Since the establishment of the commercial reserve system in the off-season of chemical fertilizer in mainland China in 2004, light storage has played an important role in alleviating the contradiction between continuous production and seasonal use of chemical fertilizer, and ensuring the supply of chemical fertilizer. However, in recent years, the price of fertilizer is high in the off-season, and the price has fallen sharply when it is put on the market in the peak season, forming a prominent price inversion, which has brought huge pressure to the storage enterprises.
Recently, the "Agricultural Resources Herald" reporter interviewed 6 storage enterprises and found that this year's light storage of fertilizers have different degrees of losses, especially urea and potash fertilizer, the price fell as high as 500 yuan (ton price, the same below), the larger the storage capacity of the enterprise, the more serious the loss. How to get out of the predicament of fertilizer commercial light storage, the interviewed enterprises have analyzed the current light storage situation and existing problems, and put forward relevant suggestions.
The phenomenon of inversion is frequent, and the loss of enterprises is worrying
The light storage policy is to ensure the sustainable operation of domestic fertilizer production enterprises, and to ensure that they will not have to stop production in the off-season due to capital and storage problems, resulting in the supply of the society in the peak season can not meet the agricultural production, and then affect the overall national situation of food security.
According to the collective reflection of the interviewed enterprises, during the winter reserve period last year, the cost rose sharply due to the impact of raw materials, logistics, warehouses and other factors, coupled with the storage period. At present, a large number of light storage fertilizers are supplied to the market in the peak season of spring fertilizer, and they are sold in a concentrated manner, coupled with the continuous production capacity of fertilizer production enterprises, which has produced huge supply pressure on the market, resulting in a decline in prices in the peak season, forming a serious inversion phenomenon. In particular, the price of urea and potash fertilizer has dropped significantly, which makes the storage enterprises face serious losses. Although there are relevant policies to provide support, for large storage enterprises, these supports are difficult to fundamentally solve the problem.
"In the past two years, storage companies have encountered the problem of price inversion, which is mainly reflected in nitrogen fertilizer and potash fertilizer. The relevant person in charge of a fertilizer company in Hubei said that taking the storage in 2023 as an example, the price of urea during the storage period is about 2,400 yuan, the price of potassium chloride is about 2,800 yuan, and the current price of urea is about 2,100 yuan, the price of potash fertilizer is about 2,300 yuan, and the corresponding compound fertilizer price has also been reduced by several hundred yuan.
"The ammonium phosphate market as a whole is stable, and the market can be expected to fluctuate slightly, but due to the excessive price drop of urea and potash fertilizer, it has caused a large area of losses for storage enterprises. The relevant person in charge of a provincial storage enterprise in Jilin also said that when the reserve was made in November last year, the overall fertilizer price was at a high level, the price of large granular urea was more than 2,900 yuan, the price of potash fertilizer was about 2,800 yuan, and now the price of large granular urea was about 2,400 yuan, and the price of potash fertilizer was about 2,300 yuan, and the decline was about 500 yuan, and the upside down phenomenon was very serious.
The volatility of the fertilizer market has made storage companies face unprecedented challenges. In this context, the relevant person in charge of a fertilizer enterprise in Beijing believes that the emergence of the inversion phenomenon is related to the changeable export policy, the change of futures and the strict reserve period of light storage in the past, and the influence of multiple factors has brought great difficulties to the operation of storage enterprises. This year, the reserves led by the enterprise are 300,000 tons, and the price of urea during the reserve period is between 2250 ~ 2350 yuan, and now it can only be sold to about 2100 yuan, and the economic benefits are seriously damaged.
Anhui Jinmei Zhongneng Chemical Co., Ltd. (hereinafter referred to as Zhongneng Chemical) is a top 20 nitrogen fertilizer enterprise with a daily output of 6,800 tons of urea, since 2004 for the first time to establish a fertilizer off-season commercial reserve system, has been actively undertaking reserves, to stabilize the fertilizer market, promote the development of modern agriculture to contribute. It is understood that in the past 10 years, 7 years of light storage have been losses, and this year's light storage is no exception. The relevant person in charge of Zhongneng Chemical said that the average price of urea during the storage period is about 2,450 yuan, and now the price of about 2,050 yuan is difficult to sell, which has brought a lot of blow to the storage enterprises.
