Summary of the Work of the China Phosphate Fertilizer Industry Association in 2008

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2008 was an extraordinary year for the phosphate fertilizer industry. After the damage caused by snow and ice in the spring, the Wenchuan earthquake in Sichuan in May dealt another severe blow to the phosphate fertilizer manufacturers there. As the year came to an end, a global economic crisis ensued, pushing the phosphate fertilizer industry into a period of severe difficulties. Over the past year, all the staff members of the China Phosphate Fertilizer Industry Association have overcome difficulties such as a limited workforce and heavy workload. Guided by **theory and the important thought of “**, they have thoroughly implemented the Scientific Outlook on Development, continuously strengthened innovation and reform as well as self-improvement. By making full use of their professional strengths, coordination capabilities, and industry self-regulation functions, and adhering to the principle of \"serving **, serving the industry, and serving enterprises,\" they have carried out extensive and effective work in strengthening policy research and industry management, coordinating industry self-regulatory actions, actively reflecting the industry’s needs and enterprises’ challenges, and promoting the healthy development of the industry. As a result, they have achieved significant results and earned support and recognition from all sectors of society. The main tasks carried out by the permanent bodies of the China Phosphate Fertilizer Industry Association over the past year are summarized as follows: 1. Cooperating with relevant departments in the management of the industry, serving as a good advisor and assistant. 2008 was a year of many changes for the phosphate fertilizer industry, with rapid developments taking place within it. Taking advantage of their in-depth understanding of the industry, the staff of the association conducted thorough investigations into the key issues and challenges faced by the industry’s development. They promptly reported on these developments to the relevant authorities and put forward numerous constructive policy recommendations, providing strong support for macro-control as well as for the formulation of industry development plans and policies. In January, in order to encourage phosphorus-based compound fertilizer manufacturers to increase production and meet the needs for fertilizers during spring plowing, the association, in collaboration with the Price Department and the Price Inspection Department of the **National Development and Reform Commission, held a meeting in Beijing titled \"Meeting on Strictly Implementing Fertilizer Price Policies.\" It also issued an initiative to the entire industry calling for strict compliance with fertilizer price policies in order to ensure stability in the prices of phosphorus-based compound fertilizers, thus contributing to meeting the fertilizer needs for spring plowing. Meanwhile, in light of the rapid fluctuations in the prices of imported sulfur and the need to ensure domestic fertilizer supply, a dynamic monitoring and reporting system was established for key phosphate compound fertilizer manufacturers regarding their imports of sulfur and exports of such fertilizer products, thereby laying the foundation for providing data to relevant authorities in a timely manner. At the end of January, a report titled \"Report on the Impact of Extensive Rain and Snow in the South on China’s Phosphorus Fertilizer Production\" was submitted to relevant departments such as the National Development and Reform Commission. The difficulties faced by enterprises in terms of power supply, raw material supply, and product transportation were reported to these departments in a timely manner, which drew their attention. As a result, the production of key phosphorus fertilizer enterprises that were most affected, as well as the living conditions of their employees, were able to be restored promptly, ensuring an adequate supply of fertilizers for spring plowing. In February, in line with the requirements set out at the \"2008 National Television and Telephone Conference on Fertilizer Supply\" held by seven ministries and commissions to ensure proper fertilizer production and supply, efforts were made to urge enterprises to accelerate production, and at the same time coordinate with transportation agencies to deliver the products promptly to areas in the Northeast and North China that relied on fertilizers. This approach effectively ensured an adequate supply in the agricultural input market during spring, meeting the needs of agricultural production. At the beginning of March, in accordance with the requirements of the **National Development and Reform Commission and Heilongjiang Province**, the association issued a notice to relevant enterprises titled \"Notice on Organizing the Transport of Phosphorus-based Fertilizers to Heilongjiang Province\", and worked with the relevant authorities to arrange transportation plans to ensure a continuous supply of fertilizers for use in Heilongjiang Province during the spring season. In July, in order to reduce corporate production costs and thereby lessen the burden on farmers, the association submitted a proposal to the Foreign Trade Department of the Ministry of Commerce calling for a reduction or exemption of tariffs on imported synthetic ammonia, sulfuric acid, phosphate rock, and pyrite, as well as value-added tax at the import stage. It also provided a detailed breakdown of the decrease in product costs resulting from such tax reductions. And in August, the same information was reported to the Office of the Tariff Commission of the State Council. According to incomplete statistics, over the course of a year the association submitted more than 30 reports to the relevant authorities on the situation in the phosphorus compound fertilizer, sulfuric acid, and potassium fertilizer industries. At peak times, three different reports had to be prepared per week, so as to keep the officials in charge informed of the difficulties and problems facing these industries and to propose actionable policy recommendations. 