In May of this year, the Zhejiang Longyou Feiyan fertilizer incident (as reported on May 26th and June 7th in this newspaper) caused damage to over 10,000 mu of crops, leading to a halt in the company’s product production. Although the issue involved only a few products from a single company, it exposed serious challenges for the already struggling phosphate fertilizer industry in Zhejiang. The incident has raised critical questions about the survival of local phosphate fertilizer companies, which are already under pressure due to rising costs and declining profitability.
Although Zhejiang is no longer a major agricultural province, there remains a steady demand for phosphate fertilizers like superphosphate and calcium magnesium phosphate. According to data from the provincial agricultural department, Zhejiang sold approximately 120,000 tons of phosphate fertilizer last year. However, the current situation for local producers is dire: they face limited access to raw materials, small-scale operations, outdated production methods, and weak management systems.
One of the biggest challenges for Zhejiang's phosphate fertilizer companies is the lack of domestic phosphate resources. The province has virtually no phosphate rock reserves, relying instead on imports from other provinces—around 500,000 tons annually. With the expansion of large phosphate and compound fertilizer plants in resource-rich areas like Yunnan, Guizhou, and Hubei, local supply has become increasingly constrained. These regions prioritize their own production needs, leading to a sharp decline in phosphate ore availability. In addition, many provinces have implemented policies to control phosphate ore exports, including price hikes. For example, in Hubei, phosphate rock prices have increased by 90% to 110% this year, while in Yunnan and Guizhou, the price rose by 160 yuan per ton. As a result, high-quality phosphate rock in Zhejiang now costs nearly 500 yuan per ton, pushing many companies into underutilization. In 2004, production capacity was only at 47%, with profit margins severely compressed.
The small scale of operations, fragmented production capacity, and low technical and managerial standards further complicate matters for Zhejiang’s phosphate fertilizer firms. According to the head of the Zhejiang Phosphate Compound Fertilizer Industry Association, the province currently has 27 phosphate fertilizer companies, with a total production capacity of just 1.215 million tons. Despite these challenges, they have managed to retain much of their local market. One key reason is that farmers still prefer local products, partly due to a lack of awareness about alternatives. More importantly, Zhejiang companies benefit from a cost advantage: they use waste sulfuric acid instead of high-cost industrial-grade sulfuric acid.
Zhejiang has a well-developed chemical industry, which provides abundant sulfuric acid resources. Under regulations, as long as the waste sulfuric acid does not contain toxic or hazardous substances, it can be used in the production of calcium superphosphate—typically around 30% of the input. This waste acid costs only 10% to 40% of genuine sulfuric acid, reducing production costs by approximately 20 to 50 yuan per ton. Other regions lack such an advantage, making Zhejiang’s phosphate fertilizer industry relatively competitive.
However, the Feiyan incident in May has shaken this cost advantage. The complex composition of waste sulfuric acid and the potential presence of harmful substances remain poorly regulated. Even though the company involved was considered technically advanced, the incident has raised concerns about the safety of using waste acid. No one can guarantee that similar problems won’t occur in other companies in the future.
This brings the industry to a critical crossroads. Without resource advantages or strong technical and managerial capabilities, the cost edge that once helped them survive is now disappearing. A company representative expressed concern that if the use of waste sulfuric acid is restricted, Zhejiang’s phosphate fertilizer companies would lose their only competitive advantage and may be forced to shut down.
While the market economy naturally favors the fittest, the closure of these companies could have significant consequences. If Zhejiang’s phosphate fertilizer industry collapses, the annual demand of 120,000 tons would have to be met entirely by imported products. Even a small increase in price—say 10 yuan per ton—would add an extra 1.2 million yuan in costs for farmers. As one official from the Provincial Phosphate Compound Fertilizer Association noted, this could place a heavy burden on local agriculture.
special steel,steel specialties,specialty steel
Jiangyou ChongxinSpecial Metal Materials Co., Ltd. , https://www.zhongxindiesteel.com