prices rose or fell. What is the industry outlook? In this regard, analysts hold different views, some analysts believe that fertilizer prices will run high, while others believe that the increase is limited, and more consistent view is that China's fertilizer industry is entering a new round of integration.
International fertilizer supply and demand tensions Recently, international fertilizer prices have risen sharply, especially with DAP and urea. The price of the DAP in the United States of Tampa rose from 256 US dollars/ton in early January this year to 422 US dollars/ton in the end of March, an increase of up to 65%. U.S. Gulf of Mexico urea prices have risen from 220 U.S. dollars/ton in early November last year to 362 U.S. dollars/ton in the end of March this year, and the increase has also reached 65%.
Analysts believe that the increase in fertilizer prices on the one hand is due to the continuous increase in planting area caused by the rise in international food prices. In recent years, due to the international development of biofuels for ethanol fuel, the demand for corn has grown rapidly. The sharp increase in corn prices has driven the expansion of corn planting area, which has driven the increase in demand for fertilizers. On the other hand, the rising prices of international natural gas and other raw materials and the US policy of limiting production and insurance prices for DAP, as well as force majeure, have also contributed to the loss of production capacity.
Everbright Securities analyst Liu Jun mentioned in his report that on October 11, 2006, the Mosaic plant of Fastina Phosphate Fertilizer Plant of the Mosaic Company of the United States exploded and the ammonia plant had to be shut down, causing its 1.2 million tons capacity to operate at low load. Mosaic was established by the merger of Cargill and IMC in the United States, with a total capacity of 12 million tons per year. It is the largest diammonium phosphate producer in the world. The company reduced its sales plan for phosphate fertilizers in fiscal 2007 to 8.5-9.3 million tons. Therefore, in the United States, the production of phosphate fertilizers in 2007 was controlled at about 12 million tons, which was about 1.3 million tons lower than that in 2006, resulting in the current tight supply and demand of DAP in the international market. According to statistics from the American Fertilizer Association, the inventory of phosphate in the United States continued to decline in January, and by January 31, the inventory of DAP/MAP was only 722,000 tons.
Advantages and Disadvantages of the Domestic Fertilizer Industry In the domestic chemical fertilizer industry, half of the domestic fertilizer industry has linkages with international prices. On the other hand, it is constrained by domestic policies and markets. The analysts have different views on their trends.
Liu Jun believes that as the world enters the peak season for fertilizer consumption, international prices may continue to rise. The increase in international fertilizer prices will also boost the domestic fertilizer prices. At the same time, with the advent of spring plowing and the arrival of the peak of fertilizer, domestic prices will follow international prices, and this year's domestic fertilizer prices are expected to be at a higher level than in 2006.
Recently, the China Nitrogen Fertilizer Industry Association reported to the State Development and Reform Commission on the report on the state of the large and medium-sized nitrogen fertilizer enterprises' policy on the price of fertilizers, and proposed to abolish the urea price control.
Analyst Li Guohong of Galaxy Securities believes that at current prices of more than 2,200 yuan/ton international urea, canceling preferential policies to liberalize urea prices is very beneficial to fertilizer manufacturers, because their sales prices can be increased by more than 500 yuan/ton, and the cancellation of preferential offers The increase in the cost is only RMB 250/tonne. Therefore, once the policy is implemented, the fertilizer production enterprises will benefit a lot.
However, most analysts take a cautious view that domestic growth is limited. More research reports show that analysts are worried about oversupply of domestic chemical fertilizers; on the other hand, the government suspends export tax rebates for major fertilizers such as urea, monoammonium phosphate and diammonium phosphate, and imposes seasonal tentative tariffs on urea exports to a certain extent. Improve the export threshold of enterprises.
Deng Yong, an analyst at Haitong Securities, said that the first half of the fertilizer industry's performance will be better than expected. Judging from the current situation, with stable prices in the first quarter and rising prices in the second quarter, it is expected that the profit of the fertilizer industry in the first half of the year will increase year-on-year.
