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According to analysis, the main cause of this situation is the overcapacity of chemical fertilizers, supply exceeds demand, production companies can not help but cut prices, but dealers buy up not buy or fall, forming a vicious cycle of falling prices and then falling. According to statistics, from January to June, the national chemical fertilizer output was 28.36 million tons (or the same amount, the same below), up 7% year-on-year; the total supply was 45.55 million tons, and the total consumption was only 36.58 million tons.
Delegates felt that the domestic fertilizer market is facing various tests in the second half of the year and it is expected that the price of fertilizers will continue to decline steadily, but it will continue to be sluggish. The first is the release of new production capacity, and the market supply exceeds demand. Taking urea as an example, new urea plants in Jilin, Xinjiang, Sichuan, Inner Mongolia, and Chongqing will be put into operation soon, and new capacity will be 7 million tons in the second half of the year. It is expected that the urea production capacity will exceed 54 million tons in 2007 and the output will exceed 50 million tons. In the second half of the year, the domestic demand for urea is only about 30% of the whole year. Second, macroeconomic policies regulate and control, and the difficulty of export increases. In order to meet domestic demand for chemical fertilizers, the country will continue to ban the export of fertilizers such as urea and diammonium phosphate, suspend the export tax rebates on urea, diammonium phosphate, and monoammonium phosphate, and impose seasonal tentative tariffs on urea exports (from January to September 30% (15% from October to December). From June 1, 2007, the state imposed a tariff on the export of diammonium phosphate (20% in January-September and 10% in October-December), but the maximum price of fertilizer would not be raised. Third, raw material prices have skyrocketed and phosphorus and compound fertilizer production have been hit. The price of imported sulphur soared this year, resulting in domestic sulphuric acid prices more than doubled. As a result, the production costs of diammonium phosphate and monoammonium phosphate with sulphuric acid production rose by more than 400 yuan per ton. Most enterprises are on the verge of losing money and phosphorus compound fertilizers The sulfuric acid industry is in a very difficult situation. This situation still exists in the second half of the year.
With overcapacity, export restrictions, and raw material price increases, the domestic fertilizer market is facing three pressures and risks in the second half of the year, and the market downturn is difficult to change. This is what the reporter learned from the 4th China Fertilizer Market International Forum held in Xi’an on 26-27th. It is reported that in the first half of this year, the overall supply and demand of the domestic fertilizer market was out of balance. Except for the potassium fertilizer supply was still slightly tight, other major fertilizer varieties showed oversupply, in which the urea supply surplus, which is known as the “wind vane†of the fertilizer market, was the most prominent. At the beginning of the year, the urea market was actively traded and the prices were at high levels. Since March, the prices started to rise and fall. Even in the season of fertilizer use in June and July, the urea market price did not rise but fell, and once fell to 1,500-1600 yuan/ton. It was the lowest point in July for nearly four years.