In the traditional export hub of Shandong, chemical fertilizer has long been a key product with relatively stable export prices. However, 2013 brought unexpected challenges. According to data from Qingdao Customs, in the first half of 2013, Shandong ports exported 1.125 million tons of fertilizers—an impressive 47.2% increase compared to the same period the previous year. The total value reached $380 million, up 20.3% year-on-year. At first glance, this seems positive. But closer examination reveals a troubling trend: while the volume of exports rose significantly, the unit price dropped sharply—by nearly 20%, falling to around $80 per ton.
This pattern of "increasing volume but decreasing profits" is becoming more common and raises serious concerns. The issue isn’t just about lower prices—it’s about the sustainability of the industry. As domestic production of urea surged to 27.754 million tons in the first five months of 2013, up by 2.53 million tons, the domestic market struggled due to unfavorable weather conditions. This led to an oversupply, making the gap between supply and demand even more pronounced. Many manufacturers turned to exporting as a way to offload excess inventory, resulting in massive stockpiles at domestic ports—reaching nearly 3 million tons by early June.
Meanwhile, India, one of the largest buyers of Chinese urea, reduced its tender price again in June, dropping from $331.5 per ton to $303.33 per ton. This was far below what domestic producers had hoped for. With such low international prices and high port inventories, exporters found themselves in a difficult position, often forced to accept lower prices to move their goods.
The situation highlights a deeper problem: despite high output, China's fertilizer industry is not earning enough profit. This reflects a lack of influence in the global market and a reliance on outdated, inefficient, and polluting production methods. Overcapacity, rising raw material costs, and increasing logistics expenses have made it increasingly hard for companies to remain profitable.
As China pushes for industrial transformation, the fertilizer sector must seize this opportunity to modernize. Investing in technology, phasing out outdated facilities, and enhancing product value are essential steps. Only by adapting to the shifting global landscape can the industry ensure long-term stability and competitiveness.
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