Will the compound fertilizer market environment improve in 2024? Will the market fluctuate? The following is an in-depth analysis of the future trend of compound fertilizer from the perspective of macro environment, policy, supply and demand pattern, cost and profit, and industry competition situation analysis.

1. The global economic recovery is slow, and the Chinese economy faces opportunities and challenges

Under the influence of multiple risks such as unilateralism, geopolitics, military conflicts, inflation, international debt and industrial chain restructuring, the growth of international trade and investment has slowed down significantly, and the global economic recovery in 2024 is slow and uneven, and uncertainties are further increasing.

At the same time, China’s economy will face many opportunities and challenges. The biggest opportunity lies in the continuous promotion of “new infrastructure” and “double cycle” strategies. These two policies will vigorously promote the upgrading of domestic industries and enhance the internal driving force of the economy. At the same time, the global trend of trade protectionism is still continuing, which brings no small pressure on China’s exports.

From the perspective of macro environment forecast, the probability of the global economy weakening in the next year is large, and the commodity may be mildly shaken down, but it is still necessary to consider the uncertainty brought by geopolitical contradictions to the market. A better domestic environment is expected to facilitate the return of domestic fertilizer prices to rational spatial fluctuations.

2, fertilizer resources have strong attributes, and policies guide the development of the industry

The Ministry of Agriculture and Rural Affairs issued the “Action Plan for Reducing chemical fertilizers by 2025″ notice, requiring that by 2025, the national application of agricultural chemical fertilizers should achieve a stable and stable decline. The specific performance is: by 2025, the proportion of organic fertilizer application area will increase by more than 5 percentage points, the coverage rate of soil testing and formula fertilization technology for major crops in the country will be stable at more than 90%, and the fertilizer utilization rate of the three major food crops in the country will reach 43%. At the same time, according to the “Fourteenth Five-Year Plan” development Ideas of the phosphate Fertilizer Industry Association, the compound fertilizer industry continues to take green development, transformation and upgrading, quality and efficiency improvement as the overall goal, and the compound rate will be further improved.

Under the background of “double control of energy”, “two-carbon standard”, food security, and fertilizer “stable supply and price”, from the perspective of industry development trend, the future of compound fertilizer needs to continue to improve the process and improve the production process to save energy and reduce emissions; In terms of varieties, it is necessary to produce high-quality fertilizers that meet the needs of quality agriculture; In the application process, attention should be paid to improving the utilization rate of fertilizer.

3. There will be pain in the process of supply and demand optimization

From the point of view of the plan and the installation under construction, the pace of the layout of the national production base of large-scale enterprises has not stopped, and the vertical integration strategy has greater practical significance for the profit increase of compound fertilizer enterprises, because the trend of industrial integration, especially the enterprises with resource advantages and large-scale operation will play an increasingly important role. However, enterprises with small scale, high cost and no resources will face a greater impact. According to incomplete statistics, the planned production capacity under construction in 2024 is 4.3 million tons, and the release of new production capacity is another impact on the current situation of the domestic supply and demand imbalance of compound fertilizer market, relatively excess production capacity, and vicious price competition is temporarily difficult to avoid, forming a certain pressure on prices.

4. Raw material cost

Urea: From the supply side in 2024, urea production will continue to grow, and from the demand side, industry and agriculture will show a certain growth expectation, but based on the inventory surplus at the end of 2023, domestic supply and demand in 2024 or show a phased easing trend, and the change in export volume next year will continue to affect the market trend. The urea market in 2024 continues to fluctuate widely, with a high probability that the price center of gravity has fallen from 2023.

Phosphate fertilizer: In 2024, the domestic spot price of mono ammonium phosphate has a downward trend. Although exports are limited in the first quarter, domestic spring demand and raw material prices are still supported by high prices, the price will fluctuate mainly at 2850-2950 yuan/ton; In the off-season of the second quarter, the summer fertilizer is mainly high nitrogen, the demand for phosphorus is limited, and the price of mono-ammonium phosphate will gradually decline under the influence of the decline in raw material prices; In the third and fourth quarters of the domestic autumn sales season, the demand for high phosphate fertilizer for phosphorus is large, and the international demand is promoted, as well as the follow-up of the winter storage demand, and the raw material phosphate for tight price support, the price of mono-ammonium phosphate will rebound.

Potassium Fertilizer: In 2024, the price trend of the domestic potash market will change according to the off-peak season of the market, driven by the rigid demand of the spring market, the market price of potassium chloride and potassium sulfate will continue to rise, and the 2023 contract ends on December 31, 2023, and will still face the negotiation situation of the 2024 big contract. It is highly likely that negotiations will begin in the first quarter. After the end of the spring market, the domestic potash market will enter a relatively light trend, although there is still demand for summer and autumn markets in the later stage, but it is relatively limited for potash.

Considering the trend of the above three main raw materials in 2024, there is a high probability that the annual price of 2023 will decline, and then the cost of compound fertilizer will loosen, affecting the price trend of compound fertilizer.

5. Downstream demand

At present, in terms of the main downstream grain, it will continue to require its comprehensive production capacity to steadily increase in 2024, and the output will remain above 1.3 trillion catties, ensuring basic self-sufficiency in grains and absolute food safety. In the context of the food security strategy, agricultural demand will stabilize and improve, providing favorable support for the demand side of compound fertilizer. In addition, considering the development of green agriculture, the price difference between new fertilizers and conventional fertilizers is expected to further shrink, and the share of conventional fertilizers will be squeezed, but it will take time to transition. Therefore, it is expected that the demand and consumption of compound fertilizer will not fluctuate too much in 2024.

6. Market price outlook

Based on the analysis of the above factors, although supply and demand have improved, excess pressure still exists, and the cost of raw materials may be loosened, so the market of compound fertilizer is expected to return rationally in 2024, but at the same time, the phased market still exists, and the impact of policies needs to be considered. For enterprises, whether it is the raw material preparation before the season, the instantaneous production capacity of the peak season, the brand operation, etc., are facing the test.