Abstract
Background
China has shaken off macro-economy depression and set foot on a fast growing
road since 2003. In the meantime, under the conditions of shortage of supply
central government has adopted a set of agriculture-oriented policies in order
to stimulate the recovery of grain production, for example, agricultural
subsidy expenditure, agricultural tax abolishment, etc. Therefore, fertilizer
production, demand and investment in China witnessed a continuous growth
influenced with the two favorable factors.
However, under the conditions of shortage of domestic and international energy
sources plus surging prices of mineral resources, a set of macro-adjustment
policies are adopted to control a highly liquid currency circulation and
prevent inflation; at the same time, price and revenue policies are carried
out to restrain the excessive consumption of energy sources and mineral
resources and large amount of investment into high energy consumption
industries. Negative effects in fertilizer industry have increased with the
implementation of macro-economy policies, and they showed more distinctive
entered 2006-2007 as followed:
In 2007, domestic supply and demand are blooming in fertilizer market with
strong demand worldwide. However, fertilizer material cost and industrial
powder generally marked up, suppressing the rise of fertilizer production cost
and price, plus export limit, so profit margin in fertilizer industry
decreased dramatically.
From the view of new policies adopted by central government and policy guide
in the Central Economy Working Conference in November and December, 2007,
policies will focus on the following points next year. It will deepen the
reform of fiscal revenue, price and investment system to promote the change of
economy development; macro-adjustment will be carried out on the principle of
quantity control, price stabilization, structure adjustment and balance
promotion; the most important task of macro-adjustment is to prevent excessive
economy growth and avoid dramatic price inflation; forceful measures will be
adopted to restrain the excessive price growth and enhance the production of
basic necessities, such as grains, edible vegetable oil, meat products, etc;
currency polices will play a more important role in macro-economy to restrain
total amount and speed of currency credit; stable fiscal policies and tight
currency polices will be implemented.
Fertilizer industry in 2008 will be restrained by cost growth and price limit
under the influence of the mentioned macro policies. In the meantime, the
implementation time of fertilizer production preferential policy abolishment
brought forward in 2006 is still not settled, further deepening the
uncertainty of Chinese fertilizer market. Therefore, it is more important to
estimate and grasp precisely the trend of domestic fertilizer production and
market.
Combined with national economy development and policy reform, BOABC will
research deeply in 2008 Chinese fertilizer market trend on the basis of an
overall analysis and review in Chinese fertilizer market policies and trend in
2007 as to make a specific estimate in Chinese future fertilizer market, which
will be a strategic reference for insiders domestically and internationally
focusing on fertilizer market in China.
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