Recently, the National Development and Reform Commission held a meeting to remind some key fertilizer companies. The meeting required key fertilizer companies to operate in an orderly manner in accordance with laws and regulations, and not to hoard, drive up prices, or fabricate or spread information about price increases. Participating companies stated that they will do their best to organize production and operation and will not arrange fertilizer exports for the time being to ensure the domestic fertilizer market supply.
Current status of the fertilizer market
The chemical fertilizers currently needed in agriculture are mainly nitrogen, phosphorus, potassium fertilizers, compound fertilizers, special fertilizers, etc. The most important one is nitrogen fertilizer, which is a relatively large amount of fertilizer with urea as the main body.
Last year, the retail price of urea was 85-95 yuan per bag, but now it has risen to 150 yuan per bag. Basically it has doubled. Recently, the ex-factory, wholesale and retail prices of potassium sulfate and potassium chloride have been rising rapidly.
According to Mobei market data, the price of potassium sulfate in July this year was about 4,500 yuan/ton, which was about 2525 yuan last year, an increase of about 80%; while the price of potassium chloride in July this year was about 3270 yuan/ton, compared to last year. The price of about 1820 yuan/ton in July also rose by nearly 80%.
The main reason for the increase in fertilizer prices
The current increase in the price of chemical fertilizers is due to multiple factors and structural problems. It has already caused serious impacts on agriculture, especially the pig industry.
① The increase in fertilizer prices is mainly due to the relatively heavy impact of the new crown epidemic. The rise in the prices of some bulk products in society has increased the prices of raw materials and energy required for the production of fertilizers, which has led to a rapid increase in the cost of fertilizers.
② The increase in fertilizer prices was due to the epidemic. Domestic fertilizer manufacturers once stopped production and the fertilizer reserve inventory was at the lowest level. This resulted in the fertilizer market supply being less than demand, that is, the supply of fertilizer was in short supply and the price rose.
③In the first half of this year, the export volume of domestic chemical fertilizers has gradually increased, and the total export value has increased by more than 90%. This has caused a significant reduction in the domestic market supply of urea, ammonium sulfate and other chemical fertilizers. The market supply is seriously insufficient and the supply of chemical fertilizers exceeds demand. Prices have risen sharply.
The rise in fertilizer prices has a major impact on agriculture
Chemical fertilizer is the most important means of production in agriculture, accounting for one-third of the cost of food production. The current rapid rise in the price of chemical fertilizers basically accounts for half of the cost of food production, greatly squeezing the profit margins of farmers’ farming and hindering the development of agricultural production.
The increase in the cost of food cultivation has led to an increase in the price of food, and the price of finished food for pig feed and human rations will increase, and a series of market reactions will occur. Due to the increase in the price of pig feed and the increase in pig raising costs, pig farmers are unprofitable, and a large number of pig farmers have withdrawn from the pig industry.
Domestic fertilizer prices are expected to fall in the second half of the year
In response to the above reasons, the official has interviewed some key fertilizer manufacturers. In the next six months, the fertilizer market in various regions is expected to introduce a series of positive support for the fertilizer production side, reduce costs, and increase benefits, promote the supply of fertilizers in the market, and restore stability. Market conditions, chemical fertilizer market prices are expected to quickly return to normal conditions, to protect the economic benefits of farmers from growing grain from declining, and at the same time to develop the pig industry to reverse the abnormal development of live pigs.
Source: Mobile Public Account