The industry has entered a new round of consolidation. The fertilizer industry is one of the few industries in China that have not yet been fully integrated. With the intervention of foreign companies, the production capacity of chemical fertilizers in China continues to rise, and the competition in the fertilizer industry is increasingly intensifying. A variety of realities, such as the gradual deepening of “conversion†and “combination,†have shown that the Chinese fertilizer industry is entering a new round of integration.
Experts believe that China's phosphate fertilizer industry through the "mineral fertilizer combined" "mineral acid combination" in recent years than the integration of nitrogen fertilizer. Six Country Chemicals (12.62, 1.15,10.03%) (600470) has a capacity of 1 million tons of diammonium phosphate, currently ranked third in the industry, and is the only listed company with diammonium phosphate. Analysts said that in 2006 the company made breakthroughs in the integration of phosphate rock resources and the introduction of wet-process phosphoric acid purification technology. The continued acquisition of phosphate rock resources and the upgrading of wet-process phosphoric acid technology will become an opportunity for the company's major development.
Recently, Sichuan Chemical Holdings Group increased its holdings in Lutianhua (13.06, 0.00, 0.00%) (000912) 34,710,000 shares of state-owned shares, and stated that it will increase resource integration efforts to further increase the profitability of listed companies and realize the state-owned assets of Sichuan Province. The Committee has established Sichuan Chemical Industry Holding Group as a leading chemical company in Sichuan, building an important base for large-scale nitrogenous fertilizers and chemical industries throughout the country, effectively integrating chemical resources, making it bigger and stronger, and striving to build China's first-class large nitrogen fertilizer base.
Beyond the main business, there is a view that due to the limited space for development of the industry, fertilizer companies should move towards diversification. Such as Yuntianhua (19.96, 0.06, 0.30%) (600,096) as a gas head urea enterprise, using its own gas source advantages, the production of glass fiber, poly formaldehyde and other products, in order to broaden the company's profit sources. Another coal urea production company Hualu Hengsheng (17.98,0.12,0.67%) (600426) invested RMB 140 million in 2006 to expand a DMF production line. In addition, with the completion of the 200,000 tons/year acetic acid project, urea was eliminated. The contribution of other products to the company's revenue and profits will increase.
International fertilizer supply and demand tensions Recently, international fertilizer prices have risen sharply, especially with DAP and urea. The price of the DAP in the United States of Tampa rose from 256 US dollars/ton in early January this year to 422 US dollars/ton in the end of March, an increase of up to 65%. U.S. Gulf of Mexico urea prices have risen from 220 U.S. dollars/ton in early November last year to 362 U.S. dollars/ton in the end of March this year, and the increase has also reached 65%.
Analysts believe that the increase in fertilizer prices on the one hand is due to the continuous increase in planting area caused by the rise in international food prices. In recent years, due to the international development of biofuels for ethanol fuel, the demand for corn has grown rapidly. The sharp increase in corn prices has driven the expansion of corn planting area, which has driven the increase in demand for fertilizers. On the other hand, the rising prices of international natural gas and other raw materials and the US policy of limiting production and insurance prices for DAP, as well as force majeure, have also contributed to the loss of production capacity.
Everbright Securities analyst Liu Jun mentioned in his report that on October 11, 2006, the Mosaic plant of Fastina Phosphate Fertilizer Plant of the Mosaic Company of the United States exploded and the ammonia plant had to be shut down, causing its 1.2 million tons capacity to operate at low load. Mosaic was established by the merger of Cargill and IMC in the United States, with a total capacity of 12 million tons per year. It is the largest diammonium phosphate producer in the world. The company reduced its sales plan for phosphate fertilizers in fiscal 2007 to 8.5-9.3 million tons. Therefore, in the United States, the production of phosphate fertilizers in 2007 was controlled at about 12 million tons, which was about 1.3 million tons lower than that in 2006, resulting in the current tight supply and demand of DAP in the international market. According to statistics from the American Fertilizer Association, the inventory of phosphate in the United States continued to decline in January, and by January 31, the inventory of DAP/MAP was only 722,000 tons.
