The fertilizer industry is booming, and the prices of potassium chloride and ammonium chloride continue to rise. Affected by the covid-19 epidemic and the conflict between Russia and Ukraine on the global industrial chain, the fertilizer industry has ushered in a strong business cycle, and the product price has risen to a high in recent ten years. Among them, the prices of potassium chloride and sodium chloride continued to rise due to the continuous high pressure at the supply end. According to Zhuo Chuang information, as of May 13, 2022, the prices of urea / ammonium chloride / monoammonium phosphate / monoammonium phosphate / diammonium phosphate / potassium chloride in China have increased by 61.64% / 107.69% / 66.45% / 26.67% / 82.50% year-on-year respectively; The prices of urea / monoammonium phosphate / monoammonium phosphate / diammonium phosphate / potassium chloride in the international market increased by 86.15% / 99.48% / 99.66% / 289.83% respectively year-on-year.
The pattern of the global chemical fertilizer industry has been continuously optimized, and the demand for benefiting from the price rise of crops has increased significantly. Globally, under the background of continuous population growth, the demand for chemical fertilizer has increased steadily for a long time. Since 2020, due to the epidemic situation and the conflict between Russia and Ukraine, the prosperity of the agricultural sector has increased significantly, driving the demand for chemical fertilizer to increase significantly in the short term. According to FAO, the global demand for nitrogen / phosphorus fertilizer (P2O5) / potassium fertilizer (K2O) in 2022 is expected to increase by 1.27% / 1.72% / 1.92% year-on-year.
The production capacity of China’s chemical fertilizer industry shows a downward trend and the overall supply is reduced. In China, under the guidance of the policy of reducing and increasing efficiency in the fertilizer industry, the industrial capacity is shrinking. In the past two years, affected by covid-19 epidemic and insufficient supply of coal, electricity and other factors, the operating rate of the industry is low, the supply is reduced as a whole, and the industry pattern continues to be optimized. According to the statistics of Zhuo Chuang information, the output of urea / ammonium chloride / monoammonium phosphate / monoammonium phosphate / diammonium phosphate / potassium chloride in China in 2021 changed by – 2.45% / + 0.44% / + 0.84% / + 5.89% / – 14.10% year-on-year respectively.
The low point of fertilizer export has passed. The export of chemical fertilizer is restricted by China’s “spring ploughing” policy. According to the latest data of the General Administration of customs, in April 2022, China’s export volume of urea / monoammonium phosphate / diammonium phosphate decreased by 72.18% / 51.64% / 58.24% year-on-year respectively, and the export volume of ammonium chloride decreased by 72.22% year-on-year in March. We believe that the low point of chemical fertilizer export has passed, and it is expected that the subsequent export volume is expected to pick up, so as to improve the business performance of the enterprise.
Insufficient operating rate superimposed on rising demand, and product inventory fell to a low level. Affected by the sharp rise in demand and the decline in operating rate, the inventory of chemical fertilizer fell to a low level. According to wind, as of May 13, 2022, the total market inventory of urea / monoammonium phosphate / diammonium phosphate / potassium chloride has changed by + 4.1 / + 1.1 / – 7.84 / – 387900 tons respectively; The total inventory of urea / ammonium chloride / monoammonium phosphate / monoammonium phosphate / diammonium phosphate / potassium chloride plants changed by – 27.6 / – 2.19 / – 9.4 / – 4.2 / + 68000 tons respectively.
Under the high prosperity of the industry, the operating rate has gradually increased. According to Zhuo Chuang information, as of May 13, 2022, the weekly operating load rates of urea / monoammonium phosphate / monoammonium phosphate / diammonium phosphate were 75.36% / 79.30% / 52.09% / 57.00% respectively, with a month on month change of 1.24% / 1.75% / 2.26% / – 4.00% respectively. According to the latest data of Baichuan Yingfu, in April 2022, the operating rate of potassium chloride in China was 68.43%, with a year-on-year increase of 1.99%.
Investment advice. It is suggested to pay attention to the company: Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) , Qingdao East Steel Tower Stock Co.Ltd(002545) , Qinghai Salt Lake Industry Co.Ltd(000792) , Shuanghuan technology, China heart to heart fertilizer, Yunnan Yuntianhua Co.Ltd(600096) , Sichuan Development Lomon Co.Ltd(002312) , Xinyangfeng Agricultural Technology Co.Ltd(000902) , Chengdu Wintrue Holding Co.Ltd(002539) .
Risk warning: Shenzhen Agricultural Products Group Co.Ltd(000061) price falling risk; Risk of declining demand for chemical fertilizer; Risk of new capacity construction exceeding expectations; Risk of policy changes.
