China fertilizer Market Review & Outlook Proposal 2009/2010
In 2009, under the “positive fiscal, easy monetary” policy, the government has implemented a large-scale economic stimulus plan, substantially lower interest rates, take various measures to boost domestic demand and encourage exports. The slowing down momentum of China’s macroeconomic growth has been effectively contained, and resumed an increase of over 8% compared the same period last year in the second of 2009. As for external economies, the global economic recession caused by the international financial crisis also has a certain degree of recovery, the negative impact on China’s economy began to be weakened.
In this context, China’s fertilizer industry trends improved in the first half of 2009. Since the beginning of the third quarter of 2008, weak domestic consumption, stagnated export, plummeted prices, production decline and other unfavorable situation improved in varying degrees, industry profit margin also appeared several months of recovery.
However, the situation of China’s chemical fertilizer oversupply further developed, and the situation in policy environment, production and logistics costs and raw material supply remains rather grim, coupled with the impact of a prolonged slump in international prices, domestic fertilizer market in the second half backed into the bottom. Prices of various fertilizers had a substantial decline. The industry profit margin is comprehensively lower than that of last year, the loss-making percentage close to the five-year highs.
BOABC expected that favorable factors that affect 2010 fertilizer market include: macro-economic policies will continue to take stimulating economic growth and expansion of domestic market as the main objective (although its intensity may be reduced); government continues to increase agricultural investment and subsidies, especially agricultural material subsidies directly for farmers to purchase fertilizers is expected to increase year by year, and the linkage mechanism with fertilizer prices is established; grain purchase price is also increasing steadily; Year 2009 is the 7th consecutive year of grain harvest, which is conducive to supporting the growth of fertilizer consumption; investment policies in fertilizer circulation has basically liberalized; low export tariff policy in 2010 will continue to be implemented, and so on.
Negative factors include: domestic and international economic situation are still in recovery phase, the capacity of fertilizer consumption growth is limited; it is not only difficult to alleviate the current situation of fertilizer oversupply, but also the situation will be intensified in 2010; production, logistics, environmental protection and other costs are still on the rise; dependence on potash, sulfur and other raw materials are still high; preferential policies on fertilizer industries would be phased out, and so on.
Based on a comprehensive review and analysis of 2009 China’s fertilizer market, combined with national economic conditions and policy changes, BOABC will conduct a more in-depth analysis of China’s fertilizer market trend in 2010, make clear judgements and provide references for people who pay attention to China’s fertilizer market at home and abroad to make decisions.
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