Recently, the news that the price of potash fertilizer will be canceled and direct supplements to farmers has been buoyant in the fertilizer industry and the investment community. On July 15, affected by this, listed companies engaged in potash fertilizer production rose against the trend.
On the same day, the Shanghai Composite Index fell 98.81 points, to close at 2779.45 points, and CITIC Guoan Zhongyin reported 15.15 yuan, which rose 6.84%. It was once touched high by 15.5 yuan, close to the daily limit; Guannong shares also closed up 7.23. The largest potash fertilizer producer in the country, Salt Lake Potash, has suspended trading on June 25 due to major asset restructuring.
“Release†expects “the news that there is no confirmation yet.†On July 15, Chen Li, manager of the Chemical Fertilizer Department of China National Chemical Information Center, told reporters. The final decision on this policy will be at the management level.
“The expectation of price adjustment has always existed, but what kind of policy will eventually be issued depends on the final result.†An analyst on condition of anonymity told reporters on the phone, “Because of the food issue, it’s here. On one issue, policy makers will be very cautious."
In the market, the relevant authorities of the National Development and Reform Commission recently proposed a preliminary plan to eliminate the price supervision of potash fertilizer and provide direct compensation to farmers. This also means that the price of potash fertilizer may be released.
According to the China Securities Journal, the National Development and Reform Commission originally had a document on the analysis of the economic performance of the fertilizer industry on its website, which contained policy recommendations for timely adjustment of the policy orientation and regulation of the fertilizer industry. On July 15, an official of the relevant department of the National Development and Reform Commission told reporters that the document has been withdrawn from the website. The document is an internal document and is for internal research use only.
In any case, it can be seen from these that the national macro-adjustment department is cautious about this matter.
It is understood that since the beginning of this year, the price of potash fertilizer in China has risen sharply due to the influence of cost promotion and foreign import. In fact, the main driving force for price increase comes from the international market. “The domestic output of potash fertilizer only accounts for 30% of consumption, and the influence on potash price is very limited.†Chen Li told reporters.
According to reports, the current consumption of potash products in China has reached more than 11 million tons, but 70% rely on imports. The seller has a high degree of monopoly, the North American Conpotex sales company and BPC sales alliance formed by several companies in the former Soviet Union region, which account for 42% and 33% of the world's potash fertilizer production capacity. The price of imported potash fertilizer has dominated the domestic price of potash fertilizer.
In the international market, the price of potash has exceeded 800 US dollars per ton, some "short-term" transactions even up to 1200 US dollars, the development of the global bio-energy is also considered to be one of the major factors in the international potash fertilizer prices.
According to overseas media reports, Steiner, chief executive of Europe's largest potash producer K+S AG, previously stated that world potash prices will continue to rise at the current level of $800 to $1,000 per ton.
However, China, as the largest buyer of the international potash fertilizer market, adopts the “long-term†trading method that is negotiated once a year, and has certain advantages in price.
In spite of this, China's potash import prices rose sharply in 2008. On April 15th, China and the BPC Sales Alliance finally reached an agreement to increase US$400 per ton of potash fertilizer to US$643.
In fact, during the entire negotiation period, China's potash fertilizer imports basically stopped. From February to May, it was in the “freezing period†of potash fertilizer imports, which made the domestic ex-factory price of potash fertilizer lose its reference and maintained at the level of 3,700 yuan.
According to Citibank's report, the sales volume of Sinofert Holdings (0297.HK), the largest fertilizer supplier in China, will be lower than the same period of last year. In mid-June, China finally restarted the import of potash fertilizer at an import price of 4,700 yuan per ton. It is reported that because of the unclear policy, potash that has already been imported has not been sold.
After several months of profit balancing, the high price of potash fertilizer was eventually transmitted to downstream companies. Compound fertilizer producers complained that because farmers could not afford fertilizer, it had led to a sharp drop in sales. Due to the risk of being unable to bear price increases, some small-scale compound fertilizer producers can only stop production.
Last week, at an industry conference, Sun Yunsheng, general manager of Shandong Linyi Shi Kefeng Chemical Co., Ltd., said that according to his market research in Linyi, 60% of the small fertilizer companies with an annual capacity of 30,000 to 50,000 tons were discontinued. The annual operating rate of 100,000 to 200,000 tons is less than 40%, and the annual output of enterprises with an output of more than 500,000 tons is reduced by 30%.
The high price of potash fertilizer has challenged the bearing capacity of agricultural production. Once the price limit is released, the domestic price of potash fertilizer will quickly move closer to the international market. In the face of bitter days of fertilizer companies and food security, how the policy will be chosen and balanced will obviously require considerable determination and skill.
The news that the industry has been rumbling is that after the price has been liberalized, direct subsidies will be given to grain farmers.
In June, the National Development and Reform Commission issued a notice stating that in order to stabilize fertilizer prices and protect the enthusiasm of farmers for grain production, from the end of June to the end of September, the company will further carry out special inspections of chemical fertilizer prices in production and marketing companies of fertilizers, with particular emphasis on domestic and imported potash fertilizers with more price increases. Price supervision and inspection.
“From an industry perspective, the liberalization of prices is a good thing,†Chen Li believes. “This will speed up the process of marketization of fertilizer prices and will help the rational development of the industry.â€
“In the short term, the increase in potash prices will put agricultural production under greater pressure and farmers will reduce the use of potash fertilizer,†Chen Li said. “But in the long run, we can rationalize the price factor.â€
For potential risks, some agricultural experts believe that if there is a shortage of potash fertilizer, it will not have a devastating impact on agriculture, but it will inevitably affect quality and production.
"As for the subsidy, we are more inclined to reflect the subsidy to farmers on the purchase price of grain," Chen Li said. "If we directly subsidize chemical fertilizers, because the sources of chemical fertilizers are different, domestic, imported and border trade will be difficult to operate."