The market remains sluggish and worries are rising
In the current market downturn, business confidence is low, bearish sentiment surrounds, and trading is relatively light. The relevant person in charge of Zhongneng Chemical believes that if exports are not relaxed, fertilizer prices will continue to decline in shocks. At the same time, the person in charge analyzed that the reason for the current downturn in the fertilizer market is closely related to the excessive domestic production capacity and the fact that exports have not yet been relaxed. According to the development of this situation, when urea production enterprises are operating at a loss, the operating rate of enterprises will drop significantly, and eventually form a low social inventory, unable to achieve the original intention of ensuring supply and stable prices.
In view of the complex situation of the current fertilizer market, the relevant person in charge of the above-mentioned Hubei fertilizer enterprises also expressed his concerns. He said that the upside-down situation has brought direct economic losses to the storage enterprises, resulting in an increase in the production cost of raw materials and an increase in sales pressure. At the same time, this situation also has an impact on the operating rate of enterprises in the later period, if this situation continues for a long time, it may cause a significant decline in the operating rate, and the price of fertilizer may also fluctuate significantly. The sharp rise and fall is extremely detrimental to the stable supply of fertilizers.
"Deflation is more terrible than inflation. "The relevant person in charge of the above-mentioned Jilin fertilizer enterprises analyzed, excessive deflation will lead to sluggish market sales, affect the enthusiasm of enterprise production and investment, economic growth is weak, and the long-term development of the economy is not good. This year, the mainland's urea and potash fertilizer reserves are relatively large, and in addition, the China-Europe trains, border trade, domestic production and other reserve channels have increased, resulting in domestic oversupply. From the perspective of urea production enterprises, although urea still has a little profit, the price of urea-derived methanol and other fine chemical products is still on a downward trend. The current international market is shorting China's urea, which is also further damaging the interests of domestic enterprises.
At the same time, he said that market volatility is a normal phenomenon and companies should go with the market. However, this year's price reduction time is earlier, and the price reduction is larger, which has brought greater economic pressure to enterprises. With the current inversion phenomenon continuing to occur, two major problems could arise. First of all, in order to pursue profits, some enterprises will lead to an increase in counterfeit and shoddy products in the market, which will have a negative impact on the market order. Second, in the face of continuous losses, the enthusiasm of the reserve enterprises has been severely hit, which may also further affect the stable production of agriculture on the mainland.
"We have undertaken the national fertilizer storage work for many years, but in recent years, due to the high price at the time of storage and the low price at the time of sales, there have been varying degrees of losses. The relevant person in charge of a fertilizer enterprise in southwest China said that in the past, the storage period of 100% full inventory was three months, and the inspection efforts of relevant departments were very strong, and these assessment indicators were under great pressure on the company's storage. If this phenomenon of price inversion is maintained, it will have a certain impact on the storage capacity of each province in the future.
In order to mobilize the enthusiasm of storage enterprises, on November 20, 2023, the National Development and Reform Commission and the Ministry of Finance jointly issued a document to fine-tune the storage period, reducing 50% of the original storage enterprises to 40% of the reserve task in the third month, and reducing 100% of the storage task completed by the storage enterprise in the fourth month to 70%, which to a certain extent reduces the pressure on the storage enterprise to build the library in the fourth month.
Since New Year's Day, the National Development and Reform Commission and other relevant departments have convened storage enterprises to conduct many discussions on how to optimize the national commercial reserve measures. The relevant person in charge of the above-mentioned Beijing fertilizer enterprises has participated in many symposiums, he said, flexible reserve period and assessment indicators, as well as the appropriate increase in subsidy standards will be the future of the optimization of the storage policy.
Listen to the voice of enterprises and build a new pattern of supply guarantee
In the face of the purchase and delivery policy of light storage and high sales, storage enterprises shoulder the important task of ensuring adequate supply of fertilizer in the peak season of fertilizer. Even in the face of strong market volatility, they must be steadfast in their reserve responsibilities and strictly adhere to policy regulations. In the current special market environment, light storage enterprises forge ahead, even in the face of the risk of loss, but also always stick to their positions, escort the country's agricultural production, and ensure that agricultural production is carried out in an orderly manner. Therefore, how to further stimulate the enthusiasm of storage enterprises while ensuring the stability of fertilizer commercial storage policy has become a new topic that needs to be solved urgently by relevant departments.
