In 2005, many
Fertilizer companies experienced the impact of price increases on raw materials, under the double pressure of price restrictions. Fortunately, at the same time, there are many favorable factors that offset the gains and losses. Last year, fertilizer companies have not been 'squeezed'. For fertilizer companies, 2005 is still a 'big year'. So, will this kind of double squeeze suffered by fertilizer companies this year be mitigated? According to the author's observation, for chemical fertilizer companies, the double squeeze of this year's weak demand and rising raw material prices may be heavier than last year.
In 2004, China's fertilizer production and demand both hit a record. The output of chemical fertilizers reached 45,777,700 tons (refined), and the amount of fertilizer used in agriculture reached 46.37 million tons. Domestic demand, coupled with soaring exports, has created a situation in which the domestic chemical fertilizer market is in short supply. However, from July 1, 2005, after the country imposed a 30% tariff on urea exports, urea once appeared zero exports. Although the country subsequently lowered its export tariffs to 15%, fertilizer exports remained limited. Relevant data show that the annual chemical fertilizer output in 2005 increased by more than 3 million tons from the previous year, and the inventory of enterprises and supply and marketing systems has increased, while the increase in domestic fertilizer consumption has declined. It is understood that China's new fertilizer production this year will exceed 4 million tons, and it is expected that the total amount of fertilizer will exceed 51 million tons, and the
Nitrogen Fertilizer market will exceed supply. The self-sufficiency rate of phosphate fertilizer in China has reached 94.3% in 2004. After the new plant is put into operation this year, it will be completely self-sufficient, and there may be a situation where supply exceeds demand. Therefore, in addition to the large gap in potash fertilizer this year, there is no shortage of fertilizer in the domestic market. This change in supply and demand makes this year's fertilizer prices even if the country is not open, the possibility of a substantial increase is not great.
At the same time, the high production costs of chemical fertilizer companies cannot be changed. Taking nitrogen fertilizer as an example, nitrogen fertilizer production enterprises using coal as raw materials in China account for about 70% of the total number of enterprises. Most of these companies use anthracite lump coal. At present, the factory-paying price of anthracite lump coal has exceeded 700 yuan per ton, and the cost per ton of urea has exceeded 1,400 yuan, based on 1 ton of urea-consuming 1.5-ton coal. The oil head urea cost more than 1,500 yuan per ton, and gas head urea costs more than 1,250 yuan per ton. At the end of 2005, natural gas prices began to increase in an all-round manner, and the use of gas for chemical fertilizers increased by 50 to 100 yuan per 1,000 cubic meters. The national coal ordering meeting that has just concluded has received news that under the premise of maintaining the overall stability of coal prices, relevant state departments will cancel temporary intervention measures for coal prices. In 2006, coal prices will be independently determined by coal and power companies. This change may bring about an increase in the price of electricity and coal for chemical fertilizers. These all clearly tell the fertilizer companies that it is not easy for this year's production costs to come down.
For such a situation, the fertilizer production enterprises must be fully prepared to formulate ways to ease the double squeeze in advance. Otherwise, after going through the good years of the first two years, a considerable number of fertilizer companies may have to enter 'small age'.
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