Nitrogen fertiliser production capacity is difficult to break

With the acceleration of the “larger and smaller” pace, since 2009, China's nitrogenous fertilizer industry has entered a period of rapid growth, and its industrial concentration has increased significantly. The technological upgrading has been accelerated, major breakthroughs have been made in advanced coal gasification technologies, and major advances have been made in the low-pressure and large-scale production of synthetic processes and devices.

Despite this, China National Nitrogen Fertilizer Industry Association and Sinopec Industrial Development Department jointly investigated and found that since the beginning of 2013, the nitrogen fertilizer industry has gradually released new production capacity, and the situation of overcapacity has gradually become more prominent. .

Data: Capacity increase since the 11th Five-Year Plan

Since the "Eleventh Five-Year Plan" period, China's nitrogenous fertilizer production capacity has grown rapidly, especially the growth rate of urea production capacity is even more significant. According to statistics from the China Nitrogen Fertilizer Industry Association, by the year 2012, the national ammonia production capacity will reach 68.5 million tons, an increase of 48.27% over 2005; it will account for about 34% of the world's total production capacity, which is two percentage points higher than in 2005. The country's urea production capacity reached 71.48 million tons, an increase of 51.52% over 2005; it accounted for about 37% of the world's total production capacity, an increase of 9 percentage points over 2005. In 2012, the national output of synthetic ammonia was 6,082,000 tons, and the output of nitrogen fertilizer was 43.133 million tons, of which 619.26 million tons of urea production (approximately 28.5 million tons of pure products) accounted for 66.1% of the total nitrogen fertilizer output.

In the past two years, the investment in the domestic nitrogen fertilizer industry has increased enthusiasm, and the production capacity has grown rapidly. According to the survey, from 2013 to 2015, China will add about 15 million tons of synthetic ammonia capacity and 20 million tons of urea. It is estimated that by 2015, the national ammonia production capacity will reach 83.50 million tons, accounting for 37% of the world; urea production capacity will reach 95 million tons, accounting for 44% of the world.

Difficulties: A large number of projects are still under construction

According to statistics from the China Nitrogen Fertilizer Industry Association, by 2013, the average capacity utilization rate of the industry has dropped to 80%, and the price has fallen by nearly 30% from the previous year's high point. In the first half of the year, the profits of the national nitrogen fertilizer industry fell by 42.4%, the profit margin was only 3%, the number of loss-making enterprises was 145, and the loss was 39%. According to historical statistics, the utilization rate of the urea industry is over 85%, and the industry is operating normally. Below 80%, when companies sell their products, the industry's profit margins are declining and they should be considered excessive. According to the current development trend, it is estimated that by the end of 2013, the utilization rate of the entire industry will be less than 75%.

However, the growth of production capacity is far from reaching a high point, and a large number of projects are still under construction. According to statistics, in 2013, there were 19 new urea projects to be put into production in China, totaling 10.16 million tons of urea production capacity. In 2014 and 2015, 25 urea projects are expected to be completed and put into operation, with a total capacity of 16.74 million tons (of which 11 million tons will be built in Inner Mongolia and Xinjiang). At present, due to unstable raw material supply and high cost, the production capacity of production difficulties is about 6 million tons. This part of the production capacity is mainly distributed in major grain-producing areas and will be gradually eliminated by the market in the next few years. It is estimated that by the end of the “Twelfth Five-Year Plan”, the national urea production capacity will exceed 90 million tons, while the market demand is about 62.3 million tons (of which industrial demand is 19.3 million tons, agricultural demand is about 43 million tons, excluding exports), and urea production capacity is surplus. Nearly 30 million tons. Due to the fact that the amount of nitrogen fertilizer applied to crops is already at a relatively high level, the growth rate of nitrogen fertilizer consumption in the agricultural sector will tend to be stable in the future; thermal power, denitrification in the cement industry, and exhaust gas treatment of diesel vehicles will drive the larger demand for urea, after 2013~ After rapid growth in 2017 (with an average annual growth rate of 11.6%), the demand for urea will slow down significantly. It is estimated that by 2025, the total consumption of urea in agriculture and industry will be around 78 million tons. Even if no additional urea capacity is produced after 2016, there will be 12 million tons of excess capacity that needs to be digested. It can be seen that urea will be in the next few years. Overcapacity will show an expanding trend.