2. Keep an eye on industry development trends to secure preferential policy support. Since 2007, China has achieved complete self-sufficiency in high-concentration phosphate fertilizers and for the first time experienced a net export volume; these exports accounted for over 20% of the global trade in phosphate fertilizers. Imports of diammonium phosphate no longer pose a threat to China’s industry, and exempting diammonium phosphate products from value-added tax can reduce the burden on enterprises, thereby lowering costs for farmers. Following repeated suggestions from the association, **a document exempting diammonium phosphate from value-added tax was finally issued in early January 2008. In recent years, China has had to import large quantities of sulfur each year to meet the growing demand associated with the development of high-concentration phosphate fertilizers. By 2007, China’s imports of sulfur accounted for 33.6% of the world’s total international trade in this commodity. However, due to changes in supply and demand, international sulfur prices rose from $79 per ton at the beginning of 2007 to $800 per ton by August 2008. The proportion of sulfur in the cost of diammonium phosphate increased from 15% to 55%, and the value-added tax on sulfur imports added nearly 600 yuan to the cost of diammonium phosphate per ton. The association continuously brought this issue to the attention of the relevant **authorities, calling for the abolition of value-added tax on sulfur imports.** The relevant authorities accepted the association’s recommendations and issued documents in May 2008 stipulating that value-added tax on sulfur imports would be exempted; merely this measure alone will save the phosphate fertilizer industry around 3 billion yuan in expenses throughout the year. After entering June, due to high fertilizer prices in the domestic market, farmers reduced their consumption. Distributors were also reluctant to stock up on fertilizers, worried about price fluctuations in the market and increased capital requirements. Meanwhile, traditional exports during the off-season became difficult to carry out owing to special tariffs, resulting in a sharp increase in production and inventory pressures for companies. At the recommendation of the association, the National Development and Reform Commission and the Ministry of Finance increased the summer stockpiling quota for diammonium phosphate by 1 million tons in July, provided interest subsidies for fertilizers held in such stockpiles, and gave preferential treatment to key producers of phosphatic compound fertilizers, thereby reducing the operational pressures on these enterprises. In August, after reaching a historical high of $800 per ton, international sulfur prices plummeted due to a sharp decline in demand from countries such as China and India. Within less than two months, the price dropped to $70 per ton. Leading phosphate fertilizer manufacturers held 1.5 million tons of sulfur at the higher price of over $70 per ton in order to maintain normal production, and there was also more than 3 million tons of products manufactured using this expensive raw material. In terms of market value, the industry suffered losses of over 15 billion yuan; even in the best-performing year, 2007, the industry only achieved profits of 7.6 billion yuan. In light of this situation, the association organized numerous meetings with enterprises to discuss possible solutions, and together with those enterprises, it submitted reports or made presentations to relevant authorities such as the leaders of the State Council, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Industry and Information Technology, and the Ministry of Commerce, in an effort to have the export restrictions on phosphate fertilizers lifted in order to save the industry. **The relevant authorities adopted the association’s suggestions and announced in November that export tariffs would be reduced from December 2008 to January 2009, thereby alleviating the survival crisis facing the industry. 3. Complete **other tasks assigned and entrusted. In March, I undertook the task of preparing the plans related to phosphate fertilizers at the request of the **Development and Reform Commission and the Ministry of Environmental Protection; I organized enterprises to work on these preparations and submitted the relevant plans to those two ministries in a timely manner. In November, in accordance with the requirements of the Ministry of Industry and Information Technology’s \"Urgent Notice on Submitting Key Projects Related to Enterprise Technological Implementation and Industrial Upgrading\", the relevant projects were submitted within the specified time frame. Since 2001, the association has been tasked by the Industrial Damage Investigation Bureau of the Ministry of Commerce with carrying out early-warning activities for the phosphate fertilizer industry. It provides data, offers insights into the industry’s conditions, and puts forward policy recommendations to help the relevant authorities safeguard the safety of this industry and regulate the domestic production as well as imports and exports of phosphate fertilizers and related products. In 2008, the association continued to devote significant human and material resources to monitoring data related to the production, sales, inventory, imports, exports, and profitability of high-concentration phosphorus fertilizers such as diammonium phosphate, ammonium phosphate, and NPK compound fertilizers, as well as 12 other related products including phosphate rock, pyrite, sulfur, and sulfuric acid. It also prepared monthly warning reports based on industry developments. Now, early warning reports have become an effective means of reflecting industry issues. Through processing by the Ministry of Commerce, they can be delivered directly to relevant central leaders in the form of internal documents, thereby enabling timely reflection of the industry’s key challenges and difficulties. 