The supply of coal is tight and it is difficult to compete for high coal prices

Since the beginning of this year, the operating rate of small and medium-sized nitrogen fertilizer enterprises with an annual output of 150,000 tons of synthetic ammonia is only 30%, and the average loading rate of large and medium-sized nitrogen fertilizer enterprises is only about 70%. An important reason identified by the industry is the high cost of coal.

China National Nitrogen Fertilizer Industry Association official said, statistics show that from January to February this year, the country's total fertilizer production increased by 6% year-on-year. Among them, the output of phosphate fertilizer increased by 23.4% year-on-year, and potassium fertilizer increased by 98.6%, except that the output of urea and ammonia decreased by 5.6% and 1.5% respectively. An important reason for the reduction in production is that the price of raw materials for urea such as coal continues to rise, and the cost pressure of urea production companies has doubled, which has inhibited the production of domestic urea.

In April and May of each year, the fertilizer application period of wheat topdressing and fruit trees coincides with a large demand for chemical fertilizers. Fertilizer companies can often obtain more profits. However, this year, the fertilizer companies have not only failed to make profits during the boom season, but have been trapped in the coal price hike and product prices upside down.

“At present, fine-washed anthracite coal has reached factory prices of more than 1,700 yuan/ton, which has risen by 700 yuan compared with the same period of last year. However, the ex-factory price of urea has not been able to increase sharply and remained at 1,850 yuan/ton, which is only 200 yuan more than the same period of last year.” A person in charge of a small nitrogen fertilizer company said.

It is understood that since the beginning of this year, coal prices have risen in a straight line, and supply exceeds supply, leading to a dramatic increase in the production costs of fertilizer companies. Despite continuing technological transformation and strengthening management, most companies are still unable to offset the negative impact of rising coal prices. Many companies are now worried about the cost of purchasing raw coal and will face the risk of a complete shutdown.

While small businesses are struggling to support, the days of big companies are equally difficult. Shaanxi Sanghua Group, the largest fertilizer company in Shaanxi, has suffered a loss of 37 million yuan. Shaanxi Huashan Chemical Group also suffered huge losses in its fertilizer sector.

Some insiders have calculated: If the 40 million tons of coal, 150 billion cubic meters of coal gas, and more than 20 million tons of methanol-to-olefins projects are planned to be implemented, the annual coal consumption will reach 820 million tons. The situation of domestic coal supply shortage will be more serious, and the sharp rise in coal prices is inevitable. If, according to the National Development and Reform Commission's "Regulations on Regulating the Orderly Development of the Coal Chemical Industry," this plan is halted, the amount of coal used in coal chemical industry will be reduced, and the shortage of coal for chemical industry will be significantly eased. To suppress the rational return of coal prices, its positive significance for the fertilizer and methanol industries is no less than the increase in product prices.