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In a recent report, a journalist gathered insights from the Yunnan Sales Manager of Hubei Yangfeng Co., Ltd., who revealed that the local retail price for high-concentration compound fertilizer stands at 2,000 yuan per ton. The company's products are in high demand, and they maintain minimal inventory levels. Additionally, the reporter spoke with sales representatives in Guangxi, who mentioned that the retail price in their region has surpassed 2,000 yuan per ton. Wang Xiyi, the Executive Vice President of Anhui Liuguo Chemical Co., Ltd., who conducted market research across several southern provinces, noted that during this year’s spring plowing season, the overall supply of phosphorus-based compound fertilizers remains stable.
Although there are regional variations in supply-demand dynamics and pricing, these differences are not significant. Analysts attribute this stability to the proactive measures taken by major domestic phosphate and compound fertilizer producers. At the end of last year, these companies assessed the supply-demand situation and adjusted their production accordingly. Many also revised their marketing strategies, avoiding the release of new goods into regions already saturated with stock, thus maintaining a balanced supply across different markets.
Xiu Xuefeng, Secretary-General of the China Phosphate Fertilizer Industry Association, echoed this sentiment, stating that this year’s phosphorus and compound fertilizer supply is sufficient. According to data from 2005, last year’s production of phosphorus compound fertilizer increased by 10% compared to the previous year, reaching over 11 million tons. Meanwhile, agricultural demand has not grown as rapidly, resulting in a more abundant supply this spring. With the expansion of large-scale enterprises, production capacity is expected to rise by 7% to 8% this year.
Despite the adequate supply, farmers benefit, but manufacturers face challenges. Several phosphate and compound fertilizer producers reported that they are under pressure from rising production costs and falling market prices, leaving them operating at or near break-even. This contrasts with earlier optimistic predictions. Although prices are expected to rise with the arrival of the spring plowing season, the recovery rate is modest, and regional disparities are more pronounced.
During interviews with various production and distribution companies, as well as industry associations, the reporter found that even the retail price, which was once easier to estimate, now shows wide variation. Prices range from 1,900 to 2,100 yuan per ton. While the average wholesale and retail prices have risen by about 20 yuan per ton compared to the same period last year, this increase is insufficient to offset the rising costs of raw materials and transportation. As a result, many companies remain at the break-even point, with rising inventories and declining profits.
Ensuring sufficient supply during the spring plowing season is crucial, and farmers’ interests must be protected. Therefore, it is unrealistic to expect companies to boost profits through higher selling prices. The current market conditions have limited the room for price increases. However, if enterprise interests are not safeguarded, it could negatively impact both the fertilizer industry and agricultural development in the long run.
Industry experts suggest several measures: First, limiting the export of phosphate ore to protect China’s depleting resources and reduce production costs for fertilizer companies. Second, provinces with phosphate ore should prioritize meeting the raw material needs of other domestic enterprises before expanding fertilizer production capacity. Third, the central government should implement economic incentives to promote high-level phosphate fertilizer exports, helping alleviate the oversupply issue domestically. Many companies confirm that this year’s spring plowing and fertilizer supply are secured. However, without active responses to current challenges, it will be difficult to manage the post-spring plowing market.