Fertilizer industry in China welcomes development in spring
Cancellation of fertilizer price restrictions, comprehensive subsidies for farmers to adopt agricultural resources, and maintain preferential policies for fertilizer production. Experts pointed out that the new price formation mechanism will promote production enterprises to regularly organize production and business activities in accordance with the market laws, and better participate in market competition, which will help promote the sustained and healthy development of the fertilizer industry, and better serve the “three rural issues†before and after the Spring Festival. The continuing drought in northern China has affected the hearts of the people of the country. According to data from the Ministry of Agriculture, as of February 2, a total of 141 million mu of wheat were affected in the main wheat producing areas in northern China, which is close to 43% of the total wheat sown in the country.
“At present, the central government is introducing policies to solve this problem. From the actual situation, if we add rainwater to the drought-bearing wheat and then increase fertilization once, the harvest will be much better.†Experts from Henan Zhumadian Agricultural Department told the reporter.
In recent years, the country has started to strengthen its agricultural foundations, and has made the promotion of grain production and peasants' income increase the top priority, and has taken a series of major measures in terms of systems, policies, and inputs. Analysts pointed out that the stability of the agricultural production materials, especially the fertilizer market, is one of the keys to solving the “three rural issues†development issue.
The National Perfect Fertilizer Price Formation Mechanism On the eve of the Spring Festival, the National Development and Reform Commission issued a notice to establish a market-led fertilizer price formation mechanism. In this reform, the ex-factory price of domestic chemical fertilizers and the price of imported fertilizers other than potash fertilizers were changed from the government-guided price to market-regulated prices; the exemption of the prices of chemical fertilizers that had been released and the prices of chemical fertilizers were eliminated. Various temporary price interventions, such as price adjustment, price ceilings, and rate control, and moderate supervision of imported potash fertilizers with higher market concentration, but adjustment of supervision methods.
The notice also pointed out that the State will comprehensively consider the impact of changes in prices of agricultural and chemical fertilizers, diesel fuel, and food prices on the income of farmers, increase the price of agricultural materials and increase the comprehensive subsidies for agricultural resources, and increase the minimum grain purchase price, temporary storage and storage price, etc. With the linkage mechanism, the comprehensive subsidy for agricultural resources will only increase, ensuring that farmers’ income from grain production does not decline due to rising prices of agricultural materials.
The person in charge of the relevant department of the National Development and Reform Commission stated that after reforming the fertilizer price formation mechanism, in order to ensure the supply of chemical fertilizers and the stability of the market, the country will comprehensively use the means of import and export adjustment, reserve regulation, coordination of transport, and market supervision.
Fertilizer price reform is imperative. “This fertilizer price reform is imperative.†According to the person in charge of the China Fertilizer Association, in 1998, the State Council issued the Notice on Deepening the Reform of the Fertilizer Distribution System, requesting an improvement in fertilizer price management methods. Establishing a market-based mechanism under the guidance of the government, changing the prices of chemical fertilizers from government pricing to government-guided prices and liberalizing the retail price of chemical fertilizers. In 2004, in response to the dramatic increase in fertilizer prices, the government implemented interim price interventions such as price increase declaration and rate control on the ex-factory prices and retail prices of fertilizers that were market-regulated.
"In recent years, there have been major changes in the domestic fertilizer market, with a total supply and demand balance, sufficient market competition, and the current fertilizer price formation mechanism has been difficult to meet the requirements of market economic development," said the person in charge.
A study by the China Fertilizer Association last year pointed out that due to the increase in raw material prices and the price limit of fertilizer products, fertilizer companies are in trouble. Since the market for raw materials (mainly coal) needed for chemical fertilizer production has been fully liberalized, and the market price can be continuously increased, urea has been constrained by the nation's highest factory price limit, so fertilizer companies are struggling.
