544,700 tons – Compound fertilizers bring clarity

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544,700 tons of compound fertilizers – The market is seeing some clarity. Author/Source: China Fertilizer Network. Date: 2019-09-03. Clicks: 5. As September arrives, the autumn fertilizer market enters its final phase; companies are shipping products while distributors are stocking them up, with activity at a high level. However, compared to the peak season, the compound fertilizer market is much less active at this stage. In most areas, there have been no real replenishment efforts, and the market atmosphere is one of caution and stagnation. Although there is still some remaining demand in the latter part of the month, it is not enough to sustain the compound fertilizer market. Just in recent years, as the domestic compound fertilizer market seemed to be at an end, the export market appeared to see a glimmer of hope. At the end of last year, the **Ministry of Finance issued the detailed rules for import and export tariffs for 2019, stating that starting from the beginning of that year, the export tariff on nitrogen-phosphorus-potassium compound fertilizers would be reduced from 100 yuan per ton based on a volume-based calculation in 2018 to zero tariffs. For this reason, from January to July 2019, China’s exports of nitrogen-phosphorus-potassium compound fertilizers totaled 544,700 tons, representing a 216.1% increase on a year-on-year basis. The total export value amounted to 172 million US dollars, an increase of 143.5% compared to the previous year. First, boost the domestic market. In recent years, the compound fertilizer market has become increasingly difficult to operate in, and it is also growing more sluggish. Enterprises are facing pressures related to costs, sales volume, and production capacity. Distributors, on the other hand, are struggling to survive. Apart from insufficient downstream demand, the various problems that have arisen in the traditional compound fertilizer market over the years have also hindered its development. The surge in the export volume of compound fertilizers can, on the one hand, help stabilize the domestic compound fertilizer market, and on the other hand, assist companies in finding alternative ways to survive in the future. However, at present the export prices are still lower than the import prices, so relying solely on price competition to increase sales is not a sustainable strategy. Secondly, reduce production capacity pressure. Clearly, the total production capacity of compound fertilizers in our country has long been in a state of severe overcapacity; it is said that the overall utilization rate is less than 40%. The abolition of export tariffs at the beginning of this year not only helps to alleviate this overcapacity issue, but also enhances the international competitiveness of China’s compound fertilizer products to some extent. This, in turn, will directly contribute to improving the quality of domestic compound fertilizers. Particularly in an environment where competition in the domestic market is becoming increasingly fierce, the increase in exports may boost companies’ confidence in their brands. The international and domestic markets complement each other and bring mutual benefits. Finally, export **diversification**. According to data from China’s customs, from January 2019 to date, China has exported ternary compound fertilizer to over 90 countries and regions. The main export destinations are countries in Southeast Asia; the top three recipients of this fertilizer are Myanmar, the Philippines, and Vietnam ； In terms of places of origin, the goods mainly come from Yunnan, Fujian, Jiangsu, Hunan, and other regions. The implementation of the zero-tariff policy for fertilizer exports in 2019 will also boost the export of compound fertilizers to the countries and regions along the \"Belt and Road\" initiative; the population size and economic volume of these areas indicate a huge demand potential. In summary, given the ongoing weakness in the domestic compound fertilizer market, expanding the export market is undoubtedly one of the positive developments that can be hoped for. At present, exports of compound fertilizers are indeed showing a significant increase compared to the same period in previous years. However, improving the domestic compound fertilizer market cannot rely solely on exports; efforts must also be made on the supply and demand sides. If there is any part of our analysis and market data that you would like to know more about, you can call the consultation hotline at 0451-88001128. (Feng Hongyang)