Advantages and Disadvantages of the Domestic Fertilizer Industry In the domestic chemical fertilizer industry, half of the domestic fertilizer industry has linkages with international prices. On the other hand, it is constrained by domestic policies and markets. The analysts have different views on their trends.
Liu Jun believes that as the world enters the peak season for fertilizer consumption, international prices may continue to rise. The increase in international fertilizer prices will also boost the domestic fertilizer prices. At the same time, with the advent of spring plowing and the arrival of the peak of fertilizer, domestic prices will follow international prices, and this year's domestic fertilizer prices are expected to be at a higher level than in 2006.
Recently, the China Nitrogen Fertilizer Industry Association reported to the State Development and Reform Commission on the report on the state of the large and medium-sized nitrogen fertilizer enterprises' policy on the price of fertilizers, and proposed to abolish the urea price control.
Analyst Li Guohong of Galaxy Securities believes that at current prices of more than 2,200 yuan/ton international urea, canceling preferential policies to liberalize urea prices is very beneficial to fertilizer manufacturers, because their sales prices can be increased by more than 500 yuan/ton, and the cancellation of preferential offers The increase in the cost is only RMB 250/tonne. Therefore, once the policy is implemented, the fertilizer production enterprises will benefit a lot.
However, most analysts take a cautious view that domestic growth is limited. More research reports show that analysts are worried about oversupply of domestic chemical fertilizers; on the other hand, the government suspends export tax rebates for major fertilizers such as urea, monoammonium phosphate and diammonium phosphate, and imposes seasonal tentative tariffs on urea exports to a certain extent. Improve the export threshold of enterprises.
Deng Yong, an analyst at Haitong Securities, said that the first half of the fertilizer industry's performance will be better than expected. Judging from the current situation, with stable prices in the first quarter and rising prices in the second quarter, it is expected that the profit of the fertilizer industry in the first half of the year will increase year-on-year.
The industry has entered a new round of consolidation. The fertilizer industry is one of the few industries in China that have not yet been fully integrated. With the intervention of foreign companies, the production capacity of chemical fertilizers in China continues to rise, and the competition in the fertilizer industry is increasingly intensifying. A variety of realities, such as the gradual deepening of “conversion†and “combination,†have shown that the Chinese fertilizer industry is entering a new round of integration.
Experts believe that China's phosphate fertilizer industry through the "mineral fertilizer combined" "mineral acid combination" in recent years than the integration of nitrogen fertilizer. Six Country Chemicals (12.62, 1.15,10.03%) (600470) has a capacity of 1 million tons of diammonium phosphate, currently ranked third in the industry, and is the only listed company with diammonium phosphate. Analysts said that in 2006 the company made breakthroughs in the integration of phosphate rock resources and the introduction of wet-process phosphoric acid purification technology. The continued acquisition of phosphate rock resources and the upgrading of wet-process phosphoric acid technology will become an opportunity for the company's major development.
Recently, Sichuan Chemical Holdings Group increased its holdings in Lutianhua (13.06, 0.00, 0.00%) (000912) 34,710,000 shares of state-owned shares, and stated that it will increase resource integration efforts to further increase the profitability of listed companies and realize the state-owned assets of Sichuan Province. The Committee has established Sichuan Chemical Industry Holding Group as a leading chemical company in Sichuan, building an important base for large-scale nitrogenous fertilizers and chemical industries throughout the country, effectively integrating chemical resources, making it bigger and stronger, and striving to build China's first-class large nitrogen fertilizer base.
Beyond the main business, there is a view that due to the limited space for development of the industry, fertilizer companies should move towards diversification. Such as Yuntianhua (19.96, 0.06, 0.30%) (600,096) as a gas head urea enterprise, using its own gas source advantages, the production of glass fiber, poly formaldehyde and other products, in order to broaden the company's profit sources. Another coal urea production company Hualu Hengsheng (17.98,0.12,0.67%) (600426) invested RMB 140 million in 2006 to expand a DMF production line. In addition, with the completion of the 200,000 tons/year acetic acid project, urea was eliminated. The contribution of other products to the company's revenue and profits will increase.