The removal of fertilizer price restrictions this time, to some extent, to adapt to the market situation at home and abroad. With the collapse of international bulk raw material prices, urea and diammonium phosphate in international fertilizer prices have fallen below domestic prices, providing a rare external environment for the market-oriented reform of chemical fertilizer prices. The elimination of fertilizer price restrictions will help promote the continued health of the fertilizer industry. Development to ensure domestic fertilizer supply.
After the new price formation mechanism will promote the healthy development of the market and reform the pricing mechanism of fertilizers, enterprises can organize production and business activities in accordance with market laws, adjust prices in a timely manner in accordance with changes in market supply and demand and cost, increase flexibility in production and operation, and better participate in market competition. It will help promote the sustained and healthy development of the fertilizer industry.
Analysts pointed out that the policy temporarily retains preferential price policies for fertilizer production, gas use, and railway transportation, as well as preferential taxation policies for the production and circulation of fertilizers, which are of great benefit to chemical fertilizer companies.
Taking the urea industry as an example, due to the pressure of supply and demand in the phosphate fertilizer industry, the uncertainty of the price of potash fertilizer is strong. After the price limit of the urea industry is removed, due to the large number of companies that have stopped production, the supply and demand in the spring season will be tight, and the ex-factory price will exceed 1,725 ​​yuan/ton. Urea Enterprises will benefit, especially gas-headed enterprises, and the ex-factory price is expected to surpass that of last year given the constant cost of natural gas. The price of raw coal for coal enterprises has room for downward adjustment, and profitability is expected to recover.
The person in charge of Hubei Chemical Fertilizer Company stated that the introduction of the policy is of course good for chemical fertilizer production enterprises, but as a competition subject, chemical fertilizer production enterprises should also see the role of technology in market competition, and should also look inwards and practice hard. While serving the "three rural issues," we will achieve a sound and rapid development of our business.
The relevant person in charge of the National Development and Reform Commission emphasized that after the reform of the fertilizer price formation mechanism, there is little possibility that the price of chemical fertilizers will increase significantly. At present, the total supply and demand for chemical fertilizers in China is basically balanced, and the main varieties such as nitrogen fertilizers and phosphate fertilizers all exceed supply, and domestic fertilizer resources are abundant. The state will continue to adopt measures such as adjusting the production structure and supporting the construction of key projects to increase the production of chemical fertilizers and ensure the supply of chemical fertilizers.
“At present, the central government is introducing policies to solve this problem. From the actual situation, if we add rainwater to the drought-bearing wheat and then increase fertilization once, the harvest will be much better.†Experts from Henan Zhumadian Agricultural Department told the reporter.
In recent years, the country has started to strengthen its agricultural foundations, and has made the promotion of grain production and peasants' income increase the top priority, and has taken a series of major measures in terms of systems, policies, and inputs. Analysts pointed out that the stability of the agricultural production materials, especially the fertilizer market, is one of the keys to solving the “three rural issues†development issue.
The National Perfect Fertilizer Price Formation Mechanism On the eve of the Spring Festival, the National Development and Reform Commission issued a notice to establish a market-led fertilizer price formation mechanism. In this reform, the ex-factory price of domestic chemical fertilizers and the price of imported fertilizers other than potash fertilizers were changed from the government-guided price to market-regulated prices; the exemption of the prices of chemical fertilizers that had been released and the prices of chemical fertilizers were eliminated. Various temporary price interventions, such as price adjustment, price ceilings, and rate control, and moderate supervision of imported potash fertilizers with higher market concentration, but adjustment of supervision methods.
The notice also pointed out that the State will comprehensively consider the impact of changes in prices of agricultural and chemical fertilizers, diesel fuel, and food prices on the income of farmers, increase the price of agricultural materials and increase the comprehensive subsidies for agricultural resources, and increase the minimum grain purchase price, temporary storage and storage price, etc. With the linkage mechanism, the comprehensive subsidy for agricultural resources will only increase, ensuring that farmers’ income from grain production does not decline due to rising prices of agricultural materials.
