In early January 2005, the National Development and Reform Commission and the Ministry of Finance formulated and announced the "Administrative Measures for Commercial Reserves in the off-season fertilizer season." When the "Measures" was introduced, fertilizer companies set off a temporary heat reserve, and both manufacturers and distributors rushed to eat the cake. Since the light-storage bids for the year were only for large state-owned enterprises, some private enterprises and SMEs also expressed extreme dissatisfaction. However, the wind direction changed. The reporter recently discovered in an interview that although the relevant policies and conditions have not changed much, the scene of fertilizer companies rushing to bid for light reserves has not been seen. Why is this?
Rising market prices raised the purchase price It is understood that the current domestic and international fertilizer market is not conducive to light storage, which is the key to business enthusiasm is not high. Since August, affected by the increase in international fertilizer prices, the domestic fertilizer market has seen a trend of increasing prices. Currently, the ex-factory price of urea has generally risen by RMB 100/tonne compared with July, and the price of DAP and Other high-concentration fertilizers has been increasing. It rose by more than 100 yuan. According to the national time limit for off-season reserves of chemical fertilizers, the storage and storage enterprises must complete the procurement and storage tasks from October of this year to March of the following year. This period of time has a lower urea export tariff and the most prosperous export, thus stimulating domestic fertilizer prices. Continue to rise, it is extremely unfavorable for the reserve companies to purchase fertilizers. Waiting until the next year to increase export tariffs to 30%, although it will reduce fertilizer exports, but this time from the end of the storage company's final market (March) is not far off. In order to complete the task, the company will have to concentrate on purchasing. The results of centralized procurement by many reserve companies will inevitably lead to domestic fertilizer prices remaining high or once again rising, increasing purchase costs and light storage risks. "Accumulated reserves of 8 million tons (that is, purchases) are completed in a short period of time, and domestic fertilizer prices do not rise. Why then? What will happen to the storage enterprises? Will they not enter the market for procurement, and will not be able to achieve the target? Whether or not to lose money! Who do you say will voluntarily engage in fertilizer reserves?" A company executives asked reporters.
“The chemical fertilizer stocks are subject to huge market risks. Therefore, we have no light storage plans this year. Once the equipment being repaired starts production, in addition to ensuring the supply of fertilizers in the province, the rest will be waiting for export.†Sinopec Hunan Baling Branch Market Management Minister Fan Zhuangzhi talked to reporters when he talked about light savings.
Overcapacity reduces sales price It is understood that at present, China's fertilizer production capacity, especially nitrogen and phosphate fertilizer production capacity has apparently been surplus. In the past, the intrinsic factors of shortage of supply during peak season have been eliminated. In the last year, domestic fertilizers, especially nitrogen fertilizers, have apparently been surplus. From January to August of this year, China’s total fertilizer production has increased by a significant 11.7% to 37.665 million tons (refined). The situation of oversupply is already evident. Next year, with the continued release of new production capacity, and the reduction in the actual demand for chemical fertilizers brought about by the promotion of soil testing and fertilizer application techniques, demonstration and extension of controlled-release fertilizers, and reduction of arable land, domestic fertilizers (especially nitrogen fertilizers) will be supplied. Excess is greater than demand. Bearing in mind that the company's supply of fertilizer exceeds demand and the price is unlikely to continue to rise, it will be in a hurry to sell storage fertilizers. With the addition of social stocks of chemical fertilizers and the production of chemical fertilizers by enterprises in the season, the supply of society has suddenly increased, the prices have plummeted, and the risk of light storage has increased. This is why many companies have turned their attitudes towards cold storage of chemical fertilizers from heat to cold.
Therefore, Shaanxi Luohe Coal Chemical Group Co., Ltd., which has been keen on storing fertilizers and has 150,000 tons of fertilizers in 2004/2005, has only combined 50,000 tons of fertilizers with Zhejiang Agricultural Assets Group. "If it is not the main contract of the Zhejiang Agricultural Group, and we only consider it for commercial interests, we do not even want to accept 50,000 tons of fertilizer." The minister of the Ministry of Market and Transportation of Suihua Group told the reporter honestly.
Preferential policies have become a tasteless reporter also learned that with the supporting and sound national policies, inspections and requirements for storage enterprises have become more and more stringent, especially this year, they have also had more "inter-provincial cross-checks" and given preferential treatment. However, the policy is still limited to "subsidized interest loans," and companies find it uneconomical. The chief executive of a company calculated this account for the reporter: At present, the country's discount interest on the storage companies is only RMB 50/ton, and all expenses such as loans, warehousing, handling, management, and warehouse consumption are required for enterprises to save their reserves. All must be solved by themselves, and they must bear the risks brought about by the fluctuations in the fertilizer market. Fertilizer prices have continued to rise in the past few years, and they are even hotter during peak seasons. At that time, it was not only profitable, but also riskless. The discount of 50 yuan/ton was a steady gain. However, since last year, due to the weak peak season of the fertilizer market, even when the storage companies can sell fertilizers, the price plummeted, which caused many companies to lose only 60 to 100 yuan/ton, even if they counted 50 Yuan / ton discount, still have to lose 10 to 50 yuan / ton. “In recent years, the cost of warehousing, labor, etc. has been increasing, but the state’s preference for storage enterprises is still a little interest. Does it need to change? When the fertilizer price falls sharply in the coming year, and the losses of storage and storage enterprises are large, the country Can we give proper subsidies? If these real issues cannot be addressed and resolved by the relevant departments, we certainly do not want to make any more.†The manager said.
