Fertilizer industry complaints tariff adjustment is better than reflectivity

Affected by the increase in export tariffs, fertilizer prices have entered a downward track in December. The heads of relevant associations have even publicly stated that the introduction of new export tariff policies has a great impact on the fertilizer industry. The production and operation of fertilizer companies will be more difficult next year. It is expected that nitrogen fertilizer will Losses in the industry, phosphate fertilizers have to fall into losses.
From the external factors that affect the efficiency of chemical fertilizer companies, export tariff adjustment is indeed a very important factor, but when fertilizer companies look for the reasons, they should start from internal factors, that is, the problem of excess capacity in the industry. If this problem is not truly resolved, even if export tariffs do not adjust, industry losses will remain elusive.
According to the China Chemical Network monitoring data, China's nitrogen fertilizer and phosphate fertilizer production capacity has been in surplus since 2006. In 2010, China's new nitrogen fertilizer production capacity was 4.1 million tons, and it reached 66 million tons by the end of the year, while domestic consumption was only 50 million. About tons; phosphate fertilizer production capacity has reached 20 million tons, the domestic average consumption in the past two years in 1100-1150 million tons.
The increase in fertilizer prices caused by factors such as energy-saving emission reductions and shutting down of production capacity in the second half of the year seems to have caused the industry to forget the problems caused by excess capacity. Now that idle production capacity is gradually re-energizing, it is only a matter of time before prices fall. Tariff adjustment is just a fuse.
Judging from the background of export tariff adjustments, the restrictions on the export of chemical fertilizers have certain inevitability. In response to rising prices of agricultural products, the state introduced a series of policies and produced more obvious results. Fertilizer as a raw material for agricultural production, its price increase will inevitably lead to further increase in the price of agricultural products, control of chemical fertilizers is actually one of the means to suppress the increase of agricultural product prices from the source.
According to outside sources, this time raising the export tariff policy is not just a short-term measure at the end of the year. Next year, the export tax period for nitrogen fertilizer and phosphoric acid will be shortened to 4 months in the off-season. It will be a policy direction to restrict fertilizer exports and protect domestic supply. China Chemical Network analyst Zhang Ming said: “November to February is the use of chemical fertilizer in the off-season, this time a substantial adjustment of fertilizer export tariffs, there is no routine, but it is also reasonable. 4 months of skyrocketing and operating rates The continuous low level has caused the domestic chemical fertilizer enterprises to re-export and light domestic, which is very dangerous for the completion of the 2010/2011 fertilizer storage task and the spring plowing of fertilizers.”
There are also people in the industry who complain that the export tariffs on chemical fertilizers are always adjusted, exacerbating fluctuations in the industry and making the industry at a loss. According to relevant data, at the end of 2007, China adjusted its export tariff on chemical fertilizers once, intensively adjusted about 4 times in 2008, and adjusted once a year in mid-2009.
This argument seems a bit farfetched, stressing that policy flexibility is designed to deal with the complex and volatile economic environment. Fertilizer industry due to overcapacity is serious, the policy through the off-season export tariff period to ease the pressure on the industry, if the implementation of a unified export tariff, it is bound to ensure domestic supply, the annual implementation of high season export tariffs, so that industry exports will be basically blocked, many Enterprises will face difficulties.
For the fertilizer industry, instead of complaining about the decline in industry efficiency caused by external policies, it is better to reflect on the industry’s own capacity expansion in recent years and really start to eliminate backward production capacity. Only by taking this opportunity to deeply adjust the industrial structure, can the industry improve its ability to resist risks and get rid of the passive situation in the past two years in which losses have been fluctuating.

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