The urea industry is facing the most painful scenery in more than a decade。
The daily economic news journalist noted that, as at 26 october 2014, 11 of the country's 12 major urea-based fertilizer companies had issued three-quarter performance forecasts or three-quarter reports. Of these, six had a loss or loss of performance in the first three quarters, and only five had a profit. In three of the profitable businesses, the net profits were down in comparison。
Overcapacity in the urea sector has increased over the years. This year, urea prices fell at one point, owing to factors such as weak downstream demand. According to information provided by drazen, in may this year the prices for small granule urea at shandong company dropped to $1350 ~ $1380 per ton, a significant decline of nearly 30 per cent from last year, and prices for urea have been lower for more than a decade。
With the continued release of urea capacity in the country, the downside may continue. The emerging product of high hopes — the market for urea in cars is not yet free, and how can urea enterprises break through and make a loss
Listed companies are sad
According to incomplete statistics from the daily economic news, 11 of the country's 12 leading urea-listed companies have disclosed three-quarter forecasts or three-quarter reports. Of these, six enterprises, such as sichuan and sichuan and kawagi shares, have negative net profits and losses of billions of yuan for shareholders in listed companies。
In its three-quarter editions, the peak chemicals revealed a loss of $276 million in net profits for companies in january-september, compared with $9,9317,000 for the same period last year; and sichuan's projected loss of net profits of $210-230 million, with sichuan's indication that the decline was affected by weak demand in the fertilizer market and a sharp fall in the price of product sales。
In the first three quarters, kawagi shares also suffered a loss of between $359 million and $394 million; net profits from bare heaven lost between $300 million and $320 million; net profits from heaven lost between $340 million and $390 million; and chinese shares lost between $988 million。
In addition, five enterprises, namely, waru hengsung, orchid, luci chemical, hubei and riveric chemical, remained profitable for three quarters. However, the net profit from orchids decreased by 97. 88 per cent compared to the same period; the river pool chemical industry earned substantial investment earnings from the sale of securities firms to compensate for operating capital。
In an interview with the daily economy news journalist, the secretary of the riverpool chemical industry, lifang, stated that the company needed to sell its shares to compensate for its operations, mainly because of the low levels of urea in recent years, the entry of urea products into the buyer's market, the fact that the company had to sell products on credit and the late recovery of funds in order to deliver the goods, which had led to a strain on the company's financial chain。
On the other hand, with its rich product structure, warru henseng adjusted its sales to market conditions in a timely manner, making a profit of $325 million, which is expected to increase by 80 per cent to 100 per cent; the ruthie chemical industry achieved a net profit of $302 million in the first three quarters, an increase of 11. 40 per cent over the same period。
Urea drop cost/
The urea industry analyst han jian, told reporters that urea production in the country will grow to 87 million tons this year, a record high, with excess capacity exceeding 25 million tons, and will continue to grow。
According to several urea business secretaries, the price of urea this year is down by about $300 ~400 per ton compared to last year. According to the secretary-general of the riverpool chemical industry, “we could still sell $1,900 ~ $2,000 per ton last year, but we sold $1,500 per ton at the worst this year, which has already costd off”
The urea industry is low, and the river basin chemical plant has only 60% or 70% of the equipment started this year. Fertilizers are poorly sold and companies have to sell to distributors on credit to boost production. “the rate of sale on credit has increased year after year, when fertilizer was sold, the distributors bought it and paid for it before it came out. It is difficult to sell fertilizer now, and the sale of fertilizer on credit places higher demands on the liquidity of urea enterprises.”
Low demand has also led to lower rates of urea start-up each year. According to data from the nitro fertilizer industry association, the national urea start-up rate was 87 per cent in 2011. In the first half of this year, the urea sector began work at 67. 95 per cent, down from 80 per cent last year. Han jian indicates that there are currently about 180 nitrogen fertilizer enterprises in the country and that, at full cost, 80 per cent or more of these enterprises are expected to lose this year。
The orchid securities department has told journalists that the weak demand for urea is largely influenced by the changing climate this year and that the demand for agrochemicals downstream has been slow. However, according to the waru hengseng executive secretary, the demand for fertilizer in downstream agriculture is rigid and stable each year, mainly as a result of increasing supply, leading to excess industries。
According to press statistics, the 2014 semi-annual report of urea-listed enterprises indicated that the annual urea production planned for 2014 was higher than in 2013. However, whether or not the planned production will be completed, the wallowingr and orchids indicate that the planned production will be achieved. More urea enterprises indicated that urea production would be regulated according to market demand。
“in addition, consumer psychological expectations are counterproductive to the urea industry, and consumer psychology is either up or down, and prices are falling, and people are less and less。
How do urea enterprises save themselves/
Currently, urea production will continue to be released. The china nitrogen fertilizer industry association projects that domestic capacity will reach 95 million tons in 2015 and that excess capacity will reach an unprecedented 20 million tons. Han jian believes that, in light of current developments, there is still a significant investment of capacity in 2015-2016 and that total capacity is expected to reach 100 million tons and that urea production will reach new peaks in 2015 or 2016。
In this context, how can fertilizer enterprises, which rely mainly on urea products, break through the industry? Of the 11 urea companies listed above, only the wallustrings and the ruthie chemicals achieved net profit increases over the same period and higher rates. The ruthie chemical industry has achieved high growth with the third quarter compound fertilizer, while the wallowing syndication has prevailed over its diversified product structure。
The waru hengkwan secret service told reporters that waru hengkwan is expected to produce 1. 6 million to 1. 8 million tons of urea this year, an increase over last year, and that urea plates account for about 25 per cent of the company's total revenues. The company's ability to achieve a comparable increase in urea performance is due to the company's “compositation” strategy, which “not only produces fertilizers but also has a wealth of other chemical, heat and electricity operations”
“our main product thinking is diversification and complementarity. The company's raw materials are highly used, almost entirely without any waste, and all the gas from coal is used for the production of products, which is a high use of raw materials, which contributes to the cost of production of the products.” the gavin army told journalists。
In addition, according to the public information of the wallo-shin-shin-shin-sung, the wallo-shin-shin-sung model of “one-lined flexible production” was adopted. “gas derived from coal, which have active components such as split hydrogen, carbon monoxide, nitrogen gas, carbon dioxide, etc., are capable of producing different products such as synthetic ammonia, methanol, etc. Using different gases, we continue to expand down the production of gas-chemical products, and the production process ends up with virtually no remaining waste gas, “the gavin army explains。
According to the gavin army, a rich product structure helps companies to adjust their production plans in a flexible manner. Depending on market conditions, there are multiple productions of ammonium, methanol or urea, or other chemicals. “this is the concept of flexible production, and it is an important reason why companies can resist the downsliding of urea and even the fertilizer industry.”
Han jian believes that, in the face of a low market, urea enterprises could consider moving to resource areas or establishing strong alliances with resource enterprises to mitigate cost pressures. According to the six-monthly reports of the 11 urea enterprises mentioned above, most of them indicated that, in order to cope with the low urea performance, they would then enrich their product structure and operate in a complementary manner. Some enterprises, however, have yet to complete the transition. Orchids told journalists that the business had begun to enrich its product structure, “but none of the other products are currently in production。
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