4. Provide active support to enterprises: Conduct thorough investigations and research to understand the difficulties and problems faced during their production and operations, engage in active communication, convey the enterprises’ demands, and assist them in overcoming practical challenges – all of which are part of the association’s regular duties. The association has established information platforms through initiatives such as the \"top leader project\" and the creation of a website, enabling interaction; it provides enterprises with technical and economic information as well as policy consultation services. Over the past year, these efforts have received unanimous praise from its member organizations. “Following the 5.12 Wenchuan earthquake, the association’s staff were concerned about the safety of enterprises in the disaster area. They made every effort to get in touch with phosphorus-based fertilizer manufacturers that were severely affected, such as Sichuan Yingfeng, Sichuan Hongda, and Sichuan Longmang. In addition to individual donations, the association, along with the Sulfuric Acid Association, allocated 200,000 yuan from its limited funds to donate to these three companies, contributing modestly to their reconstruction efforts after the disaster. 5. Organize enterprises to carry out the work of formulating or revising **standards. Phosphogypsum and industrial sodium fluosilicate are both by-products of the phosphate fertilizer industry. Establishing **standards will contribute to the healthy development of this industry. This year, the association organized relevant enterprises to actively participate in the formulation of standards regarding the emissions of pollutants from phosphogypsum, industrial sodium fluosilicate, and the phosphate fertilizer industry, so that these standard parameters are in line with the actual conditions of the industry ； With the development of the industry and technological progress, some of the specifications in the original **standards for diammonium phosphate and ammonium phosphate products are no longer suitable for current conditions. Following consultations with the **Standardization Committee, certain specifications for these two types of phosphates have been revised. 6. Through various forms such as discussions and seminars, stay informed about industry developments in a timely manner and promote industry exchanges and cooperation. In 2008, the international and domestic fertilizer markets were highly volatile. The association closely monitored market trends, organizing 7 seminars of various types to analyze problems and explore solutions. It also worked together with company leaders to report on industry developments or the difficulties encountered in production processes to the relevant authorities, in an effort to secure policy support. In May, the association held its 16th annual conference for the phosphate fertilizer and sulfuric acid industries as well as its 5th members’ representative meeting in Nanchang. At the meeting, President Wu Xiyuan summarized the profound changes that have taken place in the industry over the past four years, identified the main problems facing it, and set goals and requirements for the further development of the industry ； Secretary-General Xiuxue Feng delivered a work report on behalf of the Fourth Executive Council, summarizing the main achievements of the association’s permanent bodies over the past four years, which was recognized by the member organizations. The meeting also saw the exchange of advanced industry technologies, equipment, and management practices, and* the new members of the board of directors and the executive board were elected. At the end of October, the association’s annual meeting – the “Production and Sales Conference” – was held in Weifang. Despite a significant decline in corporate performance this year, especially in the second half of the year, the conference still attracted a large number of attendees; according to incomplete statistics, over 50,000 people visited the exhibition. The production and sales conferences have evolved from traditional sales events into business platforms that enable agricultural input professionals to obtain information on fertilizers, analyze the fertilizer market situation, explore new distribution models for agricultural inputs, and work toward promoting the healthy development of the industry. In addition to the traditional exhibitions, the association has also prepared three special seminars in response to the new changes and issues that have emerged in the industry this year, as well as the topics of concern to everyone. The first seminar is a focus session on the sulfur market; experts from institutions and companies such as the International Sulfur Institute (TSI), Dazhou City in Sichuan, Prism Corporation in Canada, ICEC, Sinopec, Sinochem Fertilizer, and the Qilu Petrochemical Research Institute conducted an in-depth analysis of the supply and demand situation of sulfur as well as its future trends ； In the second session, leaders from decision-making and regulatory agencies such as the Department of Economy and Trade of the National Development and Reform Commission, the Department of Crop Production of the Ministry of Agriculture, the Agricultural Development Bank, and the National Agricultural Technology Extension Center gave presentations on topics including the situation and policies regarding fertilizer production and distribution, the conditions in agriculture and rural areas, agriculture’s demand for fertilizers, and fiscal policies to support agriculture ； The third session focused on the conditions in the international and domestic phosphorus-based fertilizer markets. Experts and scholars from the International Fertilizer Association (IFA), Sinochem Fertilizer Company, China Agricultural University, Zolian Marine Transportation Company, China Chemical Mining Association, and Stanley Company delivered presentations on the world’s supply and demand situation and medium-term prospects, an analysis of the domestic fertilizer market, the potassium fertilizer demands of crops, the status of domestic resources for phosphorus-based fertilizer production, and the conditions in the international maritime shipping market. 