Phosphate compound fertilizer companies urgently need to optimize production capacity

Recently, Zhou Yixin, chairman and general manager of Hubei Maosheng Biological Co., Ltd., said: “On the one hand, the existing production capacity has not been fully released; on the other hand, the new expansion project has been launched and the capacity of the phosphate and compound fertilizer industry is seriously oversupply, and the contradiction between supply and demand is increasing. The predicament of losing money and making profits has become even more apparent. The company's production and sales have gone up, but profits have not risen, and even a large area of ​​losses has occurred, making the industry more difficult to survive." He called for the phosphorus and compound fertilizer companies to re-emerge if they want to re-emerge, they must optimize the industrial layout, increase the degree of industrial concentration, and constantly raise the file upgrade, from competition to competition.

According to statistics from the China Phosphate Fertilizer Industry Association, at present, China has more than 7,000 phosphate and compound fertilizer production enterprises registered in the country. In 2012, the cumulative production of phosphorus compound fertilizer was approximately 17.07 million tons, an increase of 4.3% over the same period of last year. Among them, in 2012, the output of high-concentration phosphorus compound fertilizer was 14.94 million tons, a year-on-year increase of 5.8%, accounting for 87.5% of the total output of phosphate fertilizer; in 2012, the cumulative net export of various phosphorus compound fertilizers was 2.503 million tons, a year-on-year decrease of 33.6%.

Zhou Yixin told reporters that more than 70% of China's phosphate and compound fertilizer production capacity is idle each year, and excessively large idle capacity has brought the industry downturn. Coupled with the low threshold of the phosphate and compound fertilizer industry and low technical requirements, the industry has low concentration, many companies and uneven levels. In the past two years, phosphorus and compound fertilizer companies have been fighting each other. Some manufacturers have closed down, some have limited production and reduced production. Most of the phosphate and compound fertilizer companies are complaining. Although sales of many companies are increasing every year, the overall profitability The decline in level is a heart-breaking problem for companies.

“The overwhelming majority of companies believe that only large production capacity can strengthen the market. Everyone wants to increase market share by increasing production capacity and expanding scale. This is why many companies are still desperately expanding their production capacity under the conditions of “making money and losing money”. The important reason," said Zhou Yixin. As early as a few years ago, people in the industry pointed out that overcapacity will eventually bring about an industry reshuffle, and a large number of small factories will close down. However, from the current point of view, every time a company is faced with a critical moment of life and death, policy makers may be able to “pull” it. Enterprises that originally had only one last breath revived, resulting in a genuine shutdown. Few enterprises have caused the whole industry to fall into the “unhealthy or unable to close” cycle.

Zhou Yixin said that due to the current overcapacity brought about by the rampant melee, some companies have no characteristics at all. They are neither close to resources nor have advantages in the place of consumption. The participation of these small companies in the compound fertilizer industry is completely unnecessary and will only exacerbate competition in the industry. Enterprises should change their mode of development so that a large amount of idle production capacity in the industry can be fully utilized. Do not rely on the expansion of new production capacity to develop.

At the same time, Zhou Yixin also delightedly told reporters that the “Twelfth Five-year Development Plan for the fertilizer industry” has clearly stated that by 2015, the proportion of production capacity of large and medium-sized nitrogen fertilizer enterprises will reach over 80%, and the proportion of large-scale phosphate compound fertilizer enterprises will reach 70. More than %, large-scale potash fertilizer enterprise groups have grown in size, gradually forming a production and operation pattern dominated by large-scale fertilizer companies, and encouraging large-scale enterprises to further expand the scale and strength of the industry through mergers and acquisitions, elimination of backwardness, and construction of chemical fertilizer bases. The Hubei Provincial Government clearly stressed that the province will focus on supporting mergers and acquisitions, such as Yihua, Xingfa, Xiangyun, Yangfeng, Saning, and other leading companies, to increase and strengthen this year. Industrial concentration, strict industrial access. This also explains to some extent that merger and reorganization will become one of the directions for the integration of industry resources.

“At present, when the market expands externally, the acquisition of local companies or leasing of existing production lines can avoid the problems of large-scale investment and long-term growth of new enterprises, while avoiding an increase in the total production capacity of the industry. It can improve the standard development level of the industry as a whole.” Talking about how the phosphate and compound fertilizer industry can cope with the problem of excess production capacity, Zhou Yixin first elaborated on his own point of view. He said that in the fiercely competitive market situation, it is inevitable that there will be some small companies that have reduced their product quality and management. If they are run by large companies, this situation will improve.

"On the premise of ensuring quality and service, we can share resources by selecting high-quality companies for branding." Zhou Yixin said that the current increase in freight costs such as trains, trucks, etc., leads to a significant increase in corporate costs. The best solution is to choose Advantageous enterprises OEM production. In particular, for some ordinary compound fertilizer products, companies with trustworthy brands and quality can be selected in the sales market, and they can directly carry out OEM processing and sell on the spot.

“The exchange of goods is also an effective way to solve the problem of redundant construction and waste of resources.” Zhou Yixin said that companies can explore the implementation of the exchange model between the same formula products from different regions and different manufacturers, because OEM production also needs a lot of funds. Cooperation is unidirectional, and quality problems may occur. If both parties exchange goods, the two parties will be more restrictive in terms of quality, thus facilitating quality control.

"Compared with the current difficult operating situation of traditional phosphate and compound fertilizer companies that compete in large numbers, the profitability of a group of characteristic slow-release fertilizer companies and water-soluble fertilizer enterprises is still considerable. A group of companies rely on brand influence and closeness. The service of phosphate and compound fertilizer companies has come out of the 'competition era', and the scale of the company is also growing and it stands out in the depressed market." Zhou Yixin said with confidence, "We must see the country's emphasis on energy conservation and environmental protection, in the coming The more stringent the regulation of energy conservation and emission reduction, the emphasis of investment and adjustment will be on the technological transformation of enterprises and the achievement of environmental protection standards. Instead of pursuing large companies, they will adjust their thinking and strengthen their businesses.”

Zhou Yixin believes that in the long run, the fundamental way to increase the competitiveness of phosphorus and compound fertilizer industry lies in increasing scientific and technological investment, developing products and services suitable for modern agriculture, providing technical support for the development of enterprises, and promoting complementary advantages through integration within the industry. Increase industrial concentration and drive the entire industry to become bigger and stronger. He is looking forward to the complex fertilizer industry as soon as possible to step out of the downturn and rejuvenate Nirvana to a new level.