Friday, September 30, 2011

Phosphate Fertilizer Industry to See Industrial Integration

CCM’s Phosphorus Industry China Monthly Report indicates that phosphate fertilizer industry is to see industrial integration.

In June 2011, China Petroleum and Chemical Industry Federation (CPCIF) released the Development Plan of Phosphate Fertilizer Industry (the Plan) in the12th Five-Year Plan (2011-2015). The Plan indicates that China's phosphate fertilizer industry will focus on integrated production in the coming years.

CPCIF has set five development targets in the Plan, including:
-- Control the incremental production capacity at 2.5 million tonnes and eliminate 1.0 million tonnes inefficient capacity by 2015;
-- Make the top 10 producers holding 60% output volume share and reduce the number of phosphate fertilizer producer assorting phosphate acid production capacity from 90 to 50;
-- Increase the research & development investment to 3% of the sales income;
-- Substitute 1.5 million tonnes production capacity of thermal process phosphate acid by that of wet process phosphate acid purification;
-- Raise the national recycle rate of phosphate sum to 40%. CPCIF suggests China's phosphate fertilizer industry taking measures to achieve the targets mentioned above.

The measures include:
-- Control the total production capacity of phosphate fertilizer;
-- Raise the utilizing rate of low grade phosphorus ore;
-- Strengthen innovation on developing control release fertilizers and other specialty fertilizers, etc.
-- Raise the level of industry concentration through optimizing resource allocation, mergers and acquisitions;
-- Encourage companies to develop phosphate chemicals or phosphate fertilizer industries abroad, etc.

Phosphorus ore, the most important raw material of phosphate fertilizer, will draw more and more attentions, with the rising price and exhausting reserve. As a result, the companies holding ample phosphorus ore reserve will be the principal companies in the further mergers and acquisitions. Meanwhile, state-owned companies will be the merging sides as they are the main phosphorus ore resource holders at the moment.

Take China BlueChemical Ltd. (CBC) for example. As a subsidiary of China National Offshore Oil Corporation (CNOOC), CBC got involved in phosphate fertilizer production in 2009 through acquiring Hubei Dayukou Chemical Co., Ltd. and ZHJ Mining Company Limited.

In the coming years, CBC is to seek merger and acquisition opportunities that match its development strategies both in China and overseas. CBC aims to become the largest chemical fertilizer manufacturer and the most effective resource-processing enterprise in domestic chemical industry, and it has also geared up for competing in the international market.

If you are interested in CCM’s Phosphorus Industry China Monthly Report, please feel free to contact us at You can enjoy early-bird offer if you subscribe now. From 16th Sep. to 15th Oct., you can get one year with 4 extra free issues. From 16th Oct. to 15th Nov., you can get one year with 2 extra free issues.
(Guangzhou China, September 26, 2011)

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