China's fertilizer industry 2013 Review & Outlook Report


Influenced by tighter domestic macro-environment and insufficient demand in international market, fertilizer prices in China's market declined after growth and maintained weak as a whole. On production, the output of fertilizer set another record high and passed 60 million tons in 2012, but the growth rate was lower than that in the last year, especially, the growth rate of potash fertilizer output, which has been increasing rapidly for years, dropped sharply. On domestic consumption, although some positive factors like comprehensive agricultural subsidies have promoted the consumption of fertilizer, it kept weak throughout under the adverse impact of lower cost-benefit of farm produce and higher fertilizer prices in the first half of 2012. On export, tightening export tariff policy and weak demand in international market led China's fertilizer export down overall in 2012. 

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So, the oversupply situation of fertilizer market in this year became serious increasingly and was the key reason for declining fertilizer price in the second half of this year. Although the production cost of fertilizer increased slightly and even showed falling trend, the dropping fertilizer price made the profitability of fertilizer enterprises compressed obviously. Under the pressure of sluggish growth in fertilizer market, industrial restructuring and mergers and reorganization in the industry were conducted further, the number of enterprises continued to decrease. At the same time, fertilizer production equipments and technological level have been improved obviously, coal-water slurry gasification technology, powdered coal pressure gasification technology, large sulfur-based compound fertilizer technology and beneficiation technology of mid-low grade phosphorite started to be used widely and have achieved good benefit. In addition, new fertilizer products represented by slow controlled release fertilizer, microbial fertilizer and etc. developed fast, and its market expansion rate was much higher than the average level of fertilizer industry.

In 2013, China's economy will increase at a low growth rate in a downturn. On the one hand, the risk of economic downturn still exists, so the government need adopt various measures to maintain a higher growth rate; on the other hand, structural adjustment and growth pattern transformation are urgently required. Against this background, both positive factors and negative factors for fertilizer market will show growth trend, which includes: 

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On the one hand, government's support to agricultural production is expected to be strengthened continuously, which includes increasing agricultural investment and subsidy and raising minimum purchasing price of farm produce, so then a better requirement space for fertilizer industry will be built; China's grain output has been increasing for nine years in a row in 2012, which is conducive to supporting fertilizer consumption scale to remain high in next year; the concentration of fertilizer industry is improving steadily, the influence and control ability of key enterprises on market have increased, which is conducive to weaken market volatility. On the other hand, China's fertilizer faces excess capacity, the current situation of oversupply is hard to relieve; price mechanism reform process of main fertilizer raw materials (such as coal, natural gas, Sulfur phosphate ore, etc.) is expected to be accelerated, which will have upward pressure on fertilizer production cost; tightening export tariff policy for a long term and weak external economical situation seriously limit the operation and expansion of fertilizer enterprises in international market; etc.

The interaction of above positive and negative factors will make fertilizer market showing a complicated situation in 2013, the overall growth rate of this industry will slow down continuously, the internal adjustment will be accelerated, and the market will fluctuate violently. The transformation of China's fertilizer industry from quantitative growth pattern to qualitative growth pattern is irreversible, the centralization of production, high-end orientated product, service orientated marketing and market oriented raw materials have become the main development direction of fertilizer market.

On the basis of an overall analysis and review of China's fertilizer market in 2012, and combining the national economy situation and the policy change, BOABC will make an in-depth analysis of the trend of China's fertilizer market in 2013 and provide a clear judgment for people at home and abroad who focus on China's fertilizer market as a reference for their decision-making. 

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