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HTC announced that it will invest 960 million yuan to build an annual output of 200,000 tons of synthetic ammonia, 300,000 tons of urea, 300,000 tons of compound fertilizer projects. Another chemical fertilizer giant Lutianhua also announced that it will invest 400,000 tons of synthetic ammonia and 700,000 tons of urea in Ningxia, and will jointly produce 200,000 tons of methanol. The total investment of the project is 4.17 billion. In addition, Luxi Chemical stated last month that it will invest 4.85 billion yuan in new 5 projects, including 300,000 tons of new urea.
This is just the tip of the iceberg that the fertilizer companies are competing to launch new capacity this year. According to the analysis report of China National Petroleum Corporation [13.66 4.35%] and the Chemical Industry Association, investment in the fertilizer industry surged in the first quarter of this year, an increase of 55.1% year-on-year, an increase of 37 percentage points; 230 new projects were started, an increase of 60.8% year-on-year. Among them, the increase in investment in the phosphate fertilizer industry was 77.5% year-on-year.
“There are indeed many places in the Shangma Chemical Fertilizer Project, and most of them are concentrated in resource-rich provinces.†Xu Wenfeng, an analyst at Guodu Securities Fertilizer Industry, told the reporter yesterday that many provinces with resources believe that the added value of merely selling resources is too low. Therefore, they are all using their brains to extend the industrial chain and vigorously develop the neighboring industries. Fertilizers using coal or natural gas as the raw material have become the focus of development.
According to him, GDP-oriented places often have very large investment impulses, while projects such as coal chemical industry have large output values ​​and have a strong ability to pull GDP. Therefore, they are particularly concerned by the government. But the problem is that the current fertilizer market is already weak, the urea market is already saturated, and the phosphate fertilizer market is more difficult. If we continue to expand production capacity, it will only make things worse and cause more problems.
According to a report from the China Petrochemical Association, the export delivery value of the chemical industry in April fell by 23.5% year-on-year, of which chemical fertilizer fell by 24.1%.
“The price of international fertilizer market is even lower than that of China. In the current environment where the global fertilizer industry is relatively weak, the domestic chemical fertilizer is basically not going away, but inventory can not be digested and the industry has certain risks,†said Xu Wenfeng.
Conversely expand the production of fertilizers or lay hidden dangers
Inspired by the industry's revitalization plan and the adjustment of the country's credit policy, many areas of the domestic fertilizer industry have begun to expand significantly, and the already surplus production capacity continues to make rapid progress. It seems to many in the industry that this hidden industrial risk may make the already difficult fertilizer market worse in the future.