Phosphorus* Market Analysis in 2014

In 2013, the apparent consumption of phosphate fertilizer was 14.13 million tons of P2O5, which was a year-on-year decrease of 2.0%. The decline in apparent consumption was mainly due to the decrease in production.

Phosphorus* resource is the main raw material for phosphate fertilizer production in China.* Resources mainly include *iron ore, non-ferrous metal associated* and *yellow. In 2013, the self-sufficiency rate of China's ** yellow was only 33%, which was basically the same as last year. 55% of non-ferrous metal mines need to be imported. In addition, a certain amount of ** must be imported from Japan and South Korea every year. In 2013, the foreign dependence on China's resources was as high as 49%.

As of the end of 2013, there were 395 production enterprises above designated size in China, with a production capacity of 118 million tons/year, of which *yellow acid accounted for 46%, smelting and flue gas acid accounted for 29%, and *iron ore production accounted for 23%. The other acids account for 2%.

In 2013, China's apparent consumption amounted to 87.65 million tons, a year-on-year increase of 3.1%. **In the consumption structure, the use of acid in fertilizer accounted for 62.4%, which was the same as in the previous year; industrial acid accounted for 37.6%. Among the acid used in fertilizers, the amount of acid used for phosphate fertilizer accounted for 91.7% (45% for DAP, 34% for MAP, 11% for NPK, 2% for TSP, 2% for S-NPK, and 3% for other high-concentration phosphate fertilizers) , accounting for 57.2% of total consumption.

In 2013, China's yellow production was 5.26 million tons, a year-on-year increase of 1.2%. Among them, Sinopec* Yellow accounted for 82%, and PetroChina* Yellow accounted for 7%. China's self-sufficiency rate for yellow is still low, at only 33%, which is basically the same as in 2012. Although the supply of CNPC's northeastern China project will increase, the project has been postponed. It is expected that the self-sufficiency rate of China's yellow economy will hardly increase significantly in the past two years.

In 2013, China's yellow appearance consumption amounted to 15.81 million tons, 81% of which was spent on the system and 19% on other industries. 72% of the acid is used together with phosphate fertilizer, which consumes about 9.38 million tons of yellow, which means that 60% of the yellow is used in the phosphate fertilizer industry, of which more than 85% is imported* yellow.

In 2013, China imported 10.55 million tons of yellow, a year-on-year decrease of 5.8%, accounting for 35% of the world's yellow trade volume. Imported regions are mainly in the Middle East, the former Soviet Union, East Asia and North America. Imports account for 43%, 23%, 19% and 9% of the total imports respectively. Kazakhstan has surpassed Saudi Arabia to become the country's largest importer of yellow. In 2013, China's average import CIF price was US$135/ton, which was 33% lower than the same period last year.

With the development of China's non-ferrous metal industry, the output of smelting flue gas acid production has grown rapidly. In 2011 and 2012, large-scale copper smelting facilities such as Shandong Xiangguang, Tongling Tongshan in Anhui, and Daye in Hubei were completed and put into production. In 2013, the Jinchuan, Fuchunjiang, and Ding Copper Industry Co., Ltd. and Tongling Nonferrous Metal Transformation and New Installations were put into production. In the past three years, non-ferrous metal smelting has increased production capacity of about 10 million tons/year. In the next two years, North Copper, Yuguang Gold and Lead, Central Plains Gold, and Dongying Lufang will increase their smelting acid production by nearly 5.1 million tons per year. During the "12th Five-Year Plan" period, the production capacity of smelting acid will increase by more than 13 million tons/year.

Phosphorus* Market Situation Analysis in 2014

Phosphate fertilizer market situation

Due to the increase in carryover stocks at the end of 2013, the supply of major phosphate fertilizer products continued to increase in 2014, and the market competition became more intense. Productivity and output of phosphate fertilizers and compound fertilizers will continue to increase in inertia for some time to come. Even if the output of phosphate fertilizers declines in 2013, the scope is limited, which is insignificant in relieving the contradiction between supply and demand. From the perspective of demand, under the combined effects of land circulation, new fertilizers, scientific fertilization, and ecological agriculture, demand for phosphate fertilizers has entered the platform period, and will show a downward trend in the later period. In early 2014, the domestic and international phosphate fertilizer market showed signs of recovery, but due to the intensified supply and demand conflicts, there is limited room for price increase of phosphate fertilizers.

In 2014, China’s export tariffs were loosened, especially in off-season tariffs, which made it more likely for enterprises to export. However, with the continued growth of phosphate fertilizer production in countries such as Saudi Arabia and Morocco, the international phosphate fertilizer market is in a situation of oversupply. Considering India, a major demand country, due to the low carryover inventory at the end of 2013, if the subsidy policy and exchange rate changes little in 2014, the demand for phosphate fertilizer is expected to increase and it is expected to increase from 3.5 million tons in 2013 to 5 million. Ton. In general, China's exports of diammonium in 2014 have a certain amount of room for growth, but due to the relationship between supply and demand, the export price growth is limited.

**Market situation

In 2013 and 2014, new ** production capacity was released in large quantities, and ** supply was more abundant. Smelting acid production capacity continues to increase, and all products enter the market. The increase in smelting acid has also forced some *yellow acid plants and* iron ore acid plant to exit the market, making the completed plant difficult to feed, and production of phosphate compound fertilizers and chemical equipment has been reduced or suspended. It is expected that the demand for phosphate fertilizer will stabilize in 2014, and the demand for industrial acid will be weak. The situation of the oversupply in the market in 2014 was even more severe and the outlook was still not optimistic.

In recent years, the growth rate of xanthanic acid has slowed down, while the growth rate of smelting acid has been relatively strong. Exorbitant *yellow prices have caused demand companies to switch to the smelting acid market. Smelting acid, as an environmentally friendly recycling by-product of non-ferrous metal smelting, has cost advantages, is in line with the direction of industrial development, and is the preferred resource in industrial policy. With the construction of smelting acid production capacity during the “Twelfth Five-Year Plan” period, the weight of smelting acid in the ** market will further increase.