What issues need attention when urea production surges?
How can urea application improve utilization efficiency? Please guide deep application. Whether urea is used as a base fertilizer or a top dressing, it should be applied deep and covered with soil, with an application depth of 10-12 cm being appropriate. Deep application of urea can significantly improve utilization efficiency. According to experiments, when urea is surface-applied or shallow-applied at 2-3 cm, the utilization rate is only 30%; at an application depth of 5 cm, the utilization rate is 45%...
In the past two years, urea has been very popular on the market, and all enterprises producing urea have enjoyed good profits. As a result, some enterprises are enthusiastic about expanding and building new urea production facilities. Some use natural gas as raw material, and some use coal; the scales are all quite large, and the investment is certainly considerable as well. Here the author wants to remind these enterprises: China's urea is already saturated, and without special advantages, investment in urea must be cautious.China's annual urea consumption is about 30 million tons. Even if some growth is expected in the next 10 years, it will probably not exceed 35 million tons. The total capacity of existing facilities is already not far from this amount. If the 800,000 tons under construction in Hainan and about 2 million tons in Shanxi are added, China's production capacity will be in surplus throughout the next 10 years.
Let us analyze the current urea market again. It should be noted that although urea sales have been smooth and prices relatively high in the past two years, the production and sales situation is not one of insufficient production relative to demand, but rather production exceeding sales, with about 1 million tons of urea exported every year. In addition, another important factor contributing to this booming urea sales situation is that some domestic enterprises, especially some former major oil-based enterprises, have not joined the competition. These enterprises are all converting to coal as raw material and will gradually resume production. By then, China's urea production capacity will be even greater, and sales pressure will also be even greater.
Our urea can be exported, but that must be based on China's low urea costs and low transportation costs. At present, however, China's urea exports do not yet fully possess the above advantages. Even new production facilities built in the future will still not possess such advantages. At present, even in Southeast Asia, the landed cost of China's exported urea is not relatively high, and it still has no price competitiveness compared with urea from Russia and the Middle East. The reason Chinese enterprises can profit from exporting urea relies on China's export tax rebate policy, but this policy advantage is gradually disappearing. Moreover, the main targets of China's exports, such as Vietnam and other countries, are all preparing to build large fertilizer plants, and a batch will be put into operation in 2005. By then we will lose these export markets, and the difficulty of product exports will increase. Therefore, we have no sufficient reason to expect that China's urea export market will grow greatly within a few years.
From the perspective of newly built and individually expanded enterprises themselves, they may possess some advantages and can squeeze out some enterprises in domestic competition, winning development space for themselves. But this kind of competition is quite cruel and is not worth advocating. Moreover, judging from the history of China's nitrogen fertilizer industry over the past 20 years, this kind of competition is also long-term and will very likely cause even advantaged enterprises to suffer serious losses in the competition.
Finally, we must recognize that the urea market is now having a good year, and enterprises all have profits. But there will also be bad years. If by then China's urea production capacity is severely excessive and the export market is not large, it will be a very frightening disaster.
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