The person in charge of the relevant department of the National Development and Reform Commission stated that after reforming the fertilizer price formation mechanism, in order to ensure the supply of chemical fertilizers and the stability of the market, the country will comprehensively use the means of import and export adjustment, reserve regulation, coordination of transport, and market supervision.
Fertilizer price reform is imperative. “This fertilizer price reform is imperative.†According to the person in charge of the China Fertilizer Association, in 1998, the State Council issued the Notice on Deepening the Reform of the Fertilizer Distribution System, requesting an improvement in fertilizer price management methods. Establishing a market-based mechanism under the guidance of the government, changing the prices of chemical fertilizers from government pricing to government-guided prices and liberalizing the retail price of chemical fertilizers. In 2004, in response to the dramatic increase in fertilizer prices, the government implemented interim price interventions such as price increase declaration and rate control on the ex-factory prices and retail prices of fertilizers that were market-regulated.
"In recent years, there have been major changes in the domestic fertilizer market, with a total supply and demand balance, sufficient market competition, and the current fertilizer price formation mechanism has been difficult to meet the requirements of market economic development," said the person in charge.
A study by the China Fertilizer Association last year pointed out that due to the increase in raw material prices and the price limit of fertilizer products, fertilizer companies are in trouble. Since the market for raw materials (mainly coal) needed for chemical fertilizer production has been fully liberalized, and the market price can be continuously increased, urea has been constrained by the nation's highest factory price limit, so fertilizer companies are struggling.
The removal of fertilizer price restrictions this time, to some extent, to adapt to the market situation at home and abroad. With the collapse of international bulk raw material prices, urea and diammonium phosphate in international fertilizer prices have fallen below domestic prices, providing a rare external environment for the market-oriented reform of chemical fertilizer prices. The elimination of fertilizer price restrictions will help promote the continued health of the fertilizer industry. Development to ensure domestic fertilizer supply.
After the new price formation mechanism will promote the healthy development of the market and reform the pricing mechanism of fertilizers, enterprises can organize production and business activities in accordance with market laws, adjust prices in a timely manner in accordance with changes in market supply and demand and cost, increase flexibility in production and operation, and better participate in market competition. It will help promote the sustained and healthy development of the fertilizer industry.
Analysts pointed out that the policy temporarily retains preferential price policies for fertilizer production, gas use, and railway transportation, as well as preferential taxation policies for the production and circulation of fertilizers, which are of great benefit to chemical fertilizer companies.
Taking the urea industry as an example, due to the pressure of supply and demand in the phosphate fertilizer industry, the uncertainty of the price of potash fertilizer is strong. After the price limit of the urea industry is removed, due to the large number of companies that have stopped production, the supply and demand in the spring season will be tight, and the ex-factory price will exceed 1,725 ​​yuan/ton. Urea Enterprises will benefit, especially gas-headed enterprises, and the ex-factory price is expected to surpass that of last year given the constant cost of natural gas. The price of raw coal for coal enterprises has room for downward adjustment, and profitability is expected to recover.
The person in charge of Hubei Chemical Fertilizer Company stated that the introduction of the policy is of course good for chemical fertilizer production enterprises, but as a competition subject, chemical fertilizer production enterprises should also see the role of technology in market competition, and should also look inwards and practice hard. While serving the "three rural issues," we will achieve a sound and rapid development of our business.
The relevant person in charge of the National Development and Reform Commission emphasized that after the reform of the fertilizer price formation mechanism, there is little possibility that the price of chemical fertilizers will increase significantly. At present, the total supply and demand for chemical fertilizers in China is basically balanced, and the main varieties such as nitrogen fertilizers and phosphate fertilizers all exceed supply, and domestic fertilizer resources are abundant. The state will continue to adopt measures such as adjusting the production structure and supporting the construction of key projects to increase the production of chemical fertilizers and ensure the supply of chemical fertilizers.
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