On the same day, the Shanghai Composite Index fell 98.81 points, to close at 2779.45 points, and CITIC Guoan Zhongyin reported 15.15 yuan, which rose 6.84%. It was once touched high by 15.5 yuan, close to the daily limit; Guannong shares also closed up 7.23. The largest potash fertilizer producer in the country, Salt Lake Potash, has suspended trading on June 25 due to major asset restructuring.
“Release†expects “the news that there is no confirmation yet.†On July 15, Chen Li, manager of the Chemical Fertilizer Department of China National Chemical Information Center, told reporters. The final decision on this policy will be at the management level.
“The expectation of price adjustment has always existed, but what kind of policy will eventually be issued depends on the final result.†An analyst on condition of anonymity told reporters on the phone, “Because of the food issue, it’s here. On one issue, policy makers will be very cautious."
In the market, the relevant authorities of the National Development and Reform Commission recently proposed a preliminary plan to eliminate the price supervision of potash fertilizer and provide direct compensation to farmers. This also means that the price of potash fertilizer may be released.
According to the China Securities Journal, the National Development and Reform Commission originally had a document on the analysis of the economic performance of the fertilizer industry on its website, which contained policy recommendations for timely adjustment of the policy orientation and regulation of the fertilizer industry. On July 15, an official of the relevant department of the National Development and Reform Commission told reporters that the document has been withdrawn from the website. The document is an internal document and is for internal research use only.
In any case, it can be seen from these that the national macro-adjustment department is cautious about this matter.
It is understood that since the beginning of this year, the price of potash fertilizer in China has risen sharply due to the influence of cost promotion and foreign import. In fact, the main driving force for price increase comes from the international market. “The domestic output of potash fertilizer only accounts for 30% of consumption, and the influence on potash price is very limited.†Chen Li told reporters.
According to reports, the current consumption of potash products in China has reached more than 11 million tons, but 70% rely on imports. The seller has a high degree of monopoly, the North American Conpotex sales company and BPC sales alliance formed by several companies in the former Soviet Union region, which account for 42% and 33% of the world's potash fertilizer production capacity. The price of imported potash fertilizer has dominated the domestic price of potash fertilizer.
In the international market, the price of potash has exceeded 800 US dollars per ton, some "short-term" transactions even up to 1200 US dollars, the development of the global bio-energy is also considered to be one of the major factors in the international potash fertilizer prices.
According to overseas media reports, Steiner, chief executive of Europe's largest potash producer K+S AG, previously stated that world potash prices will continue to rise at the current level of $800 to $1,000 per ton.
However, China, as the largest buyer of the international potash fertilizer market, adopts the “long-term†trading method that is negotiated once a year, and has certain advantages in price.
In spite of this, China's potash import prices rose sharply in 2008. On April 15th, China and the BPC Sales Alliance finally reached an agreement to increase US$400 per ton of potash fertilizer to US$643.
In fact, during the entire negotiation period, China's potash fertilizer imports basically stopped. From February to May, it was in the “freezing period†of potash fertilizer imports, which made the domestic ex-factory price of potash fertilizer lose its reference and maintained at the level of 3,700 yuan.
According to Citibank's report, the sales volume of Sinofert Holdings (0297.HK), the largest fertilizer supplier in China, will be lower than the same period of last year. In mid-June, China finally restarted the import of potash fertilizer at an import price of 4,700 yuan per ton. It is reported that because of the unclear policy, potash that has already been imported has not been sold.
After several months of profit balancing, the high price of potash fertilizer was eventually transmitted to downstream companies. Compound fertilizer producers complained that because farmers could not afford fertilizer, it had led to a sharp drop in sales. Due to the risk of being unable to bear price increases, some small-scale compound fertilizer producers can only stop production.
Last week, at an industry conference, Sun Yunsheng, general manager of Shandong Linyi Shi Kefeng Chemical Co., Ltd., said that according to his market research in Linyi, 60% of the small fertilizer companies with an annual capacity of 30,000 to 50,000 tons were discontinued. The annual operating rate of 100,000 to 200,000 tons is less than 40%, and the annual output of enterprises with an output of more than 500,000 tons is reduced by 30%.
The high price of potash fertilizer has challenged the bearing capacity of agricultural production. Once the price limit is released, the domestic price of potash fertilizer will quickly move closer to the international market. In the face of bitter days of fertilizer companies and food security, how the policy will be chosen and balanced will obviously require considerable determination and skill.
The news that the industry has been rumbling is that after the price has been liberalized, direct subsidies will be given to grain farmers.
In June, the National Development and Reform Commission issued a notice stating that in order to stabilize fertilizer prices and protect the enthusiasm of farmers for grain production, from the end of June to the end of September, the company will further carry out special inspections of chemical fertilizer prices in production and marketing companies of fertilizers, with particular emphasis on domestic and imported potash fertilizers with more price increases. Price supervision and inspection.
“From an industry perspective, the liberalization of prices is a good thing,†Chen Li believes. “This will speed up the process of marketization of fertilizer prices and will help the rational development of the industry.â€
“In the short term, the increase in potash prices will put agricultural production under greater pressure and farmers will reduce the use of potash fertilizer,†Chen Li said. “But in the long run, we can rationalize the price factor.â€
For potential risks, some agricultural experts believe that if there is a shortage of potash fertilizer, it will not have a devastating impact on agriculture, but it will inevitably affect quality and production.
"As for the subsidy, we are more inclined to reflect the subsidy to farmers on the purchase price of grain," Chen Li said. "If we directly subsidize chemical fertilizers, because the sources of chemical fertilizers are different, domestic, imported and border trade will be difficult to operate."
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