2020 On July 1, the “Symposium for Key Nitrogen Fertilizer Enterprises and the 2020 Meeting of the International Trade Coordination Committee of the China Nitrogen Fertilizer Industry Association,” hosted by the China Nitrogen Fertilizer Industry Association, was held in Yinchuan, Ningxia. Due to the impact of the pandemic, this meeting was conducted both online and offline simultaneously. The event received strong support from the Zhengzhou Commodity Exchange, the Mengtuoling Logistics Platform, the Ningxia Petrochemical Branch of CNPC, and Ningxia Heneng Chemical Co., Ltd. A total of 115 representatives attended the on-site meeting.

Since the beginning of this year, affected by the COVID-19 pandemic, the global economy has suffered a severe blow, and fertilizer exports are facing significant challenges. In the second half of the year, China will enter the off-season for fertilizer use. Many factors—including the global fertilizer market situation, the new fertilizer reserve system, natural gas pricing policies, and the new environmental protection production restriction policies for autumn and winter—will influence the economic performance of the nitrogen fertilizer industry. Going forward, the number of uncertainties affecting the nitrogen fertilizer market is increasing, making the challenges faced by China’s nitrogen fertilizer industry even more daunting.

According to statistics from the China Nitrogen Fertilizer Industry Association, nitrogen fertilizer production has shown significant growth. From January to May, the country’s cumulative output of synthetic ammonia reached 24.611 million tons, an increase of 3.2% year-on-year; nitrogen fertilizer production totaled 17.041 million tons, up 3.2% over the same period last year; and urea production reached 23.536 million tons (in physical terms), representing a 6.2% year-on-year increase. In the first half of the year, as domestic nitrogen fertilizer production rose and coal prices declined, domestic nitrogen fertilizer prices showed a clear downward trend. From January to June, the cumulative average price of urea was 1,666 yuan per ton, down 12.87% year-on-year.

According to customs statistics, nitrogen fertilizer imports and exports have declined. From January to May cumulatively, China’s nitrogen fertilizer exports totaled 1.966 million tons, a decrease of 6.4% year-on-year; imports amounted to 110,000 tons, down 31.7% year-on-year. Among these, urea exports reached 1.498 million tons (in physical terms), a decrease of 7.7% year-on-year; urea imports totaled 594.5 tons (in physical terms), a drop of 99.4% year-on-year.

According to data from the National Bureau of Statistics, from January to April, there were 176 nitrogen fertilizer enterprises surveyed, of which 77 reported losses—a year-on-year increase of 12 enterprises. The proportion of loss-making enterprises in the industry reached 43.8%, up 18.3 percentage points from the previous year. The total losses incurred by these loss-making enterprises amounted to 2.27 billion yuan, an increase of 140 million yuan, or 6.4% year-on-year.

Overall, from January to June 2020, nitrogen fertilizer production performed better than in the previous year, and domestic supply of nitrogen fertilizers was ample. However, prices dropped significantly year-on-year, leading to a sharp decline in the profitability of nitrogen fertilizer enterprises and a marked expansion of the number of loss-making companies. Currently, the nitrogen fertilizer industry continues to face challenges such as persistently high costs, an expanding scope of losses across the industry, a rise in counterfeit and substandard fertilizer products, and widespread losses among enterprises producing chemical products internally. The business outlook for these companies remains grim.

Gu Zongqin, Chairman of the China Nitrogen Fertilizer Industry Association, pointed out that, judging from the current international and domestic situation, neither the COVID-19 pandemic nor downward economic pressures will come to an end in the short term. Therefore, we must be prepared for a prolonged response. We should strengthen our internal capabilities, reduce costs, enhance competitiveness, and steadily advance enterprises toward the goal of high-quality development. We must attach great importance to epidemic prevention and control to ensure the normal operation of enterprises; actively seek natural gas resources and reasonable gas prices; improve the efficiency of fertilizer logistics; intensify efforts to combat counterfeit fertilizers; strengthen risk management in international trade; and continue optimizing product structures.

During the pandemic, the association reported daily to relevant government departments on the industry’s situation, striving to secure greater policy support for the sector. To ensure an adequate supply of fertilizers for spring plowing, the Nitrogen Fertilizer Association promptly issued a call to the industry, urging it to effectively manage epidemic prevention and control while guaranteeing fertilizer supplies for spring farming. The association also promptly informed key government agencies—including the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Agriculture and Rural Affairs, the State Administration for Market Regulation, and the China National Transportation Corporation—about the challenges faced by the nitrogen fertilizer industry due to the COVID-19 pandemic, such as tight raw material supplies, rising costs, labor shortages, and logistical disruptions. Thanks to the association’s efforts, communication between the government and enterprises has become smoother, enabling swift policy formulation and robust implementation. As a result, this year’s nitrogen fertilizer production and sales have not been significantly affected, fully safeguarding the domestic supply of nitrogen fertilizers and making a substantial contribution to China’s food security, thereby ensuring another bumper harvest of summer grains this year.

Wei Yong, Director of the Information and Market Department of the China Nitrogen Fertilizer Industry Association, said that China's demand for nitrogen fertilizers is expected to remain stable this year. To ensure food security, policies promoting agricultural production have already been introduced, which will boost the agricultural demand for nitrogen fertilizers.

It is reported that during the 2020–2021 autumn and winter period, when heavy pollution episodes occur in the Beijing-Tianjin-Hebei region and surrounding 2+26 cities, the Fenwei Plain, and the Yangtze River Delta region, coal-to-nitrogen fertilizer production will be subject to tiered control measures. The capacity utilization rate of 90% of new gasification-based nitrogen fertilizer plants will decrease by more than 20%, while the capacity utilization rate of the vast majority of fixed-bed intermittent gasification units will drop by more than 30%. As a result, supply volumes for the 2020–2021 autumn and winter season are expected to decline to some extent.