In
early Dec. 2013, the China Petroleum and Chemical Industry Federation (the
CPCIF) finished the compiling of the Thematic Research Report on Defusing
Overcapacity (the Report). The Report documents the overcapacity problem and
makes recommendations for the eight chemical industries that are most affected
by the overcapacity problem, namely oil refining, nitrogen fertilizer, ammonium
phosphate, chlor-alkali, sodium carbonate, calcium carbide, carbinol and
silicon fluoride, according to CCM’s Phosphorus Industry
China Monthly Report 1401.
The
Report has been submitted to the National Development and Reform Commission
(the NDRC), the Ministry of Industry and Information Technology of People's
Republic of China (the MIIT), the National Energy Administration (the NEA), and
the State-owned Assets Supervision and Administration Commission of the State
Council (the SASAC). It has been distributed to regional industrial associations
and industrial competent departments. The Report will be released after it has
been unanimously approved by the relevant departments and authorities.
There
are four general features of the overcapacity situation in the above mentioned
eight chemical industries. Firstly, these industries are mainly traditional and
basic industries. There is also a trend that some emerging industries are also
becoming threatened by overcapacity. Secondly, the overcapacity in these
industries is largely the result of structural problems—oversupply for low-end
products and a supply shortage for high-end products. Thirdly, there are still
too many small and uncompetitive companies in these eight industries. In other
words, the degree of concentration in these industries is not high enough.
Finally, the proportion of backwards production capacity involving antiquated
methods in these industries remains high. Take the domestic calcium carbide
industry for example, the use of internal combustion furnaces for production
still accounts for 40% of the total calcium carbide production capacity.
Although
the export tariff imposed on phosphate fertilizer will be sharply reduced in
2014, the domestic industry will remain encumbered with the issue of
overcapacity for several years. Overcapacity is a root problem faced by China's
phosphate fertilizer industry. In the first 11 months of 2013, the production
volume of phosphate fertilizer was steady, while the export volume of DAP,
which accounts for the majority of phosphate fertilizer exports, decreased by
16.48% compared with the corresponding period in 2012. Meanwhile, there was new
DAP production capacity, with about 1 million t/a put into operation in 2013.
Therefore the overcapacity in ammonium phosphate, which traditionally accounts
for 80% of the production volume of the entire phosphate fertilizer industry,
worsened during 2013.
The
direct purpose of the Report is to reduce the ammonium phosphate fertilizer
production capacity. The CPCIF has targets to reduce the overall production
capacity of DAP from nearly 20 million t/a in 2013 to 15 million t/a, and the
production capacity of MAP from nearly 17 million t/a in 2013 to 12 million t/a
by 2015. The long-term purpose of the Report is to stimulate the phosphate
fertilizer industry towards integrating, transforming and modernizing the
industry.
The
major challenge that the phosphate fertilizer industry faces is how to achieve
the targets that have been set by the CPCIF. In the Report, some measures will
probably be included, such as setting standards and thresholds to weed out
backward production capacity and the rejection of applications for investment
into new ammonium phosphate projects.
However,
the government's policies will only have a minor and temporary effect. Any
major integration or upgrade in China's phosphate fertilizer industry will
depend on the private enterprises themselves. Private enterprises will need to
adjust their product structures and drive technological innovation so that
phosphorus resources are comprehensively used.
Newyangfeng
Fertilizer approved to be listed by back door listing
Tianjin
Tanyi develops a new technology to produce MKP by using yellow phosphorus tail
gas
CPCIF
compiles thematic report to ease the overcapacity in eight chemical industries
Phosphate
fertilizer export tariff to be sharply reduced in 2014
New
standard to regulate domestic single superphosphate market in 2014
Batian
to invest in a giant synthesis ammonia project in Weng'an County, Guizhou
Province
Kainlin
Group to start the integration project of phosphorus and coal chemical industry
in H2 2014
The
first phosphate complex in South East Asia to be built in Malaysia
Yidu
Dajiang to upgrade its phosphate compound fertilizer production devices
Iodine
recycling item of Kailin Mining & Ferilizer to be put into operation in
Feb. 2014
International
trade of phosphate chemicals in Nov. 2013
Market
review of prime phosphate chemicals in Dec. 2013
Price
monitoring of phosphate chemicals in Dec. 2013
Phosphorus Industry China Monthly Report, issued
by CCM on 15th, keeps providing the latest company dynamics related to China’s
phosphorus industry, and market analysis on supply and demand, import and
export as well as global insight.
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