As an important part of modern agriculture, the fertiliser industry focuses on producing various types of chemical fertilisers to replenish soil nutrients and promote crop growth. In recent years, with factors such as global population growth, improved agricultural production efficiency and environmental protection, China's fertiliser industry has undergone a series of changes and is set to show new developments by 2025.
The development of China's fertiliser industry
China's fertiliser industry compared to foreign fertiliser industry is considered a late start, but the industry is developing faster. Since the beginning of China's use of fertiliser, fertiliser varieties from a single to rich, the structure from nitrogen-based fertiliser to nitrogen, phosphorus, potassium basic balance, the product from low concentration to high concentration, from mono fertiliser to composite fertiliser, and then to a new type of fertiliser.
Starting Stage (1937-1972): After the establishment of New China, China's fertiliser industry began the road of technology introduction. between 1953 and 1957, the former Soviet Union assisted in the construction of three fertiliser factories in Jilin, Lanzhou and Taiyuan, and since then, China has a production capacity of 154,000 tonnes of synthetic ammonia, and 188,000 tonnes of ammonium nitrate, which has laid a solid foundation for the early stage of the chemical fertiliser industry in China.
Development Stage (1973-2014): From 1973 to 1976, China initiated the secondary technology introduction, invested foreign exchange funds, and built 13 sets of large-scale synthetic ammonia and urea plants successively in Guizhou, Yunnan, Sichuan, Heilongjiang, Liaoning, Shandong, Hunan and Hubei, etc. The introduction of these equipments greatly enhanced the scientific and technological strength of China's nitrogenous fertiliser industry, and made China's proportion of urea increase significantly. In 1986, China's Ministry of Chemical Industry put forward the structural adjustment of the fertiliser industry, and carried out technological renovation and transformation of the existing ammonium carbon production units into urea products, thus making fertiliser enterprises stand out. This period was a time of continuous enrichment of varieties in China's fertiliser industry, with the start of large-scale use of phosphorus fertilisers and compound fertilisers. China jumped to become the world's number one country in 2005.
Transformation stage (2015-present): in February 2015, the Ministry of Agriculture released the Zero Growth Action Programme for Fertiliser Use by 2020. Optimize the ratio of N, P and K, and promote the coordination of multiple elements and medium and trace elements; guide the structural adjustment of fertilizer varieties and the development of new and efficient fertilizers according to the needs of modern agriculture.In July 2015, the Ministry of Industry and Information Technology issued the 'Guiding Opinions on Promoting the Transformation and Development of the Chemical Fertilizer Industry', which states that new, efficient and environmentally friendly fertilizers should be vigorously developed, and that priority should be given to the development of: blended fertilizers, nitro compound fertiliser, efficiency fertiliser, urea ammonium nitrate solution, slow (controlled) release fertiliser, water-soluble fertiliser, liquid fertiliser, soil conditioner, humic acid, alginic acid, amino acid, etc. In November 2022, the Ministry of Agriculture and Rural Development (MAFRD) issued the Action Programme for Fertiliser Reduction by 2025. The programme aims to safeguard the supply of agricultural products and promote the green development of the planting industry, with the whole industry and the whole chain making efforts to build a scientific fertilizer application system, promote scientific, precise and green fertilizer application, strengthen the innovation and promotion, achieve the reduction of chemical fertilizers and industrial upgrading, and help stabilize the supply of grain and rural revitalization, as well as promote the new type of functional fertilizers.
Market Competition and Concentration of Shares
At present, despite the large number of domestic fertiliser enterprises, the market share is mainly concentrated in the hands of a few large enterprises. For example, the five largest fertiliser companies occupy most of the fertiliser market share. Yuntianhua, Salt Lake, and Xinyangfeng, these three companies are in a leading position in the industry, with high market share and brand influence. Other companies have different positions in the market due to their resources and capabilities.
In addition, against the backdrop of declining international trade barriers and accelerating global integration, international fertiliser companies will continue to enter China, thus intensifying competition in the domestic market. But at the same time, this also brings greater opportunities and broad market prospects for Chinese fertiliser enterprises. Chinese fertiliser enterprises should strengthen international cooperation, expand overseas markets and improve their international competitiveness.