7. Make efforts to promote exchanges and cooperation with international institutions and organizations. Since 2008, the association has continued to strengthen its exchanges and cooperation with industry organizations around the world. At the beginning of March, at the invitation of the Fertilizer Association of India (FAI), a delegation led by President Wu Xihyan and Vice President Zhang Yongzhi went on a mission; leaders from five companies, including Yuntianhua, Guizhou Hongfu, China-Arab Fertilizer, Anhui Tonghua Group, and Guangdong Zhanhua, also joined the trip. The delegation held talks and exchanges with the Fertilizer Association of India (FAI), the Indian Fertilizers Department, TATA Chemicals, Indian Potash Limited (IPL), Gujarat State Fertilizers and Chemicals Ltd. (GSFC), and Indian Farmers Fertilizers Corporation Ltd. (IFFCO). It was unanimously agreed that there are many opportunities for both countries to promote cooperation between their phosphate fertilizer industries, whether in terms of product trade or technical cooperation; the potential is great and the prospects for development are promising. Both sides agreed to the idea of establishing a \"forum\" to be held regularly. The China Phosphate Fertilizer Industry Association has maintained a partnership with the International Sulfur Institute (TSI) for over a decade. With significant changes in the international sulfur market in the past two years, both organizations have deemed it necessary to strengthen communication and cooperation as well as to exchange information promptly. In 2008, taking advantage of two opportunities to organize large-scale industry events, the China Phosphate Fertilizer Industry Association invited officials from the International Sulfur Research Institute to exchange views with the industry on the international sulfur market, which was well received by domestic enterprises. At the same time, the China Phosphate Fertilizer Industry Association also sent representatives to attend the international sulfur symposium held by TSI in the UAE. 8. Enhance industry cohesion by providing information services. Information services are a key focus of the association’s daily activities, as well as a highlight of its work. In order to make the website’s content more extensive and comprehensive, through methods such as information exchange and linking, \"China Phosphorus and Sulfur Network\" has become richer in both content and format. It has received widespread recognition from industry professionals, with its click-through rate rising sharply; in 2008, the number of visits exceeded 4 million, with monthly click counts reaching over 400,000. Among them, the data on the phosphate compound fertilizer industry compiled by the association are more comprehensive and up-to-date; media outlets and foreign organizations consider the association’s statistical figures to be more accurate and authoritative. In addition to the regular tasks of scheduling production, sales, and inventory management as well as compiling relevant data, in 2008 the association assigned dedicated personnel to prepare reports on key industry issues on a monthly basis. These reports were sent to enterprises through the leadership structure, enabling them to stay informed about policy changes and industry developments. This approach also strengthened the interaction between enterprises and the association’s permanent offices, thereby enhancing the association’s influence and cohesion. Organized by the association, it provides the industry with information and materials from various perspectives, promotes new technologies, new processes, and new equipment, and its circulation volume is increasing year by year. 9. Strengthening the association’s own development: Through the various services it provides to enterprises, the association has seen an increase in its appeal and influence; in 2008, 17 new member enterprises joined the association. The association places great emphasis on strengthening its own development, regularly organizing training sessions for the staff of its permanent bodies on political ideology and professional skills in order to improve their competence. Pay attention to absorbing fresh blood to strengthen the association. In 2009, the China Phosphate Fertilizer Industry Association will further implement the spirit of the Third Plenary Session of the 17th CPC Central Committee and the Central Economic Work Conference. As always, it will take it as its responsibility to \"serve the country, serve the industry, and serve enterprises\", and strive to carry out the following tasks: 1. Continue to pay attention to the development trends of the industry and strengthen research on industry conditions ； Actively **reflect the industry’s needs, seek policy support in a timely manner, and focus on helping the industry and enterprises overcome their difficulties. 2. Attach importance to the development of a circular economy and resource conservation, and promote energy conservation and emission reduction. Actively explore and promote the development of the \"resources-product-waste-renewable resources\" industrial chain, recycle the associated resources found in phosphate mines, advance clean production practices, make comprehensive use of phosphogypsum, reduce the emission of \"three types of waste\", achieve waste reduction and resource utilization, and guide the industry toward sustainable and healthy development. 3. Actively promote technological innovation within the industry, accelerate the transformation of research results, and make greater efforts to develop the industry’s value chain across various stages. Advocate joint development and commissioned development among industry, academia, and research institutions, and guide enterprises to strengthen their capabilities in original innovation, integrated innovation, and innovation through the adoption and adaptation of existing technologies, so as to use high-tech and appropriate technologies to transform and improve the overall technical level of the phosphate fertilizer industry. 4. Continue to strengthen information services and improve the timeliness and effectiveness of industrial early warning efforts. Further enrich the website content and expand its reach. 5 Organize industry activities through various forms of meetings such as annual industry conferences and production and sales meetings, so as to stay informed about industry developments and assist the industry in overcoming difficulties. 6 Further foster among staff a sense of professionalism as well as a team spirit of cooperation and mutual support. Strengthen the training and utilization of young comrades to make the structure of the association’s staff more rational. China Phosphate Fertilizer Industry Association