Abstract
Background
China maintained a rapid economic growth in 2006 under the national
macro-control policy, the first year of the 11th Five-Year Period (2006~2010)
of the national economic development. A series of policies for economic
development, including objectives, key points of growth and directions of
structural readjustment, have been worked out.
The 11th Five-Year Plan for the Chinese Economic And Social Development,
promulgated in March, 2006, requires that per unit GDP energy consumption and
pollution discharge be reduced by 20% and 10% in five years against the
backdrop of an expected annual 7.5% GDP growth. This poses a new challenge to
the fertilizer industry because it is one of the industries with high energy
consumption and high pollution discharge. The policy is expected to bring
about a new round of technical innovation, distribution of production and
product-mix readjustment in the fertilizer industry. How will the new round of
restructuring be carried out?
The 11th Five-Year Plan for National Agricultural & Rural Economic
Development, promulgated in Aug., 2006, sets up a goal of annual 0.65%
increase in comprehensive grain productive capacity in five years under the
condition of annual 0.18% decrease in planted grain acreage. Then how will the
fertilizer industry step up fertilizer supply, improve its product-mix,
improve fertilizing technology and raise fertilizer utilization to ensure the
accomplishment of grain production goals?
The 11th Five-Year Plan for the Fertilizer Industry, promulgated in Oct.,
2006, puts forward a fertilizer productive capacity of 63.5 million MT and a
production of 60 million MT a year by 2010 in order to guarantee fertilizer
supply. The specific goals of nitrogen, phosphorus and potassium production
are 42 million MT, 15 million MT and 3 million MT respectively. Domestic
fertilizer self-sufficiency should reach 90%, that is, basic self-sufficiency
of nitrogen and phosphorus supply and 30% of potassium supply. How will the
fertilizer industry readjust its distribution of production and product-mix
and what steps will it take in technical innovation to attain the industry' s
development goals?
The conflict between the government' s policy to practice macro-control and the
policy of increasing farmers' income and the conflict between fertilizer price
growth and government' s control remained unsettled in 2006. Farmers' and
fertilizer producers' complaints led to a government decision to lift
fertilizer price control, withdraw preference policies for fertilizer
producers and give direct cash subsidy to farmers from 2007 on. But fertilizer
production cost keeps increasing on account of the reform of coal, power and
natural gas price toward market economy. Owing to this, there was a tendency
of declining profit margin in the fertilizer industry in late 2006. Therefore,
how the government reforms its policies will have great impact on fertilizer
production and fertilizer market trend in 2007.
On the basis of thorough review and analysis of government' s fertilizer
policies and market trend in 2006, taking into account of national economic
move and overall policy reform, BOABC will make an in-depth analysis of the
problems facing the fertilizer market in 2007 and draw reasonable conclusions,
so as to provide a reference to people concerned about China' s fertilizer
market.
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