In 2012, there were 33 ammonium nitrate production enterprises in China, with a production capacity of 7.4 million tons and an output of 4.83 million tons, of which 3.37 million tons was used for industrial production. It was used to produce 1 million tons of nitrate-based compound fertilizer and 460,000 tons of exports. At present, more than 5 million tons of *** capacity will be built and proposed. It is predicted that by the end of the “Twelfth Five-Year Plan”, the production capacity of *** will reach 12 million tons, and the industrial demand for *** will be up to 5 million tons. The remaining more than 700 million tons of production capacity can only be digested by the production of nitro compound fertilizer. However, the development speed of nitro compound fertilizer is far lower than the development speed of ***. By the end of 2012, it has reached a certain scale of more than 20 nitro-fertilizer production enterprises, with an annual production capacity of 6.58 million tons, and a planned or planned capacity of 9 million tons. It is expected that the nitro compound fertilizer at the end of the “Twelfth Five-Year Plan” will require approximately 3.8 million tons of nitro-a-compound fertilizer, which will still have a surplus capacity of 3.2 million tons. Because *** has flammable, easily explosive characteristics, overcapacity can easily cause a large inventory of inventory, increasing the difficulty of corporate security management, but also detrimental to the public safety of society.

The international market is gradually saturated and China's exports of nitrogen fertilizer products have become more difficult. According to statistics from the International Fertilizer Industry Association, global ammonia production capacity and production in 2012 were 203 million tons and 166 million tons respectively.

In the next three years, the production capacity will increase at a rate of 3.4% per year. It is estimated that the production capacity in 2015 will reach 224.2 million tons. Calculated at an operating rate of 85%, the estimated ammonia production in 2015 is approximately 192.8 million tons. In terms of demand, total demand in 2015 is expected to reach 180.6 million tons. According to the above forecast, the world's synthetic ammonia surplus will be about 12.2 million tons in 2015, accounting for about 6% of the total output.

As of the end of 2012, global urea capacity and production reached 191.5 million tons and 167.6 million tons, respectively. In the next three years, the world average annual growth rate of urea capacity and output is expected to reach 3.9% and 5.3%, respectively. In 2015, the world's urea production capacity will reach 214.6 million tons, and the output will reach 193.1 million tons (calculated at 90.0% of the operating rate). On the demand side, global urea demand is expected to increase from 164 million tons in 2012 to 183 million tons in 2015, an average annual increase of 3.8%. The average annual growth rate of agricultural demand is 2.7%, and the average annual increase in industrial demand is 9%. With the expansion of the world's urea capacity in the next few years, the potential surplus of urea will gradually increase. It is estimated that the surplus in 2015 will be about 10 million tons, accounting for 5% of the total output.

Affected by the supply and demand of energy and resources, the global pattern of nitrogen fertilizer industry is undergoing new changes, and nitrogen fertilizer production has shifted to resources such as the Middle East and North America where energy prices are lower. At the same time, with the increase in fertilizer prices, India, Vietnam, and other fertilizer-consuming countries are pursuing a self-sufficiency strategy and some production facilities are under construction. From 2013 to 2017, the capacity of new foreign urea plants will exceed 33 million tons. China's current major export markets such as India and the United States will expand nearly 13 million tons, while China’s current competitors such as North Africa and the Middle East will expand 20 million tons. The release of the production capacity of these devices will inevitably exert great pressure on the nitrogen fertilizer industry in China, and will face the difficulties of internal and external diplomacy in the future.

Limiting nitrogen fertilizer exports and increasing the pressure of overcapacity. Since 2007, the country has imposed high export tariffs on chemical fertilizers to ensure domestic fertilizer use. In the current situation of severe oversupply of nitrogen fertilizer production, if the export tariff differential tariff policy is still implemented, controlling the export of fertilizer not only exacerbates domestic overcapacity pressure, but also puts the company in a very passive position in the export negotiations, seriously weakening International competitiveness.

Suggestions: Encourage enterprises to transition or exit

Since the "Twelfth Five-Year Plan" period, China's nitrogen fertilizer production capacity is developing from a structural surplus to a full-scale surplus. How to adopt relevant policies and measures to effectively resolve the contradiction of overcapacity is an objective reality that the entire industry must face. To this end, the joint research team put forward relevant recommendations: strict control of new production capacity.

At present, there are more than 6 million tons of production capacity that is relatively backward in the industry, raw material supply is unstable, and costs are not competitive. Even if all of them are eliminated immediately, at the end of the “Twelfth Five-year Plan”, there are still nearly 20 million tons of urea excess capacity. Therefore, it is difficult to resolve the contradiction of overcapacity by eliminating only backward production capacity. New production capacity must be strictly controlled. It is recommended that no new urea, hydrazine, and allied alkali projects be built in five years in principle, and construction must be stopped when all approvals have been completed but construction has not commenced. In particular, in Inner Mongolia and other northwestern regions, although coal resources are abundant, water resources are scarce and the ecological environment is fragile. It is not appropriate to continue to build ammonia and urea projects that consume large quantities of water. In addition, local agricultural demand for urea is limited, and large quantities of urea are transported by distant distance to increase railways. The transport pressure.