Phosphorus Industry China Monthly Report 1509

Date: 2015-10

“In recent years, excess capacity, slackening demand growth and increasing environmental pressure have become inevitable problems in the development of the phosphate fertilizer industry. Besides, the restoration of VAT from 1 Sept., 2015 makes it even more urgent to transform and upgrade the phosphate fertilizer industry. In this regard, CCM has learned that experts in the industry have offered corresponding development ideas, mainly focusing on three aspects: technology, management and policy.
Since the internal supply & demand contradiction of China’s phosphorus chemical industry is still prominent and the overall chemical industry is depressed, it is estimated that China’s phosphorus chemical market can hardly witness the “”Golden September and Silver October”” boom in 2015.
On 1 Sept., 2015, China began to restore VAT on fertilizers officially. For this, CCM talked to insiders and learned that the new VAT policy exerts limited influence upon large fertilizer companies.
At the end of Sept. 2015, Kingenta was reviewed by an investigation group from the MIIT on the development of integration of water and fertilizer. It is found that, Kingenta has achieved good results in many aspects, such as, the research and development, products innovation, service and promotion of water soluble fertilizer. Its development patterns are worth learning and being promoted.
In H1 2015, Hubei Xinyangfeng recorded a YoY increase of 46.41% in its net profit, thanks to the upward trend in China鈥檚 MAP and DAP market.
At the end of Aug. 2015, the new air pollution law was officially launched in China. Accordingly, the government鈥檚 duties are specified; requirements and punishments for high-pollution companies are more stringent. CCM believes that this will bring opportunities to phosphorus chemical companies that have key technologies to dispose tail gases. Meanwhile, the industry threshold will be improved and backward and high-pollution capacities will be eliminated. In a word, it will boost the transformation and upgrading as well as the sustainable development of the industry.
At the end of Aug. 2015, after the publication of the Notice on Restoring VAT Policy on Fertilizer, the MOF and the SAT jointly released a supplementary notice on the restoration of VAT on fertilizers. CCM believes that this will help fertilizer companies, including phosphate fertilizer companies, to cope with their increased cost caused by large stock of fertilizers.
At the end of Aug. 2015, a research team led by Professor Gai Guosheng from Tsinghua University successfully developed a P&K ore powder activated ecological organic fertilizer. This will enhance the exploitation and utilization of medium- and low-grade phosphorus ore resources and boost the substantial development of agriculture.
In Sept. 2015, market price of yellow phosphorus maintained at its low level in China, but compared to Aug. 2015, sales were increased slightly and operating rate of the industry was recovered to some extent.
In Sept. 2015, market price of phosphorus ore was stable at a relatively low level. According to market conditions, CCM predicts that the market price will continue to remain stable in Oct. 2015.”

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