Losses of nearly 10 billion yuan in 10 months! Domestic nitrogen fertilizer manufacturers are facing a life-or-death test

Thread Content

Losses of nearly 10 billion yuan in 10 months! Domestic nitrogen fertilizer manufacturers facing a life-or-death test Author/Source: Date: 2016-12-07 Clicks: 6 It is reported that in 2014, domestic nitrogen fertilizer manufacturers suffered losses of around 5 billion yuan, 3 billion yuan in 2015; however, from January to October 2016, the losses reached 10 billion yuan. This was mainly due to recent increases in electricity prices and a 70% rise in coal prices. Although the wholesale price of urea increased along with rising costs, the vast majority of profits was offset by these high costs. Nitrogen fertilizer manufacturers are thus going through a critical period of survival. 　　Recently, the urea market has shown a steady recovery, with prices experiencing a slight decline. Domestic trading activity remains weak overall. Internationally, due to the significant shortage of urea in the domestic market during spring, manufacturers do not face any pressure to export at the moment. The intended price for small particles is around $230 per ton at mid-range FOB prices, while for large particles it is $240–245 per ton at FOB price. 　　Furthermore, since the railway freight reform policy was implemented in December, the situation for some low-cost road freight shipments has improved slightly; the short-term price support has weakened. Facing difficulties in securing orders, manufacturers have gradually adjusted their prices in an effort to secure deals. Yet some still insist that price changes will not lead to any significant changes in volume. Under this scenario, dealers have reverted to a wait-and-see attitude, unsure of what the market will be like once winter stockpiling begins or what prices will be during the peak season – all of these are uncertain factors. 　　At the current stage, both in the industrial and agricultural sectors, purchasing volumes remain low; the short-term market is expected to stay volatile with fluctuations, or to show stability on the surface but decline underneath. Moreover, environmental protection policies were implemented earlier and with greater intensity in winter this year than in previous years. The focus of the inspections is mainly on Hebei, Henan, Shandong, Shanxi, as well as surrounding areas such as Shaanxi and Hubei. The current impact on the fertilizer industry is seen in the suppression of production in areas related to compound fertilizers, BB fertilizers, and rubber sheet manufacturing; this has led to a significant drop in the industrial demand for urea. Downstream distributors are reluctant, leading to sales at higher prices from earlier in the period. 　　Market prices in various regions: In Henan province, some prices have declined. The mainstream factory price for small particles is 1460–1520 yuan per ton; the price at which it is sold in the agricultural sector is 1460–1480 yuan per ton, though in smaller quantities. The mainstream industrial price is 1420–1430 yuan per ton, while the actual selling price is 1380–1400 yuan per ton. Currently, there is little fertilizer stock available for agriculture, and it mainly relies on industrial output for distribution to regions such as East China. Some manufacturers remain firm on their pricing, holding inventory in stock and maintaining confidence in the future market. 　　Guangdong region: Urine prices are declining steadily; currently, the price in Guangzhou’s market is 1700–1730 yuan per ton, with the average transaction price at 1700 yuan per ton. The market remains stable for now ； In the Zhanjiang market, the price is 1,650–1,700 yuan per ton; it is the off-season for agriculture, so there are few transactions. Supplies from outside the province mainly come from Shanxi, Shaanxi, and Xinjiang. 　　Shaanxi region: Local sales are weak, and prices for shipments to other areas have seen a slight decrease; the market is expected to remain sluggish in the short term. The mainstream factory price is 1,370–1,500 yuan per ton, while the actual cost for transportation by truck is 1,290–1,330 yuan per ton; most of the available stock is sent out for delivery. 　　Jiangsu region: The prevailing ex-plant price for urea is 1,480–1,600 yuan per ton. Today, Linggu’s price was reduced by 30 yuan to 1,560 yuan per ton. The Shuangduo plant is shut down; there is only a small amount of inventory available, resulting in higher prices of 1,630–1,650 yuan per ton. The amount of goods ready for shipment by manufacturers has decreased, and new orders are coming in slowly. Overall, there is not much pressure on the supply of goods in the market, but demand is insufficient. Manufacturers say that selling at lower prices also does not yield good results; the market remains weak in the short term, with supplies coming from Henan. The wholesale price in the northern Jiangsu region is around 1,490–1,500 yuan per ton, while in southern Jiangsu it is 1,580 yuan per ton. 　　Shandong region: The urea market sees occasional price cuts at the high end or stable prices; the ex-factory price for small particles is 1430–1480 yuan per ton, while the prevailing transaction price is around 1410–1430 yuan per ton. The price for large particles is 1480–1500 yuan per ton. Farmers continue to wait before making purchases, with limited new orders being placed. In the industrial sector, purchases are made as needed, and price adjustments are modest. The Linyi market receives supplies from Henan and Shanxi, with purchase prices ranging from 1470–1480 yuan per ton. (Agricultural Inputs Market Report)