Compound fertilizer industry will enter the era of low profit

From the early 90s of the 20th century, the compound fertilizer has been gradually matured from its inception to its development. In the past 20 years, from the early simple compound fertilizer to the new fertilizers such as controlled-release fertilizer, foliar fertilizer and rhizosphere fertilizer, etc. From the early days of several families to the current thousands of compound fertilizer companies, from early discs and drum granulation to current ammoxidation, towers and other processes, whether from fertilizer types, granulation processes, or the number of companies A great deal of progress has been made, but with the development of technology and the continuous innovation of sales methods, compound fertilizers have gradually been accepted by farmers because of their ability to provide balanced crop effects. At the same time, profits have also gradually decreased. After the financial crisis, the competition for compound fertilizers has become increasingly fierce, and the contradiction between overcapacity has become increasingly prominent. It can be said that compound fertilizer will enter the era of low profit. The reasons for this situation are manifold and inevitable.

Product diversification, the rise of new types of fertilizers. With the continuous advancement of technology, there are a wide variety of products in the compound fertilizer market. Apart from conventional compound fertilizers, fertilization, foliar fertilizers, rhizosphere fertilizers, large-sized fertilizers, and market-approved controlled-release fertilizers and high tower nitrosulfide Fertilizers and the rise of new fertilizers have also gradually reduced the profitability of conventional fertilizers. Of course, due to the non-standard market management and low barriers to entry, the new fertilizer market is a mixture of fish and dragon, and many fertilizer companies only use the concept of hype to gain more profits and deceive consumers.

There is a serious surplus of production capacity and competition pressure has increased dramatically. Due to the low barriers to entry, according to Zhuo Chuang Information, the national statistical compound fertilizer production capacity in the book is more than 200 million tons. According to statistics, the output of compound fertilizer in recent years is between 50-60 million tons (the actual production capacity and output is less than this figure). According to such figures, the annual operating rate of the overall compound fertilizer market is less than 25%. If the operating rate is large, the short-term output will be difficult to digest domestically. At present, there are still many projects under construction, and many products are homogenized seriously and the competition is becoming fiercer. Compression of profit space is also an inevitable choice.

The financial crisis broke out and the contradiction between supply and demand became prominent. Due to the financial crisis, upstream manufacturers and downstream distributors have suffered large losses, and many companies have therefore withdrawn from the agricultural assets industry. Affected by this, dealers have also changed their marketing mentality for chemical fertilizers and are increasingly cautious in stocking. According to incomplete statistics of Zhuo Chuang Information, before the financial crisis broke out, the profit per ton of fertilizer wholesalers in some regions was around RMB 300-400/t or even higher; but after the financial crisis, according to Zhuo Chuang Information, the profit of compound fertilizer was understood. It is generally 100-200 yuan/ton. And there is a rare tying compound fertilizer phenomenon in the market, compound fertilizer zero profit or negative profit, and profit by binding new fertilizer.

The establishment of new standards, products gradually standardized. The new standard for compound fertilizers/complex fertilizers (GB 15063-2009), which was promulgated in late 2009 and implemented in 2010, requires more rigorous product requirements for compound fertilizers. In addition to stringent nutrient requirements, it is further specified in the packaging or product specification. It is necessary to specify the chloride ion content, biuret content, and other indicators, which also makes it impossible for some companies to control the fish and restrict companies to regulate their own products. As a result, some enterprises that have passed through the customs clearance have to increase their costs and strengthen their own product quality.

The establishment of the Internet, the advent of the information age. The development of the network has brought about tremendous changes in many industries, and the fertilizer industry is no exception. The establishment of the network brings convenience to the exchange of information, and the price of chemical fertilizers also gradually becomes transparent. The operation method of obtaining huge profits by propaganda or hype concepts is gradually being eliminated by the market. This makes production companies and distributors have to regulate operations, reducing profit margins.

In addition to the above reasons, in the short term, the increase in the price of raw materials, the increasing tension in resources, and the increase in inflation expectations are also factors that affect the current profit of compound fertilizers. It is understood that after the Spring Festival this year, with the exception of urea, the price of potassium fertilizer and ammonium phosphate rose slightly, and the sulphur price increased even more. Since compound fertilizer prices have risen since July last year, compound fertilizer prices have remained relatively high. Although raw material prices have been supported, it is difficult for grassroots dealers and farmers to accept current prices. Compound fertilizer companies and agents or wholesalers can only To curtail profit margins or formulate preferential policies to drive sales in disguised price cuts.

However, the compound fertilizer industry is still a huge potential industry. First of all, no matter from the production process and the effect of use, there is still a big gap between domestic fertilizer and imported fertilizer. Domestic compound fertilizer companies still have room for greater progress. Second, it is understood that the composite rate of China's chemical fertilizer is about 35%, and it is developed. The country is between 70%-80% or even over 80%. With the development of technology, the compounding rate of fertilizer in China still has room for development. Therefore, the development of compound fertilisers in China can still be said to be still in the primary stage, and there is still a long way to go.

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