How to treat the status quo of China's phosphate fertilizer industry

In the fast-paced development of China's phosphate and compound fertilizer industry, the domestic market has achieved full self-sufficiency. However, there is still debate over whether the phosphate fertilizer sector should expand overseas, especially with the introduction of export restrictions by the government. This has sparked discussions within the domestic market about the future direction of the industry. Over the past decade, the industry has seen remarkable growth, reaching a peak that also marked a turning point. By 2005, the self-sufficiency rate had climbed from 50% to over 95%. The year 2006 was a pivotal moment, and by June 2007, China became a major exporter of phosphate fertilizers. That year, exports of diammonium phosphate reached 2 million tons, while monoammonium phosphate exceeded 1.4 million tons, establishing China as one of the world’s leading suppliers. This shift triggered significant changes in both domestic and international markets. In particular, the price of high-concentration phosphate fertilizers, such as diammonium phosphate, saw a dramatic surge—rising over 87% from $250 to $420 per ton in a short period. This was the most abrupt and significant price change in 50 years, drawing global attention. The focus was not only on the reasons behind the increase but also on how long this trend could be sustained—a critical issue for the industry. The main driver of the price rise was increased demand, while the domestic price fluctuations were largely influenced by raw material costs. At the same time, China remains the world’s largest producer of phosphate fertilizers, with a significantly restructured industry. Ten years ago, there were over 1,100 phosphate fertilizer companies, but today, only a few large-scale producers remain, with many smaller ones having been consolidated. The emergence of large enterprises has accelerated industry integration, and this trend is expected to continue. Despite claims that China faces a serious phosphorus resource shortage, recent data from the U.S. Geological Survey suggests otherwise. China now holds the top position in global phosphorus resources. Moreover, advancements in ore processing technology have made it unlikely that China will face a long-term resource crisis. This means the phosphate fertilizer industry can sustain growth for many decades. However, misperceptions about resource availability may affect corporate strategies. It is crucial for relevant government departments to reassess phosphorus resource planning and reach a consensus to guide the industry’s sustainable development. This is essential for the long-term success of China’s phosphate and compound fertilizer sector. In my view, the industry must first meet domestic demand before considering international expansion. Export restrictions under the guise of resource protection could hinder the industry’s golden growth period. According to WTO principles, countries should not limit trade based solely on resource concerns. Therefore, the phosphate fertilizer industry needs to integrate more deeply with the global market and move forward together. Currently, companies are facing challenges and need support from distributors. The relationship between manufacturers and distributors plays a vital role in long-term development. It’s important to maintain stable supply chains, ensure key customers, and keep prices consistent. For example, some companies are not suitable for distribution due to structural mismatches. Instead, partnerships built on mutual trust and capital collaboration should be encouraged to achieve win-win outcomes. As upstream players, production companies rely on downstream distributors. A strong and rational partnership is necessary for sustainable growth. We urge our distributors to prioritize the domestic market, maintain supply stability, and ensure reliable service. Ultimately, the goal is to optimize social resource allocation and reduce costs through cooperation.

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