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The process of price restructuring is accelerating. In accordance with the requirements set out in documents issued by the National Development and Reform Commission, preferential electricity prices for small and medium-sized fertilizer manufacturers are to be completely abolished starting from April 20, 2016, in order to complete the market-based reform of electricity prices. This time, the electricity price increase for fertilizer manufacturers averaged 0.1 yuan per kilowatt-hour. Given that producing one ton of urea requires approximately 1,000 kilowatt-hours of electricity, this would theoretically result in an increase in the cost of urea by 70–100 yuan per ton. According to industry experts, based on the current price of urea in East China, which is around 1,450 yuan per ton, this increase could raise costs by 4%–6%. It would help accelerate the withdrawal of outdated production capacity from the market, while also benefiting large nitrogen fertilizer manufacturers that have their own power generation facilities. The impact of rising electricity prices on the costs of fertilizer manufacturers: It is understood that, taking urea manufacturers as an example, those currently enjoying preferential electricity rates are mainly those with an annual urea production capacity of 520,000 tons or less; such capacities account for around 50% of the total current urea production capacity. At present, the electricity price for fertilizer production has been increased by 0.1 yuan per kilowatt-hour, resulting in an increase in production costs of 80–100 yuan per ton for most enterprises; however, the production costs for those enterprises that have their own power plants remain relatively stable. Some of the new urea production facilities built in recent years have a capacity of over 520,000 tons per year; they have not benefited from any electricity price discounts. As a result, their costs have not increased as a result of this adjustment, giving them an advantage over those companies whose costs have risen. Lin Changqing, General Manager of the Nitrogen Fertilizer Department at Guangdong Tianhe Agrochemicals Co., Ltd., analyzed for reporters the impact of the elimination of preferential electricity rates for fertilizer production on enterprises: \"The current overall supply and demand situation does not bode well for the urea market. With the end of these preferential electricity rates, some urea-producing enterprises with high energy consumption may see cost increases of over 100 yuan per ton, while those using advanced furnace technologies will experience cost increases of around 40 yuan per ton.\" With the rapid increase in urea production capacity in recent years, the process of capacity reduction is also accelerating. Factors such as relatively low export tariffs, reduced railway discounts, rising natural gas prices, the elimination of electricity price incentives, and the reinstatement of value-added tax are all contributing to measures aimed at making the urea market more market-oriented, thus speeding up the process of transformation in this market. ” Zhang Xuenong, deputy general manager of Xinhuinong Agricultural Production Materials (Beijing) Co., Ltd., believes that although this increase in electricity prices leads to rising costs and reduced profits for enterprises, it could be a significant benefit for the overall domestic urea market. He analyzed that this increase in electricity prices would, on the one hand, serve to boost the currently weak market ； On the other hand, it has a crucial impact on phasing out outdated production capacity, promoting technological innovation in enterprises, and alleviating overcapacity in nitrogen fertilizer manufacturers. Companies are in urgent need of transformation. Under the severe conditions of low urea prices and increasing competition, nitrogen fertilizer manufacturers must adjust their product portfolios in a timely manner in response to market changes, and make every effort to reduce energy consumption and improve efficiency in order to maintain high profit levels. Lin Changqing said that in the face of the severe situation where the prices of key agricultural products have dropped significantly compared to the same period last year, enterprises must not only enhance their competitiveness, improve production efficiency, and reduce per-unit consumption and production costs, but also adjust their product mix in response to market changes in order to achieve a balance between production and sales. He also emphasized that companies should lower their profit margins and come together to support one another during difficult times in order to overcome challenges together. Zhang Xuenong explained to the reporters the necessity of corporate transformation. He said that in the face of the current overcapacity situation, companies need to improve their manufacturing equipment, strive to develop new products, and continuously expand their downstream product lines in order to utilize the excess capacity ； Competitive advantages are enhanced through differentiated strategies; for example, some nitrogen fertilizer manufacturers have entered the compound fertilizer sector by producing products such as large-grain urea, coated urea, and peptide urea. They have also developed products like nitrosulfur-based fertilizers, slow-release fertilizers, controlled-release fertilizers, and water-soluble fertilizers. These products complement urea, thereby creating brand strengths and synergistic effects. Furthermore, in an environment characterized by fierce industry competition, the sales and service aspect should also serve as an important means for fertilizer companies to generate additional revenue. Zhang Xuenong said that in critical moments of corporate competition, it’s not just quality that matters, but also brand and service. Those whose services are of high quality and whose brands are well-known will be better able to attract distributors and farmers, and thus gain a foothold in the market. Given the current situation, there are various reasons behind the industry-wide losses; upon closer analysis, declining demand is only a superficial cause. The single product structure, low technical content, and low added value are the underlying reasons. To address this issue, some companies have begun to restructure and pursue transformation in order to reduce losses and maximize profits from production. The No. 1 Central Document calls for supply-side reform, and for the fertilizer industry, where the problem of overproduction is particularly severe, 2016 will be a year of hardship. Guided by policy measures, coupled with overcapacity in the industry and declining demand, the competition for survival in the fertilizer sector is intensifying. Only by relying on technological innovation, actively adjusting the product portfolio, pursuing sustainable development through ecological cycles, and continuously developing personalized and differentiated eco-friendly products can fertilizer companies break through this challenging situation and gain a competitive advantage in future market battles.