A stunning comeback? The bidding for this project has failed again!

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A stunning comeback? The bidding for this project has failed again! Author/Source: China Fertilizer Network Date: 2019-07-26 Clicks: 9 It’s indeed surprising that the bidding process for potassium sulfate in Fujian’s tobacco industry has once again faced so many challenges! 　　First, let’s briefly review the specific process of this tender. The first tender was issued on June 6, with a requested quantity of 33,530 tons. The reserve price for first-class products was 2,850 yuan per ton, while the reserve price for top-quality products was 2,964 yuan per ton. Joint bids were not accepted, and bidders were required to have an annual production capacity of no less than 100,000 tons ； The bid opening took place on June 28; the bidding process was terminated due to insufficient number of valid bidders, i.e., it was a failed bid ； The second tender was issued on July 3, with little change in the details ； On July 24, the second bidding round was held, but once again the bidding process was terminated due to fewer than three valid bidders (no bids received). 　　Why is it called a “stunning turnaround”? The notice of no successful bidder was released today, on July 25th. However, after the bidding process concluded yesterday, the preliminary results that came out indicated that the bid price for Luoyang Potash High-quality grade (52%) was 2,910 yuan per ton, the bid price for Migo High-quality grade (52%) was 2,964 yuan per ton, and the bid price for Qingshang High-quality grade (52%) was also 2,964 yuan per ton. Based on the principle of selecting the bidder with the lowest bid price, Guotou Luoyang Potash won the bid. ”With this twist in the plot, who will be happy and who will be sad? 　　It is understood that the same three companies were involved in the first bidding round as well; the bid failed back then because Guangdong Michael did not meet the eligibility requirements, while this time it was because Huizhou Qingshang did not meet those requirements. Both failures occurred with companies based in Mannheim – what does that suggest? Attentive industry insiders will also notice that potassium sulfate from Qinghai’s water-salt system was not included in either bidding process. What does this imply? (Note: “Fall short” is an idiom from the Northeastern dialect, meaning to fail to perform well at a critical moment or when dealing with something important.) ) Well, the author has already asked many questions; now I’ll start answering them myself. 　　First, there have been repeated failures in bidding, and reversals have also occurred; in such a situation, who is happy and who is sad? The author believes that there are many happy people, while those who are sad can be said to be none, or at least there will be none. Most of those who are happy about this situation are people who don’t mind the consequences; after all, the reason for the failure to secure bids was that there weren’t enough bidders – which indicates that people don’t agree with the bid thresholds set, or else there isn’t such strong pressure to meet inventory demands through tobacco orders. In any case, this is beneficial for the potassium sulfate market. So, instead of fearing further failures to secure bids, they actually worry that others might not be aware of this! As for Luojia, which was interested in winning the bid, and Fujian Tobacco, which can be considered to have lost, these two failures to win bids actually don’t mean much beyond just wasting time; at worst, things will be pushed to the competitive negotiation stage, and the final outcome won’t differ significantly from the initial expectations. 　　Second, why do the Mannheim manufacturers keep failing? Why are there no manufacturers from Qinghai? What does this mean again? This can be viewed from two perspectives. From a market perspective, the situation for potassium sulfate isn’t exactly good; the recent price spikes have subsided, and there has been a slight decline in some high-end prices recently. However, there isn’t much pressure involved. Apart from potassium chloride, whose price situation is relatively weak and thus creates greater pressure, a decrease in demand isn’t a major issue at present. There is already a certain level of demand, and most manufacturers currently don’t have any inventory. Additionally, the overall production capacity in this industry is low. Whether it’s due to intentional actions or a lack of attention, the two “mistakes” made by Migo and Qingshang actually reflect that the manufacturers of potassium sulfate are not willing to accept lower prices, and they still have considerable confidence. As for the reason why manufacturers in Qinghai are not participating, it is similar: even though market prices are much lower than the bid thresholds, it might seem that they should be eager to win bids. However, according to Zhongfei Net, most of these manufacturers in Qinghai have low production rates at present; their orders from long-term clients are stable, and basically all of them face supply shortages. Therefore, they do not currently feel much pressure to compete for tobacco orders. 　　The other is the rule angle. In fact, whether it’s potash or water-soluble salts, and not only in the case of tobacco produced in Fujian, potassium sulfate manufacturers have always had complaints regarding the rules governing tenders for potassium sulfate used in tobacco production – such as high bid deposits, as well as the financial pressure of having to pay for goods before receiving them. Moreover, in this tender in Fujian, although it is divided into 5 smaller packages, the entire project must be won by a single manufacturer; this means that one company will reap the benefits while others can only watch. In addition, the manufacturer must have a production capacity of over 100,000 tons. Taking into account both this capacity requirement and the need for an appropriate location, very few manufacturers are capable of competing in this tender. Thus, the underlying reasons for auctions failing often reflect the mistakes made by the tobacco companies themselves. 　　In any case, another year of failed bids has, to some extent, benefited the potassium sulfate market; it can be considered a positive factor that provides support. Tobacco companies have already begun to align their pricing more closely with market conditions. Moving forward, it is equally important to not only go further in tying prices to market trends but also to adjust the rules appropriately to demonstrate a greater commitment to cooperation. For potassium sulfate manufacturers, it’s best not to focus solely on the tobacco tendering opportunities at the moment; although there may be some advantages in this area, they should not forget the additional pressures that the overall market might face in the future. Zhongfei Net believes that in the short term, the market for potassium sulfate may see a slight decline at the higher end levels, with prices rising again at the lower end; overall, however, there won’t be any significant changes ； There are many factors to keep an eye on regarding the long-term trend; please pay close attention to future original articles on Zhongfei Network. 　　(Adu)