The 2013 Argus FMB Asia Fertilizer Exhibition was successfully held in Beijing from April 24th to 26th. More than 400 industry professionals from 60 countries participated in this grand event to discuss cooperation matters. This meeting focuses on the supply and demand situation of the Asian fertilizer market and the impact of major policy changes on the future international market trend. As China's export tariff gate is about to open and India's new fiscal year (April to March each year) begins, the holding of this conference will provide new guidance for the trend of the Asian fertilizer market.

Building a platform for fertilizer companies to seek business opportunities

As in previous years, many domestic and foreign fertilizer production and trading enterprises began contact negotiations at this meeting and reached cooperation intentions. Many international large-scale fertilizer producers and major traders have stable cooperation almost every year. As Chinese export enterprises began to gather fertilizers at ports and wait for the export gate to open, domestic export enterprises and import enterprises from Southeast Asia and other places engaged in intensive discussions for trade in the coming months.

According to the reporter's understanding, there have been some changes in the structure of the attending representatives this year. Firstly, some international suppliers with long-term stable trade did not attend the negotiations, while production enterprises that have appeared in the international trade market in the past two years are more active. In the current unfavorable international situation, traditional fertilizer companies mainly choose to maintain stability operations, while emerging fertilizer companies hope to gain some business opportunities from it. Secondly, there has been an increase in domestic trading enterprises, and many small-scale fertilizer production and distribution enterprises have begun to focus on exports. Faced with the pressure of oversupply in the domestic market, some fertilizer companies have begun to consider exports as a new channel for digestion. Once again, there has been an increase in the number of companies involved in maritime transportation compared to previous years. Companies such as ports, chartering ships, and shipping also hope to provide more services for fertilizer exports.

Trade negotiations to discuss cooperation intentions

This year, the international fertilizer market is relatively sluggish, with prices of nitrogen and phosphorus fertilizers at low levels in recent years. On the one hand, international fertilizer prices have basically approached the cost prices of domestic enterprises, and domestic enterprises lack confidence in the current prices; On the other hand, there is still some time before the export period, and domestic and foreign companies will not place orders for uncertain markets. Therefore, most trading parties only discuss cooperation intentions to lay the groundwork for real exports.

In terms of nitrogen fertilizer, there are currently more urea gathering ports in northern China. Chinese exporters and Southeast Asian importers have encountered low offshore prices of $330-340 per ton during the contact negotiation process. However, most domestic and foreign enterprises have expressed that due to the long time until the export period, there are still many uncertain factors in July, so although the price is low, the import and export sides cannot finalize cooperation.

In terms of phosphate fertilizers, India, as a global target market, has experienced a sharp decline in imports in the past two years. In the imported diammonium from India, the share of Chinese products has gradually increased, from 35% in 2011 to 40% in 2012. Mike Nash, a phosphate fertilizer analyst at Argus FMB in the UK, believes that Chinese products will account for 50% of India's imported diammonium in 2013. Therefore, the negotiations between India and China will serve as a benchmark for international phosphate fertilizer prices. However, the domestic fertilizer subsidy policy in India has not yet been introduced, and the structure and plan of different imported varieties in India are yet to be determined. Meanwhile, the inconsistent export standards of China have led to uncertain import prices for India.

In terms of potassium fertilizer, in recent years, the import price of potassium fertilizer in China has been in the international market; The depression. In this regard, international suppliers may choose to prioritize supplying to high priced markets while maintaining the supply of potassium fertilizer in the Chinese market, which may also lead to a shortage of supply. There is a large inventory of potassium fertilizer in Chinese ports, but recently there has been a significant decrease in border trade. International suppliers remain optimistic about the global market; On the other hand, we maintain confidence in the Chinese market, but also express our rational analysis of China's potassium fertilizer demand.

The trend is difficult to reverse, and the fertilizer market is looking forward to a rebound

The main factor currently affecting the decline of the international fertilizer market is weak demand. The climate in most regions of the world is abnormal, and some areas are experiencing extreme weather, which has affected the demand for fertilizers. Since last winter and this spring, the Northern Hemisphere has been cold, some parts of the United States have been hit by rainstorm, tens of thousands of acres of farmland in Canada have been flooded, and the Danube River, the second largest river in Europe, has been frozen, making the river it flows through stop shipping. China, Mongolia, and Japan in Asia are also deeply affected by extreme cold weather. The rainy and snowy weather in Northeast China even extends until April, causing delays in spring plowing. Some areas even change crop planting to cope with weather changes.

At the same time, the global commodity market is declining, and the fertilizer industry cannot escape the trend. Looking at the global economic situation, commodities such as coal, iron ore, and minerals are slowly declining, and futures prices such as corn are also falling, so the fertilizer industry is bound to be affected. However, there may not necessarily be no positive factors involved. Countries such as the United States and Brazil have increased their planting areas, and after experiencing extreme weather, crop prices also need to rebound.

