At the market analysis forum of this year’s phosphorus and compound fertilizer production and marketing meeting, Andrea Valentini, the fertilizer market commentator of Argus, made a report on the review and outlook of the global fertilizer and raw material market, and analyzed and predicted the global fertilizer market and the medium and short-term market situation. At the same time, Wang Bei, deputy general manager of Zhongnong Group Holding Co., Ltd., made an in-depth analysis and prediction on the global import and export of potash fertilizer and the domestic market trend of winter storage under the title of “looking at the world through potash fertilizer”. A kind of
short term supply surplus of nitrogen fertilizer
new production is worthy of attention
According to Andrea Valentini’s analysis, at this stage, the global nitrogen fertilizer is in the stage of high production capacity, and the market will continue to maintain the situation of oversupply before 2023. Then, the nitrogen fertilizer market and trade market will change because the new production cannot keep up with the growth of demand. Chinese style
From the perspective of new production, investment capacity in Europe and America is limited, and new production areas are mainly concentrated in Nigeria, India, Russia, Iran and Egypt. Among them, there are two changes worthy of attention: first, Nigeria (natural gas cost $1.5-2 / mmbtu), Russia (natural gas cost $0.5-3.5 / mmbtu) and other regions, as a result of the low cost of natural gas and investment and construction, promote the continuous increase of new production; second, India’s annual urea demand is about 30 million tons, of which more than 10 million tons need to be imported, but In recent years, through continuous investment and construction of LNG urea production plant, India’s urea import has been rapidly reduced from 10 million tons / year to 6 million tons / year. According to Andrea Valentini, with the barauni hurl gas supply improvement project listed in the determined capacity, India will add four new urea production units by 2022, with the expected capacity growth rate of more than 5 million tons / year, and its external dependence on urea demand will drop significantly, which will deeply affect the traditional international trade pattern of urea. Chinese style
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On the part of China, the sharp decline in exports from 2016 to 2017 led to a decrease in the net surplus in the international market, which led to a tight supply trend in the international urea market in 2018, which should be postponed to 2019. However, due to the impact of the devaluation of the RMB and the decline of energy prices, the export volume of China’s urea this year tends to be significantly surplus. With the slowing down of the shutdown of excess capacity and the increasing supply of natural gas, China’s urea export volume is expected to rise from the original 4-5 million tons next year. But overall, China’s urea production capacity will continue to decline. A kind of
in view of the international urea market trend in the next five years, Andrea Valentini analysis said that it is expected that in 2020-2021, 5 million tons of new export-oriented production will exceed the growth of market demand, and the market may tend to be weak. From 2023 to 2024, the new production increase can be slowed down significantly, or the situation of supply shortage will appear again. It should be noted that the early production of some projects will fill the demand gap and become an unpredictable trade risk point. A kind of
Phosphorus fertilizer tends to be regional
Production can reduce year-round
In recent years, the trend of regional phosphate fertilizer market is very obvious. For example, the North-South American market represented by OCP, and the Asian market to the east of Suez Canal represented by ma’aden. Andrea Valentini pointed out that unlike the saturation of market demand in other regions, the emerging market in Brazil still has considerable room to increase the demand for phosphate fertilizer, thus attracting the high attention of OCP, ma’aden, mosaic and phosphate fertilizer enterprises from China. Chinese style
For the international phosphate fertilizer market in 2019, the merger of kaip and Wengfu is undoubtedly an event with far-reaching impact. In response, Andrea Valentini said that in the past period, high cost, environmental pressure, zero growth policy of chemical fertilizer, increasingly strict issuance of mining license, fierce export competition and other factors severely restricted the development of Chinese phosphate fertilizer enterprises, which also contributed to the integration of Chinese phosphate fertilizer industry. Some enterprises without resources and environmental protection standards are gradually squeezed out of the market, and large-scale horizontal reorganization and integration among large enterprises may continue to cause the annual decline of China’s phosphate fertilizer production capacity. A kind of
from the perspective of export, in the first quarter of this year, domestic demand for diammonium was not strong, and suppliers paid close attention to Indian diammonium bidding. In the first half of the year, 1.3 million tons of diammonium were shipped from China to India, an increase of 34%. In the second half of the year, the international market declined as a whole, and China’s export of diammonium was blocked, especially the export price fell sharply. Chinese enterprises began to jointly limit production to stabilize the market. A kind of
compared with the measures taken by Chinese enterprises to jointly limit production, the international phosphate fertilizer giants, such as OCP and ma’aden, did not limit production, but sought sales through continuous operation, resulting in a continuous surplus of global phosphate fertilizer supply. With the rapid growth of raw material capacity, such as sulfur, the price of phosphate fertilizer continued to decline. Enterprises in North America are also faced with environmental protection, resource depletion, mining restrictions and other issues, mainly through horizontal integration, closure of some projects, and optimization of production capacity and product structure. Throughout the year, large suppliers will not significantly reduce production, the global phosphorus fertilizer will be perennial surplus, the situation of oversupply is difficult to ease for a while. Chinese style