Current situation and development trend of fertiliser industry
Rapid growth of new fertilisers leads industry transformation: according to CICC data, China's fertiliser market reached $235.2 billion in 2015 and $296.4 billion in 2021. The market is expected to reach $319.1 billion in 2025 and grow at an average annual rate of 1.8% between 2021 and 2025.
The international political and economic environment has a strong impact on fertiliser prices, leading to high market volatility: the complex economic situation at home and abroad has had a major impact on fertiliser production, transportation and sales since 2020. At the same time, fertiliser prices are rising due to geopolitical turmoil and the crisis in the global supply chain.
Fertiliser compounding rate and utilisation rate year on year: Compound fertiliser can provide a variety of nutrients for crops, which can effectively alleviate the problems brought about by single fertiliser, such as soil nodulation, water pollution, fertility reduction, etc., and improve the utilisation rate of fertiliser. From 2.10 per cent in 1980, to 22.10 per cent in 2000, to 46.63 per cent in 2022, with the continued advancement of the process of agricultural modernisation and greening, it can be foreseen that the rate of compounding will continue to grow for a considerable period of time.
Self-sufficiency rate of compound fertiliser: The marketing of compound fertiliser is affected by factors such as transport distance and cost, and its sale in the market shows certain geographical characteristics. Long-distance transport not only reduces the cost-effectiveness of the product, but also may cause the goods not to reach the market in time under the condition of insufficient capacity. The above reasons have objectively caused the global compound fertiliser producers to focus on the domestic market, mainly on imports, with a small proportion of exports. Starting from 2021, affected by the international compound fertiliser price increase and enterprise production reduction and other factors, China's compound fertiliser imports have decreased significantly, and the self-sufficiency of domestic compound fertiliser has increased significantly.
Backward production capacity is gradually eliminated, and industry concentration is increased: in 2015, the Development and Reform Commission, the Ministry of Industry and Information Technology and other departments issued a series of documents such as 'Guiding Opinions on Promoting the Transformation and Development of the Fertilizer Industry' and 'National Sustainable Agricultural Development Plan (2015-2030)' to implement weight loss and efficiency policies, and put forward the idea of promoting the industry to dissolve the overcapacity through transformation and upgrading, adjusting the industry structure, and striving to achieve the goal of China's fertiliser industry from big to strong, backward production.
Future Development Trends and Challenges
Greening and environmental protection become mainstream: In the future fertiliser industry, greening and environmental protection are the general trend. At the same time, the state will also formulate a more favourable development of environmentally friendly fertilizers, in order to promote the green, low-carbon and recyclable development of China's fertilizer industry. At the same time, the increasing consumer demand for environmentally friendly fertilisers, so that the development of environmentally friendly fertiliser has a broad market outlook.
Technological innovation drives industrial upgrading: scientific and technological innovation is the driving force for the sustainable development of China's fertiliser industry. In the fertiliser industry, the adoption of new processes and new techniques not only improves the economic benefits of enterprises, but also improves the quality of their products. At the same time, through scientific and technological innovation, China's fertiliser products are developed in the direction of diversification and functionality to meet the needs of an increasingly diversified market.
Differentiated competition strategy is crucial: in the face of increasingly fierce market competition, the implementation of differentiated competition strategy will be the key to victory for China's fertiliser enterprises. In order to adapt to the growing market needs, fertiliser companies must continuously carry out research and development of new products, improve the quality of their products and services, and enhance their competitiveness in the market. On this basis, the company must also pay attention to the changes in policy orientation and market demand, and flexibly adjust its operation strategy according to the changes in the market.
Changes in Market Demand and Structural Adjustment: With the improvement of China's agricultural productivity and the change in farmers' willingness to grow food, the demand in the fertiliser market has been adjusted accordingly. New varieties of compound fertilisers and special-purpose fertilisers are gradually becoming the mainstream of the market, while the proportion of traditional single fertilisers in the market is decreasing. This puts forward higher requirements for the production and sales of fertiliser manufacturers. In the future, under the guidance and support of national policies, China's fertiliser industry will continue to take the road of efficient, green and sustainable development, providing a strong guarantee for China's agricultural production and national food security.
Source:CCM
More information can be found at CCM Dairy Sugar&sweeteners China Monthly Report.
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