Corporate Voice

Wu Haitao, Deputy General Manager of Nantong Xinhe International Logistics Co., Ltd.: From previous years, the urea port consolidation plan generally lasts from April to October, with export volume fluctuating from loose to tight, especially with explosive growth in September and October. Compared with last year, this year's off-season export tariff period has been extended and tax rates have been reduced, which should be a better situation for China's fertilizer exports. But now the international fertilizer market is sluggish, with prices at a low level. If the market continues to be sluggish, it may be difficult to complete the export plan this year. At present, the urea collection capacity at Nantong Port is less than 100000 tons. The collection and export situation in the coming months will need to be determined based on different varieties and domestic and foreign market conditions.

Tang Guorong, Deputy Director of Trade Department of Guangxi New Victory Group Company: From the foreign companies attending this conference, it can be seen that some foreign trade companies that have had stable cooperation in the past did not participate in the negotiations, but rather companies that have been new to trade in recent years are more active. It can be seen that the international trade market situation is not good, and some foreign trading companies have also adjusted their strategic plans. From the perspective of the domestic market, the price trends of various varieties are unclear, especially the price of potassium fertilizer has not fluctuated significantly. In fact, the market demand is still high, and sometimes there may be tight supply situations. The lack of active potassium fertilizer transactions is just a psychological problem downstream. In addition, the transparency of the current potassium fertilizer market is too high, and downstream factories are unwilling to stock up and collect as needed. Therefore, there is no intention of futures for potassium fertilizer, and the market is relatively stable. From the international market perspective, international prices are at a low level, making it difficult for China's fertilizer exports to be traded in the near future. On the one hand, it is because the import demand from India and Southeast Asia is diversifying; On the other hand, the prices of international fertilizer trade are decreasing, and the prices of phosphate and nitrogen fertilizers are lower than in the previous two years. In some places, with transportation costs added, it is difficult for domestic export enterprises to accept them. In response to this situation, the company will also consider diversified exports and focus on the export market of small varieties.

Qian Zhiguang, Deputy Manager of the Domestic Export Department of Zhejiang Agriculture Aipu Trading Co., Ltd.: Last year's export situation was good, and everyone had high expectations for this year's exports. However, this year's market situation is not as good as expected. There are three main reasons: firstly, the current situation in the commodity market is poor, with coal prices falling, corn also falling, and fertilizers unable to escape the trend; Secondly, overcapacity has put pressure on the market. Currently, nitrogen fertilizer production is 200000 tons per day. If produced at full capacity, the annual output will reach 72 million tons, while exports will only digest over 6 million tons. Plate and chemical industries will digest over 10 million tons, and compound fertilizers will consume over 40 million tons. The market is severely oversupplied; Thirdly, the abnormal domestic climate, slow warming in Northeast China, and drought in the north have also affected the domestic market. Meanwhile, abnormal weather conditions in the United States, Europe, and India have also led to a relatively sluggish international market.

Liu Yibing, Deputy General Manager of Longsheng Economic and Trade Co., Ltd. in Suifenhe City: Currently, the prices of fertilizers and other bulk commodities are showing a slow downward trend, making it difficult for potassium fertilizers to break out of an independent market. This is the overall trend of the industry. In addition, the drought in the northern domestic market this year has led to a decrease in the overall demand for fertilizers. In this situation, the market is relatively better for companies that have a real sales network and can sell on their own. If it is just a simple trading enterprise, the difficulty will increase.

Potassium fertilizer has been in a slow downward trend, but it will not be as disappointing as other product prices. Potassium fertilizer has not caused any impact on the fertilizer market. In the absence of a surge in demand, a sharp rise and fall in the market, and an overall sluggish fertilizer market, potassium fertilizer can only take advantage of the situation. However, the potassium fertilizer market is not without positive news. With the further adjustment of potassium chloride prices, the price of potassium fertilizer as a single element no longer has a significant disadvantage among the three varieties of nitrogen, phosphorus, and potassium. It has a relative advantage for a period of time, which will lead to an increase in the restorative effect of potassium chloride application. For example, in the past, when the price of potassium fertilizer was higher than that of nitrogen and phosphorus, the application amount was severely suppressed. As the price decreased, the application amount of potassium chloride increased, and this increase in demand was the biggest support for potassium fertilizer prices.

Zhang Guoqing, Manager of the Second Foreign Trade Company for Chemical Product Sales of Luxi Chemical Group Co., Ltd.: At this meeting, the number of Indian participating companies has decreased compared to previous years, mainly because the domestic fertilizer subsidy policy in India has not yet been determined, which has greatly hindered the signing of trade contracts. Once the subsidy policy in India becomes clear, Indian companies will still need to conduct bidding. At present, Indian companies still have many unknown situations regarding imports, for example, India imported two element fertilizers last year, but it may not be possible to import them this year. At present, the export of urea is generally not optimistic, mainly because the timing is not yet ripe. The current negotiations are only tentative negotiations, and there are not many substantive contract signings. In terms of phosphate fertilizers, the official price in India has not yet been announced, and there have been no substantial transactions. Domestic and foreign traders still need to wait and take a look. If the foreign party presses the price too low, some domestic enterprises do not need to export under the cost.

Overall, the export price of fertilizers in China will not become clear until late May. Even if the price continues to decline, the magnitude will not be significant. The current price has already exceeded the cost line of some small factories. The current international market prices are already low, but they are still acceptable.