5 May, 2016 is the beginning of summer according to the Chinese 24 Solar Term
calendar system. It signifies the end of spring and the arrival of summer, and
also marks the end of peak season for fertilizer consumption in China.
Looking back, CCM found that the entire fertilizer market was depressed over
the spring ploughing period. According to CCM's research, demand for nitrogen, phosphorus and potassium (100% A.I.) during the spring ploughing period was
21.77 million tonnes, 6.60 million tonnes and 5.40 million tonnes respectively.
Given the total output, import and export
volume, and inventory level over the spring ploughing period, there should be
excess supplies of nitrogen, phosphorus and potassium of about 860,000 tonnes,
1.61 million tonnes and 310,000 tonnes respectively.
"In the spring ploughing period in 2016, market prices of major
fertilizers continued their downward trend from the last quarter of 2015,"
commented Li Dianping, head of the Bureau of Agricultural Means of Production,
"Market price of monoammonium phosphate dropped by USD30.98/t (RMB200/t)
during the 2016 spring ploughing period and that of nitrogen fertilizer fell by
12% YoY."
Aside from overcapacity, the domestic fertilizer market was also hit by a large
variety of other factors, such as:
- The falling domestic market prices of corn and wheat have directly influenced
farmers' initiative in planting grains and fertilizer consumption since the
third quarter of 2015;
- The Action Plan for Realizing Zero Growth in Consumption of Chemical
Fertilizers by 2020 has changed farmers' fertilizer consumption habits;
- In the international market, both demand and price of fertilizers have
declined as a result of newly added capacity, a sharp decline in crude oil
price and depressed global economic conditions.
However, CCM found that against falling market conditions, minor fertilizers
such as triple superphosphate (TSP), calcium superphosphate and calcium
magnesium phosphate fertilizers successfully maintain relatively stable market
prices due to the following reasons:
1. Minor fertilizers receiving little consideration.
With farmers turning to concentrated fertilizers, minor fertilizers' position
in the market has been falling. Yet, because of this, domestic minor fertilizer
manufacturers have been able to halt the downward trend of prices and maintain price
stability. In addition, right before peak season, the overall operating rate of
the industry was low, mitigating pressure from overcapacity.
2. Domestic demand for minor fertilizers remains stable.
According to CCM's research, the overall transaction volume of minor
fertilizers in the 2016 spring ploughing period was basically the same as in
the corresponding period of 2015. Some trade sources commented to CCM that
demand for minor fertilizers in some regions had increased slightly, but
manufacturers didn't dare to raise their product prices as overall market
demand was stable.
3. The export market has fluctuated slightly and is relatively promising.
According to data from the General Administration of Customs of the P.R.C., in
the first quarter of 2016, China exported 135,300 tonnes of TSP at an average
export price of USD299/t and 222,000 tonnes of calcium superphosphate at an
average price of USD194/t. Some manufacturers disclosed that existing orders
will enable them to hang on till early June 2016, and the domestic market is
expected to recover by mid-July. Thus, there is currently little pressure to
make sales.
The falling price of major fertilizers doesn't seem to have taken a toll on
minor fertilizers. However, a loss of demand has become a great challenge for the minor fertilizer industry.
Influenced by the state's Action Plan for Realizing Zero Growth in Consumption
of Chemical Fertilizers by 2020, more and more minor fertilizer manufacturers have
shut down or shifted their business towards compound fertilizers due to poor
performance.
Notably, the comprehensive utilization technology of low grade phosphorus ore
is still in the initial development stage and flotation technology is currently
not mature in the country. Thus, as main downstream products of low grade
phosphorus ore, minor phosphate fertilizers will continue to exist on the
market for a while yet, and the export market will play a more and more
important role in terms of sales channels.
This article comes from Phosphorus Industry China Monthly Report 1605, CCM
About CCM:
CCM is the
leading market intelligence provider for China's agriculture, chemicals, food
& ingredients and life science markets. Founded in 2001, CCM offers a
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newsletters and customized market research reports. Our clients include Monsanto,
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Tag: fertilizer phosphorus