If 2016 is a year of great test for China’s chemical fertilizer import and export trade, 2017 can be called more of a year of exploration amid change. Under the heavy pressure of relevant industry policies, domestic fertilizer production costs are overwhelmed. The increased fertilizer production in other resource-rich countries has largely occupied China's fertilizer export market share. Under the control of the "hand" of the market, on the one hand, traditional export companies are being forced back, and on the other hand, the pattern of China's fertilizer import and export products is gradually changing.
Demand grows steadily overall while supply changes dominate the market
According to data from the International Fertilizer Industry Association (IFA), world fertilizer demand grew steadily from 2016 to 2017 and is expected to reach 186 million tons. , among which, the demand for phosphate fertilizers and potassium fertilizers will far exceed that of nitrogen fertilizers. Compared with the steadily growing demand, the uncertainty of fertilizer supply has become one of the important factors that dominate the market trend. In terms of phosphate fertilizers, the current global phosphate fertilizer market shows regional characteristics. The Canadian and Latin American markets will be dominated by the United States, the European market is mainly dominated by North Africa and Russia, the Indian market is mainly dominated by Saudi Arabia and China, and the African market is occupied by Moroccan OCp Company. In terms of nitrogen fertilizers, urea imports from the top ten countries in the world accounted for 61% of the global urea trade volume. Eight of them increased their imports in 2016, while imports from India and the United States declined. In terms of potassium fertilizer, Russia and Canada still occupy an important position in the global potash fertilizer market supply with their huge potash resources. China's potash fertilizer production capacity has increased rapidly in recent years, which has also given China a growing voice in importing potassium fertilizer.
China’s status as a “major exporter” has been subverted
After the cancellation of the window period in 2015, China’s “timetable” for exporting to the global fertilizer market seems to have faded. Therefore, with the changes in the global supply and demand situation, Chinese fertilizer export companies have been squeezed by the increase in their own production costs and the decrease in the production costs of foreign suppliers. They have to bear the pain and reduce their export market share. In this battlefield of international market competition, Bearing the torment of surviving in the cracks.
Concerning the overall surplus of nitrogen fertilizer and phosphate fertilizer industries globally, low cost is undoubtedly king in the current market. Abundant resources alone can no longer bring absolute market advantages to enterprises, but abundant resources with low cost and low energy consumption are the way to go. Over the years, Chinese fertilizer companies have thrived in the international market by virtue of their background as a resource-rich country. However, when the output of phosphate rock, which can be mined on a large scale and used for hundreds of years, exploded in the Middle East, and when the United States suddenly discovered and immediately used large amounts of high-quality shale gas to produce nitrogen fertilizer, China's resources seemed to have no advantage on the international stage.
The Chinese market still attracts foreign fertilizer manufacturers
As the global fertilizer industry faces overcapacity, Chinese companies want to "go out" and foreign companies also hope to "come in." From the perspective of import volume, my country's imported chemical fertilizer products are mainly potash fertilizers, followed by compound fertilizers. According to Chinese customs statistics, China imported a total of 8.32 million tons of various fertilizers in 2016, with a total import volume of potassium chloride of 6.82 million tons and a total import volume of nitrogen, phosphorus and potassium ternary compound fertilizers of 1.13 million tons. The latest data shows that from January to August this year, my country imported 6 million tons of fertilizers, a year-on-year increase of 18%, of which potassium fertilizer imports were 5.015 million tons, a year-on-year increase of 24.6%.
In recent years, with the increase in global potash fertilizer production capacity, especially the continuous release of my country's potash fertilizer production, my country's road to import potash fertilizer has been continuously broadened. my country's potash fertilizer imports are no longer subject to the monopoly control of foreign suppliers, and domestic and foreign supplies can effectively ensure that my country's potash fertilizer consumption needs are met. But it also caused the market position of potassium fertilizer to gradually change from a market position of short supply to a competitive situation of oversupply. From the perspective of the introduction of products and technologies, in addition to potash fertilizers, more and more imported water-soluble fertilizers, biostimulants, organic fertilizers, etc. have appeared on the Chinese market. These agents bear more responsibility as a communication bridge, and most of their efforts in the Chinese market expect long-term returns.
Where there is an opportunity, there is a way out
As the global trade situation continues to change, Chinese companies are gradually diversifying their participation in the international market.
Many companies have taken the initiative and actively explored international markets. At present, China's compound fertilizer has great advantages in production and application technology in the international market, especially the export of new fertilizers, which has great market potential in Africa and Southeast Asia.
As an important global fertilizer demand market, Asia is one of the main target markets for global fertilizer suppliers. The huge agricultural industries in ASEAN countries have released strong agricultural input market potential, especially under the "Belt and Road" initiative, which is a huge opportunity for my country's agricultural input industry.
Seizing the opportunity to ensure the quality of domestically produced products is a necessary condition and foundation for expanding overseas. At the same time, it is also necessary to enhance the "soft" power of China's manufacturing, which is mainly reflected in two aspects:
First, service output. Although the agricultural realities of ASEAN countries are different, they are generally not as good as my country's development level. Enterprises that "go global" need to strengthen their soft power, especially in the formulation of patents and standards.
Second, brand building. Companies that “go global” must have a self-discipline mechanism. At present, global market competition is fierce and the quality of companies varies. Companies that “go global” will inevitably “fall off the chain” and “ruin their image.” Therefore, companies that “go global” must be self-disciplined. Small-scale companies can follow large-scale companies to jointly enter overseas markets, and small companies should join forces to jointly develop foreign markets.
Faced with the current international market situation, the challenges faced by enterprises indeed outweigh the opportunities. But only by surviving in opportunities can we have the possibility of winning. Only by gathering momentum when the industry is at a trough and responding to changes in the industry can we find a way out of the tight siege more quickly.