Summary of the Conference Call on China's Fertiliser Market Industry Overview - The report focuses on the fertiliser sector in China, particularly potash, urea, and phosphate fertilisers [2][3][4]. Key Points and Arguments Fertiliser Price Trends - Potash prices have risen significantly since Q4 2024, with domestic average selling prices (ASP) exceeding Rmb 2,700/t [7]. - Urea prices experienced a slight rebound due to agricultural restocking before the Chinese New Year (CNY), but this was short-lived as production increased post-CNY [8]. - Phosphate fertiliser prices remain muted due to low purchasing intentions from downstream producers, with stable ASP around Rmb 1,000/t [9]. Influencing Factors on Fertiliser Market 1. Agricultural Product Prices: Strong international soybean and corn prices are expected to boost domestic fertiliser demand as China approaches the spring ploughing season [3][11]. 2. Export Policy Changes: Urea export volumes have sharply declined due to legal inspections, suggesting potential policy relaxation could ease domestic supply pressures [3][12]. 3. Energy Consumption Policies: Stricter regulations on energy consumption are expected to constrain urea and phosphate fertiliser supply [3][13]. Production and Capacity Insights - Limited production growth is anticipated for potash, with Asia-Potash expected to increase production by 1mt in 2025 [4]. - Urea production capacity additions for 2025 are projected at 4.5mt, but high inventory levels and subdued profits are concerning [4][29]. - No capacity additions for MAP/DAP are expected in 2025-26, although upstream phosphate ore projects are planned [4][48]. Stock Recommendations - Asia-Potash and Hualu-hengsheng are recommended for investment, with potential upside risks linked to production growth and price recovery [5][80]. Risks and Considerations - The fertiliser sector faces risks from fluctuating international oil prices, uncertain global economic growth, and potential oversupply from new capacity coming online [64][66]. - Specific risks for Asia-Potash include policy risks and commodity price declines, while Hualu-hengsheng faces challenges from reduced demand and regulatory tightening [66][66]. Additional Important Insights - The fixed-bed production process accounts for nearly 25% of China's urea capacity, which is under pressure due to high costs and low efficiency, potentially leading to the exit of these facilities [4][34]. - The export volume of urea has drastically decreased from an average of 7mt (2010-2021) to 250kt in 2024, indicating significant supply-demand pressure domestically [3][38]. This summary encapsulates the critical insights from the conference call regarding the current state and future outlook of the fertiliser market in China, highlighting key trends, influencing factors, and investment recommendations.
China Oil, Gas and Chemical Thematic Research_Eyes on fertiliser sector, with spring ploughing approaching