Judging from the targeted suggestions put forward by the interviewed enterprises, the overall focus is on exports and flexible adjustment of reserve policies. Reasonable and orderly exports are conducive to boosting the confidence of the domestic urea market. Flexible storage period, reserves and categories can help enterprises better adapt to changes in market demand; flexible storage periods, delivery quantities and regions can ensure the effective allocation of resources; flexible subsidies according to market changes can reduce the business risks of enterprises; and standardized and explicit acceptance standards are helpful to maintain market order and ensure product quality. These suggestions are of positive significance for solving the new challenges faced by storage enterprises, and deserve serious consideration and adoption by relevant departments.
"In recent years, the phenomenon of market inversion has had a serious impact on the economic benefits of enterprises. However, from the perspective of long-term market stability and enterprise development, light storage is still an indispensable and significant positive measure to ensure the supply and price stability of fertilizers. In the future, the company will unswervingly continue to promote this work. "In view of the light storage policy, the relevant person in charge of the above-mentioned Jilin fertilizer enterprises put forward two suggestions, first of all, to fully protect the interests of reserve enterprises, which is the key to maintaining the enthusiasm of storage enterprises. Only when the interests of the enterprise are reasonably protected, can it stimulate its enthusiasm to participate in the work of light storage and ensure the smooth progress of the work of light storage. Second, blindly "guaranteeing supply and reducing prices" is not a long-term solution, and it is hoped that a reasonable and orderly quota export of urea and phosphate fertilizers from the mainland will be carried out. This will not only help the macroeconomic regulation and control of the domestic fertilizer market, but also contribute to the stability of the social and economic order.
The relevant person in charge of the above-mentioned Hubei fertilizer enterprises also put forward four suggestions: first, the relevant departments of the state will appropriately tilt the fertilizer export policy to the reserve enterprises, so as to reduce the business risk of the reserve enterprises; the second is to clarify the export policy as soon as possible; the third is to appropriately increase the reserve interest discount subsidy standard according to the market situation; and the fourth is to appropriately give tax policy exemptions and exemptions to the reserve enterprises.
At present, the mainland urea has overcapacity and is in a relaxed supply state. The relevant person in charge of Zhongneng Chemical also suggested that the relevant domestic departments should introduce a sustainable export policy to balance the domestic market, and at the same time provide reasonable subsidies for storage enterprises with excessive losses.
In view of the specific implementation of the light storage policy, the relevant person in charge of the above-mentioned southwest fertilizer enterprises made an in-depth analysis and put forward four specific suggestions. First, it is recommended to increase the subsidy per ton of light storage, so as to better stimulate the enthusiasm of enterprises to participate. Second, it is suggested that appropriate adjustments should be made to the relevant rules of light storage, especially the provisions on the storage time of enterprises, which should be more flexible to adapt to market changes. Third, a flexible inspection system should be developed to more accurately assess the company's light storage work. Fourth, it is recommended to expand the scope of storage varieties, especially to increase nitrogen fertilizer and phosphate fertilizer varieties such as ammonium phosphate and ammonium chloride, and appropriately expand the content range of storage compound fertilizer, and include low-content compound fertilizer varieties with market demand into the scope of light storage.
The amount of a single target of spring fertilizer reserves is generally 50,000 tons, and the bidding is held once every 2 years. The spring fertilizer reserve time shall be selected by the storage enterprise for any 6 consecutive months between September of the current year and April of the following year. In order to better cope with the seasonal fluctuations of the fertilizer market, the relevant person in charge of the above-mentioned Beijing fertilizer enterprises suggested that in order to increase the stability of the storage enterprises, it can be considered to appropriately extend the bidding time of the storage enterprises. In addition, in addition to encouraging enterprises to store more fertilizers in the off-season by giving interest subsidies, the subsidy standards of some reserve enterprises can also be appropriately increased, such as subsidizing storage fees.
As an important cornerstone of market stability and enterprise development, the improvement and optimization of the light storage policy is particularly crucial. In the face of a complex and volatile market environment and increasingly complex corporate needs, the light storage policy must keep pace with the times, constantly adjust and optimize to ensure that it can better adapt to and lead the development of the market.
At the same time, it is hoped that the relevant departments can actively listen to the voice of the enterprise and have an in-depth understanding of the actual needs and interests of the enterprise, so as to formulate a more scientific, reasonable and in line with the market law of the light storage policy, so as to provide a strong guarantee for the stability of the market and the long-term development of the enterprise.
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Please indicate in the following format for reprinting: Source: Agricultural Resources Herald Author: Ma Xiaoru Ding Jiahui
Editor: Ding Jiahui Review: Chen Guoxing Producer: Wu Junsheng