Thread Content
Currently, four factors are contributing to a positive trend in the domestic fertilizer industry. The fertilizer industry saw a significant increase in production, revenue, and profits, reaching a peak period of growth. First, Chinese agriculture is facing favorable development opportunities, with strong market demand for fertilizers. Second, rising prices of agricultural products have led to a rapid increase in fertilizer usage. The continuous rise in agricultural product prices has increased farmers’ incomes and boosted their enthusiasm for investing in agricultural production. On the production side, rising prices of energy and chemical raw materials, along with **stricter environmental regulations, have forced many small fertilizer factories to cease operations, thereby exacerbating the shortage of fertilizer products. Third, fertilizers are an industry that is currently **given priority for development. With the increasing emphasis on issues related to agriculture, rural areas, and farmers, the fertilizer industry will continue to receive policy support. Currently, the policies available to listed companies in the fertilizer industry generally bring more benefits than drawbacks. Fourth, changes in the competitive landscape between industrial and agricultural development in our country have directly led to a peak in the use of chemical fertilizers. On the one hand, fertilizer production requires a large amount of energy; the competition between industry and agriculture for energy exacerbates the energy shortage, leading to a sharp increase in fertilizer prices ； On the other hand, the development of the industry has enabled many fertilizer manufacturers to raise the quality of their products to international standards. Meanwhile, the high prices of international fertilizers have prompted Chinese companies to continue exporting a certain amount of high-quality fertilizers, even though export rebates have been replaced by export taxes. This further exacerbates the tight supply of fertilizers in the country. The supply and demand situation for natural gas, the main raw material for nitrogen fertilizers, is set to improve significantly. In recent years, China’s natural gas production has maintained strong double-digit growth. After the West-to-East Gas Pipeline came into operation, it **reduced the amount of natural gas supplied from Sichuan to other regions, alleviating the shortage of gas in that province.** The major natural gas discovery in Sichuan helps fertilizer plants increase their operating rates. Furthermore, the possibility of discovering more gas fields has increased. Currently, international natural gas prices are showing a steady decline. Urea is the most important type of fertilizer, and like other fertilizer products, it is experiencing peak growth in the industry. It can be predicted that the period of high profitability in the urea industry will last for at least 10 years. The period from 2007 to 2015 was the peak of prosperity for the urea industry. The total global urea production and demand need to be balanced, but there are significant differences across different regions ； International urea prices are on the rise. The urea industry in our country is developing rapidly. Urea prices were bullish from 2007 to 2008. Domestic urea prices are 35% lower than international levels, indicating that there is still room for price increases in the domestic market. At the same time, urea is derived from oil, coal, and natural gas, and the current global shortage of these resources cannot be alleviated within 10 years, as new alternative energy sources cannot be developed in that time frame. Therefore, in the long term, it will be difficult to increase the supply of urea effectively, while demand will rise at a significantly faster pace than supply, driven by China’s population growth and the increasing need for fertilizers on land that has been cultivated for over a thousand years. Building on the strong trend from earlier in the year, international urea prices have continued to rise since February this year; the current market price ranges around $340 per ton, with the lowest prices still above $270. Export tariffs and high sulfuric acid prices are detrimental to the phosphate fertilizer industry. For resource-based products, **export tariffs may be increased in the near future, and it is expected that diammonium phosphate will be no exception. Due to the abundance of red and black soils in China, the demand for phosphate fertilizers is relatively low compared to production capacity, resulting in a certain dependence on the international market; an increase in export tariffs would have a negative impact on it. In addition, the price of sulfuric acid has risen significantly since the beginning of this year, driving up the cost of diammonium phosphate raw materials. Therefore, the phosphate fertilizer industry is not viewed positively. The potash fertilizer industry remains promising. China has a large amount of acidic red soil, and these soils are severely deficient in potassium; as a result, the demand for potassium fertilizers will remain high for a long time. The potassium fertilizer industry holds promising prospects in the long term. In particular, potash fertilizers derived from salt lakes offer significant resource advantages and represent the leading players in this industry, so they also have promising future prospects.