Fertilizer industry: facing the dual pressures of policy control and rising costs

The formulation of the fertilizer industry policy is based on the principle of “restricting exports and ensuring domestic supply” as the increase in food prices is far less than that of chemical fertilizers. The cost of growing grain will increase substantially. Farmers will reduce the amount of chemical fertilizers. Nitrogen fertilizers and phosphate fertilizers have risen sharply due to rising costs, although prices remain high. , But profits have fallen sharply, and even many companies have suffered losses; Potassium fertilizer is subject to high external dependence and affected by import prices. Domestic market prices continue to rise, making it difficult to regulate the price of potash fertilizer. National policies to ensure domestic agricultural production and ensure the supply of chemical fertilizers China will impose a tariff of 100%-135% on all fertilizers and raw materials from April 20 to September 30. After September 30th, it will determine whether to continue to implement high export tariffs based on market supply and price conditions. In view of the situation, the possibility of continuing to implement high export tariffs is very high.
In addition, in order not to increase the burden on peasants, the government has imposed restrictions on the price of chemical fertilizers, with urea not exceeding 1,725 ​​yuan per ton, and diammonium phosphate not exceeding 4,100 yuan per ton. However, due to rising raw material prices, cost pressures for production companies It is very large, and the factory price limit has not been strictly enforced, and the price of chemical fertilizers has steadily increased. At present, the government mainly through direct subsidies to reduce the burden on farmers, this year will be a total of 63.8 billion subsidies, an average of 40 yuan per mu subsidy.
The prices of fertilizers for farmers with limited price bearing capacity are very large. The growth rate of fertilizers varies from 50 to 120%, far exceeding the increase of about 10% in food prices. Fertilizer expenditure accounts for about 40% of farmers' entire grain cost, and farmers Can not afford the sharp rise in fertilizer prices, according to grass-roots sales data, northeast 1Q2008 phosphate sales fell 20-30% year-on-year, many farmers reduce the amount of fertilizer, turn to low-concentration fertilizers and farmyard fertilizers, and even kind of "white land", so it can be predicted, This year's domestic consumption of chemical fertilizers will drop sharply year-on-year.
Nitrogen Fertilizer, Phosphate Fertilizer - Cost Pressure Causes Significant Drop in Profits In the absence of exports, China's nitrogen and phosphate fertilizer production capacity is in excess. At present, China's urea capacity is 57.5 million tons/year, domestic consumption is about 49 million tons/year, and there is a surplus of 17%. Before 2010, it will also increase production capacity by more than 10 million tons/year; DAP production capacity will be 10 million tons/year. It will increase production capacity by more than 2 million tons/year, and in terms of consumption, due to the sharp increase in prices, the first quarter of this year will be a 38% decrease from the same period of last year.
With overcapacity and increased competition, the price of domestic nitrogen fertilizers and phosphate fertilizers has been forced to remain high due to the sharp rise in raw material costs. The ex-factory price of urea rose slightly from the previous period to RMB 2,200/tonne. The price of diammonium phosphate was falling due to export restrictions and weak demand, but it was still as high as RMB 4,500/ton or more. With the country's removal of sulphur import VAT The price of ammonium phosphate may continue to fall. However, whether it is the increase in the price of urea or the drop in the price of ammonium phosphate, the cost of raw materials is continuing to rise. At present, the number of smokeless lump coal produced by Shandong enterprises has reached 1,200 yuan/ton, up 50% year-on-year, and the production cost of many urea companies has reached 1,800 yuan/ton or more; the price of sulphur is rising steadily. The price is already close to 6,000 yuan/ton. The cost of domestic DAP producers has surpassed the national factory price limit of 4,100 yuan/ton. At present, many companies have reduced the operating rate and stopped maintenance.
Therefore, judging from the current situation, the prices of nitrogen fertilizers and phosphate fertilizers are unlikely to fall sharply due to rising costs. However, there is no doubt that profits have dropped sharply. Many companies have suffered losses and the situation is not optimistic.
Potassium Fertilizer - Affected by Imported Potash Fertilizer, Price Increases The country's potash fertilizer relies heavily on imports. Domestic prices have also continued to rise due to rising international potash prices. At present, the highest price of international potassium chloride has reached 900 US dollars / ton, the price of potassium chloride in China's border trade has nearly 5,000 yuan / ton.
In the early stage, China Agriculture, Sinochem and BPC and Canpotex signed a supply contract in 2008. The CIF price is about US$700/ton, and the total supply is 2 million tons. In 2007, the supply was 5 million tons. Therefore, a large amount of potash fertilizer will be purchased from the spot market. At that time, the CIF price will be higher than 700 US dollars/ton, and the domestic market price will inevitably rise further.
In response to the state's policy of controlling the price of potash fertilizer in the early stage, we believe that it is very difficult to achieve a two-track price system in the same market. It is unrealistic to control the ex-factory price or control the sales price. Therefore, the potash fertilizer production enterprise is still the most fertile fertilizer industry. Worth investment land.

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