In the first half of 2023, the
Compound Fertilizer industry was comprehensively affected by factors such as external environment, bulk production, and upstream and downstream constraints, resulting in difficult operations and intensified competition; At the same time, due to the continuous decline of upstream raw materials, the market has been upside down and confidence has been severely undermined. However, with the assistance of the food security strategy and the construction of an agricultural power, downstream demand is stable, and new fertilizers are developing rapidly; With the adjustment of export policies, the export situation of some varieties has slightly improved, but the short-term drive is limited. Below is an analysis of the price and supply side.
Price recovery
Compound Fertilizer, Monoammonium Phosphate, Potassium Chloride, Potassium Sulfate In the first half of 2023, the price of compound fertilizers showed a narrow range of fluctuations and then continued to decline, with a cumulative adjustment of over 700 yuan/ton. Some specifications and proportion prices have fallen below the same level as in 2021.
The main upstream nitrogen, phosphorus, and potassium raw materials have a decisive impact on the prices of composite fertilizers. Since mid March, there has been a significant decline in the prices of phosphate, potassium, and nitrogen fertilizers. The gradual decline in costs has also led to a decline in the prices of composite fertilizers. During this period, the high cost of raw materials in the early stage has also caused some composite fertilizer enterprises to suffer unbearably.
However, based on the market trend in the second half of June, there are signs of gradual narrowing of the adjustment in raw material product prices, with monoammonium phosphate's half month decline narrowing to 50 yuan/ton. Compared with the psychological expectations of the market, the current prices of nitrogen, phosphorus, and potassium raw materials are gradually approaching the expected values. Although there is still a certain price difference, this range is mostly within a controllable range. The difference is that after these two years of significant ups and downs, market confidence has been undermined, and all parties are trying to avoid unnecessary risks. Therefore, for the second half of the year, compound fertilizers will still be cautious in trading.
The year-on-year decline in production and the decrease in social stock
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In the first half of 2023, the yield of compound fertilizers decreased year-on-year. According to data from Longzhong Information, China's compound fertilizer production in the first half of the year was 28.5 million tons, a year-on-year decrease of 7.1%. The average utilization rate of compound fertilizer production capacity in the first half of the year was 40.9%, a year-on-year decrease of 3.42 percentage points.
From a monthly perspective, the production from January to April 2023 showed a year-on-year decline compared to the average year of 2022, with January and April performing more significantly. During the traditional Spring Festival holiday in January, small and medium-sized enterprises parked more cars, and large-scale enterprises mainly reduced their load. However, during the 2022 Spring Festival in February, enterprises increased their horsepower production in early January, resulting in a two-year year-on-year difference. In mid to early April 2023, due to fluctuations in raw material prices, it was difficult for composite fertilizer companies to lock in costs, and poor market shipping caused temporary shutdowns of some units, resulting in a significant year-on-year decline in production for the month.
From May to June 2023, there was a slight increase in production compared to the same period last year, mainly due to the delayed progress of corn fertilizer preparation in the first summer of 2023, and the centralized shipping situation continued until mid to early June, with a relatively improved capacity utilization rate; Secondly, from May to June 2022, due to significant market price fluctuations, enterprises were cautious in scheduling production after completing orders.
Overall, the production of compound fertilizers has declined in 2023, which is in line with market expectations. In the downward price channel, all parties have operated cautiously and actively arranged inventory, and the social stock has also completed a wave of consumption.
Gradually improving market mentality in the second half of the year
Compound Fertilizer, Monoammonium Phosphate, Nitrogen Fertilizer, Phosphate Fertilizer, Potassium Chloride, Potassium Fertilizer, Potassium Sulfate
Recently, from the perspective of market sentiment in the second half of the year
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