The rise of global grain prices has led to the recovery of the prosperity of the chemical fertilizer industry, and there are great differences in chemical fertilizer prices between China and foreign countries
Chemical fertilizer plays an irreplaceable role in promoting the development of grain and agricultural production. The chemical fertilizer industry mainly includes four sub industries: nitrogen fertilizer, phosphorus fertilizer, potassium fertilizer and compound fertilizer. Since 2015, the planting area or yield of major crops such as wheat, soybean, corn and rice / rice have decreased in varying degrees; There are many problems in China’s agriculture, such as less land and more people, and the structural imbalance between grain supply and demand. The application of chemical fertilizer has made a great contribution to grain production. In 2015, the action plan for zero growth of chemical fertilizer use by 2020 promoted the supply side reform of the chemical fertilizer industry, and the problem of overcapacity has been initially alleviated. In 2020, the importance of food security was further highlighted in the context of the global covid-19 epidemic. The global food and grain price index remained rising, which led to the recovery of the landscape of the planting industry chain, the rise of farmers’ planting willingness, and the rise of the consumption demand and price of agricultural materials. Internationally, Russia plays an important role in the global supply of food and fertilizer. After the conflict between Russia and Ukraine in February 2022, the global shortage of food and fertilizer supply has intensified. In addition, factors such as the rise of global shipping costs and the high price of overseas natural gas have also led to the release of global fertilizer production capacity not up to expectations and poor import and export; For China, China is an important exporter of nitrogen and phosphorus fertilizers in the world, and it is highly dependent on the import of potassium fertilizer. The export legal inspection system implemented in October 2021 slowed down the export of fertilizer. Policies such as ensuring supply and stabilizing prices and grain subsidies provide strong support for China’s fertilizer consumption. Under the background of the gradual balance between supply and demand and the increasing importance of grain, the prosperity of the chemical fertilizer industry bottomed out and rebounded, and the price opened an upward channel. According to wind data, as of April 14, China’s urea, monoammonium phosphate, diammonium phosphate and potassium fertilizer reported 2925, 3600, 3970 and 4940 yuan / ton respectively, up 57.3%, 77.3%, 60.1% and 148.2% compared with the beginning of 2021. In addition, the price of overseas chemical fertilizer is generally higher than that of China, and the export of chemical fertilizer is profitable.
The application of chemical fertilizer has made a great contribution to grain production, and the supply pattern of China’s chemical fertilizer industry has been continuously optimized
Nitrogen fertilizer: urea is the main type of nitrogen fertilizer. China’s coal urea production capacity accounts for more than 70%. After the supply side reform, the industrial capacity utilization rate has increased to more than 70%, and the capacity Cr5 is less than 20%; The application proportion of urea in non-agricultural fields such as wood-based panel, melamine and vehicle urea has gradually increased. Under the high coal price in China, the profit space of gas head urea enterprises is broader. Phosphate fertilizer: monoammonium phosphate and diammonium phosphate are the main varieties, and the phosphate fertilizer industry is highly dependent on phosphate rock resources. China’s supply side reform and “three phosphorus” regulation have significantly boosted the phosphorus chemical industry chain. Since 2022, the prices of raw materials such as phosphate ore, sulfur and sulfuric acid have increased, and the profits of ammonium phosphate enterprises have continued to hang upside down. With the continuous clearing of production capacity in China’s phosphorus chemical industry, ammonium phosphate enterprises will have more competitive advantages in supporting phosphate rock resources upstream and building industrial chain integration. Potash fertilizer: potassium chloride is the main variety. Due to the limited potash resources, China’s dependence on potash fertilizer import has remained above 50% for a long time. China’s potash fertilizer import mainly comes from Canada, Belarus and Russia. The conflict between Russia and Ukraine has further tightened the supply of potash fertilizer. The industry concentration of Chinese potash fertilizer enterprises is high, and Qingdao East Steel Tower Stock Co.Ltd(002545) and Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) actively explore overseas potash fertilizer resources. Compound fertilizer: there is still room to improve the concentration and compound rate of China’s compound fertilizer industry. Most ammonium phosphate enterprises have supporting compound fertilizer production capacity. In the future, leading enterprises with advantages in cost, technology, brand, service and dealer resources are expected to benefit from the improvement of the industry competition pattern. Subject of the beneficiary’s subject: potafertilizer ( Qinghai Salt Lake Industry Co.Ltd(000792) \ , Xinyangfeng Agricultural Technology Co.Ltd(000902) , Hubei Yihua Chemical Industry Co.Ltd(000422) , etc.).
Risk tips: macroeconomic downturn, less than expected policy implementation, sharp decline in product prices, etc