“We did not participate in the bidding for the national chemical fertilizer and light storage this year. Because the risk of light storage is getting bigger and bigger, the country’s preferential treatment for it has saved the cost and the company will passively lose money.†Hebei Cangzhou University Liu Chang, Sales Director of Hua Chemical Co., Ltd. said bluntly.
Rising market prices raised the purchase price It is understood that the current domestic and international fertilizer market is not conducive to light storage, which is the key to business enthusiasm is not high. Since August, affected by the increase in international fertilizer prices, the domestic fertilizer market has seen a trend of increasing prices. Currently, the ex-factory price of urea has generally risen by RMB 100/tonne compared with July, and the price of DAP and Other high-concentration fertilizers has been increasing. It rose by more than 100 yuan. According to the national time limit for off-season reserves of chemical fertilizers, the storage and storage enterprises must complete the procurement and storage tasks from October of this year to March of the following year. This period of time has a lower urea export tariff and the most prosperous export, thus stimulating domestic fertilizer prices. Continue to rise, it is extremely unfavorable for the reserve companies to purchase fertilizers. Waiting until the next year to increase export tariffs to 30%, although it will reduce fertilizer exports, but this time from the end of the storage company's final market (March) is not far off. In order to complete the task, the company will have to concentrate on purchasing. The results of centralized procurement by many reserve companies will inevitably lead to domestic fertilizer prices remaining high or once again rising, increasing purchase costs and light storage risks. "Accumulated reserves of 8 million tons (that is, purchases) are completed in a short period of time, and domestic fertilizer prices do not rise. Why then? What will happen to the storage enterprises? Will they not enter the market for procurement, and will not be able to achieve the target? Whether or not to lose money! Who do you say will voluntarily engage in fertilizer reserves?" A company executives asked reporters.
“The chemical fertilizer stocks are subject to huge market risks. Therefore, we have no light storage plans this year. Once the equipment being repaired starts production, in addition to ensuring the supply of fertilizers in the province, the rest will be waiting for export.†Sinopec Hunan Baling Branch Market Management Minister Fan Zhuangzhi talked to reporters when he talked about light savings.
Overcapacity reduces sales price It is understood that at present, China's fertilizer production capacity, especially nitrogen and phosphate fertilizer production capacity has apparently been surplus. In the past, the intrinsic factors of shortage of supply during peak season have been eliminated. In the last year, domestic fertilizers, especially nitrogen fertilizers, have apparently been surplus. From January to August of this year, China’s total fertilizer production has increased by a significant 11.7% to 37.665 million tons (refined). The situation of oversupply is already evident. Next year, with the continued release of new production capacity, and the reduction in the actual demand for chemical fertilizers brought about by the promotion of soil testing and fertilizer application techniques, demonstration and extension of controlled-release fertilizers, and reduction of arable land, domestic fertilizers (especially nitrogen fertilizers) will be supplied. Excess is greater than demand. Bearing in mind that the company's supply of fertilizer exceeds demand and the price is unlikely to continue to rise, it will be in a hurry to sell storage fertilizers. With the addition of social stocks of chemical fertilizers and the production of chemical fertilizers by enterprises in the season, the supply of society has suddenly increased, the prices have plummeted, and the risk of light storage has increased. This is why many companies have turned their attitudes towards cold storage of chemical fertilizers from heat to cold.
Therefore, Shaanxi Luohe Coal Chemical Group Co., Ltd., which has been keen on storing fertilizers and has 150,000 tons of fertilizers in 2004/2005, has only combined 50,000 tons of fertilizers with Zhejiang Agricultural Assets Group. "If it is not the main contract of the Zhejiang Agricultural Group, and we only consider it for commercial interests, we do not even want to accept 50,000 tons of fertilizer." The minister of the Ministry of Market and Transportation of Suihua Group told the reporter honestly.
Preferential policies have become a tasteless reporter also learned that with the supporting and sound national policies, inspections and requirements for storage enterprises have become more and more stringent, especially this year, they have also had more "inter-provincial cross-checks" and given preferential treatment. However, the policy is still limited to "subsidized interest loans," and companies find it uneconomical. The chief executive of a company calculated this account for the reporter: At present, the country's discount interest on the storage companies is only RMB 50/ton, and all expenses such as loans, warehousing, handling, management, and warehouse consumption are required for enterprises to save their reserves. All must be solved by themselves, and they must bear the risks brought about by the fluctuations in the fertilizer market. Fertilizer prices have continued to rise in the past few years, and they are even hotter during peak seasons. At that time, it was not only profitable, but also riskless. The discount of 50 yuan/ton was a steady gain. However, since last year, due to the weak peak season of the fertilizer market, even when the storage companies can sell fertilizers, the price plummeted, which caused many companies to lose only 60 to 100 yuan/ton, even if they counted 50 Yuan / ton discount, still have to lose 10 to 50 yuan / ton. “In recent years, the cost of warehousing, labor, etc. has been increasing, but the state’s preference for storage enterprises is still a little interest. Does it need to change? When the fertilizer price falls sharply in the coming year, and the losses of storage and storage enterprises are large, the country Can we give proper subsidies? If these real issues cannot be addressed and resolved by the relevant departments, we certainly do not want to make any more.†The manager said.
“We did not participate in the bidding for the national chemical fertilizer and light storage this year. Because the risk of light storage is getting bigger and bigger, the country’s preferential treatment for it has saved the cost and the company will passively lose money.†Hebei Cangzhou University Liu Chang, Sales Director of Hua Chemical Co., Ltd. said bluntly.
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