Relationship between compound fertilizer production capacity and cost

Generally speaking, the higher the output, the lower the costs should be, right?

Reply to 1# imlxb2010: It can be said that production capacity is related to costs to some extent. On a national scale, in the past China experienced an oversupply of compound fertilizer production capacity, especially for DAP and MAP, which led to increased inventory levels among various compound fertilizer manufacturers and consequently higher management costs. Of course, this is just one aspect; due to the oversupply across the country, the products produced could not generate economic benefits quickly, resulting in lower profits for these companies, which in effect means higher costs. The level of costs is relative – when profits are high, the proportion of costs in the entire production process is low. So, it can be said that when profits are high, costs are relatively low; conversely, when costs are high… Costs are divided into administrative costs and production costs. In chemical enterprises, I believe that administrative costs are relatively fixed, while it is the production costs that vary, as they are directly related to the raw materials used in production. For example, the costs in the phosphate fertilizer industry remained high due to rising international sulfur prices. So I think costs are mainly related to factors such as raw materials and management, while production capacity is primarily tied to the processing capacity of the production facilities

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