Chinese fertilizer firms rush to increase supplies amid global shortage

Chinese fertilizer suppliers are churning out products to secure adequate supplies amid booming demand in the coming spring plowing season, while coping with the tightened supply in the global market, ignited by the EU energy crisis and rising tension in Europe.

The cost of natural gas has continued to soar this year, leading to a drop in fertilizer production in EU countries, supply shortages and soaring prices, according to media reports.

“At present, the item most in short supply in the world is ordinary NPK pure chemical fertilizers, which consume a lot of energy in production,” a person at a large fertilizer conglomerate based in East China’s Shandong Province told the Global Times on Monday.

The company’s production is concentrated on organic fertilizers, which have seen export jumps in recent days, driven by surging demand.

Another fertilizer company based in Shandong said that it is ramping up production for booming orders, especially after the Chinese New Year, with farmers making preparations for the spring plowing season in March and April.

“The orders have piled up for three months,” a person with the company said.

At present, more than 90 percent of the production capacity of the global potash fertilizer market is concentrated in seven countries, including Canada, Russia, Belarus, Germany and China, according to media reports.

While China is a major fertilizer producer and exporter, supplies of fertilizers are different in terms of categories.

For example, the supply of nitrogen fertilizer is relatively adequate, given the high production capacity in China, while another major fertilizer, potash, which depends more on imports, is facing an increasingly tight situation, experts said.

According to the China Phosphate and Compound Fertilizer Industry Association, a Chinese potash fertilizer import negotiation team consisting of several major fertilizer companies such as Sinochem and Canada-based potash fertilizer company Canpotex recently reached an agreement on the 2022 potash fertilizer import contract.

The contract price was finalized at $590 per ton CFR (cost and freight), hitting a five-year high this year and up 139 percent year-on-year.

Experts said that the main reason for the increase in the contract price for potash fertilizer is the increase in the price of international potash fertilizer.

Market participants expect that demand for fertilizers for crop production in developed countries will remain high this year, potentially leading to shortages in fertilizer supplies in emerging economies and developing countries.

Wang Liqing, secretary-general of the China Nitrogen Fertilizer Industry Association, told the Global Times on Monday that now China is focusing on ensuring domestic supplies, including those of nitrogen fertilizers, amid tightened global supplies, surging prices and the upcoming spring plowing season.

“At present, domestic supply is still tight because of the global market,” Wang said, predicting the tight situation may last for some time.

Global Times

Tags: China, fertilizers