In addition, Andrea Valentini also noted that IMO’s new regulations on Desulfurization of ship fuel oil will be officially implemented in 2020. According to the requirements of the new regulations, the fuel oil raw materials of cargo ships need to be changed from heavy acid oil with high sulfur content to light sweet oil with sulfur content less than 0.5% or natural gas as fuel. Cargo ships still using acid oil need to be equipped with high cost desulfurization devices. After the implementation of the new rules, it will inevitably lead to a significant increase in shipping costs, especially the impact on FOB prices. A kind of
potash international giant monopolizes supply
excess capacity may continue to increase
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after the first quarter of 2019, potash market experienced a round of downward trend. At this stage, the monopoly of potash supply by international giants has not changed, and the industry concentration is still quite high. Andrea Valentini said that since 2009, the new production of international potash fertilizer has begun to exceed the growth rate of market demand, and the new production is mainly concentrated in Canada, Russia, Belarus and China. In this environment, any new production will lead to the continuous decline of potash market. He expects that, despite the closure of projects, the oversupply of potash fertilizer market will continue to grow in the future. In the short term, potash market will remain weak. Chinese style
According to the global import and export of potash fertilizer, Wang Bei analyzed that in 2018, the global trade volume of potash fertilizer was 53.49 million tons, of which Brazil, China, India and Southeast Asia accounted for 60% of the total import volume of potash fertilizer. Specifically, affected by weather and flood disasters, the U.S. imported 5.64 million tons of potash fertilizer from January to August 2019, a year-on-year decrease of 10%; the trade of potash fertilizer in Southeast Asia is relatively flexible, dominated by large-scale planting bidding and spot trade, and greatly affected by palm oil market. From January to August 2019, Indonesia imported 2.12 million tons of potash fertilizer, a year-on-year decrease of 12%, and Malaysia imported 830000 tons from January to July 2019 , a year-on-year decrease of 20%; Brazil’s demand for potash fertilizer continues to increase, with imports reaching 7.98 million tons from January to September 2019, a year-on-year increase of 11%; India adopts the form of annual long-term cooperation + short-term bidding and government subsidies, with imports of 2.98 million tons of potash fertilizer from January to July 2019, basically the same year-on-year. Brazil’s large farmers have strong financial strength and great demand potential. At this stage, they have become the price benchmark of the global high-end spot market of potash fertilizer. Chinese style
China’s annual demand for potash fertilizer is 15-16 million tons, with a self-sufficiency rate of 55%. Influenced by the decline of agricultural product quotation, the increase of environmental protection supervision and the continuous decline of nitrogen and phosphorus fertilizer product quotation, it is expected that the domestic demand for potash fertilizer will decline, and potash fertilizer price will remain weak. In view of the unilateral downward trend of potash fertilizer price in this year, few shocks, and large-scale losses of domestic import businesses, Wang Bei analyzed that the main factors of Zui are the rapid growth of supply and high inventory. According to data statistics, from January to September 2019, China imported 7.653 million tons of potash fertilizer, an increase of 2.09 million tons over the same period last year. It is expected to import 8-8.3 million tons in the whole year, with a year-on-year increase of 550000-850000 tons. From January to August 2019, the domestic potash fertilizer was converted into 4.689 million tons of pure (K2O), and the expected physical quantity was 7.5-8 million tons, which was the high growth rate of Zui among all kinds of fertilizer. In addition, the stock increase of domestic potash fertilizer this year also reached about 1.5-1.7 million tons. With the increase of supply and the high stock, the price of potash fertilizer has been affected to some extent. In comparison, the international prices of nitrogen and phosphorus have declined in this year, with a drop of more than $100 per ton for Zui high and a relatively small drop of $30-50 per ton for potash.
Wang Bei said that from the perspective of potash fertilizer, we should focus on the following aspects: first, macro-economic situation. At this stage, economic growth slows down, Sino US trade war and RMB exchange rate adjustment lead to the increase of trade costs, and we should pay attention to the new international production and changes in major markets such as Brazil, India, the United States and Southeast Asia; second, port inventory, Special attention should be paid to the difference between bonded goods and imported stock, and the structure of its stock products. For example, the stock of potash fertilizer in Northeast China this year is 400000 tons, of which only 240000 tons are large grains. The demand gap is large. In addition, the stock proportion of red powder and white crystal is also low. Third, the arrival situation. It is expected that after October, the supply of tradable potash will not increase any more, and the imported potash fertilizer will enter the stage of one-way storage. In the short term Fourth, the negotiation on import of potassium is not smooth this year, and no long-term agreement has been signed. It is expected that the negotiation will be reopened before and after the Spring Festival in 2020, so we should pay attention to the timing and price of land and sea transportation import.
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