Impact of Climate Disaster on China's Chemical Market

This year's climate is unusual. Drought is the most serious climate disaster this spring. According to statistics from the National Defense Office, as of April 9th, the area of ​​farmland affected by drought was 132 million mu, of which 99.98 million mu were affected by heavy drought, which was 27.84 million mu, and dryness was 16.77 million mu. The rare drought in spring has a serious impact on the production and sales of chemical products, which is particularly unfavorable to the fertilizer market.

“Although supply exceeds demand is the culprit for the continuing downturn in the fertilizer market this year, last year's winter to May this year, the unseasonably dry weather has become a contributor to the decline in prices of chemical fertilizers.” Henan Coal Chemical Group, Zhongyuan Dahua Co., Ltd. Sales Guo Quanpu, the company's manager, and Dong Wenming, general manager of Heilongjiang Beifeng Agri-products Group Ning An Chemical Co., Ltd., expressed the same views when interviewed by reporters. The Eastern Civilization stated that the continuous cold and dry weather in winter and spring and the “cold spring” weather in April delayed the sowing time in the northeast and reduced the amount of chemical fertilizers. This caused the Northeast Fertilizer, which missed the spring season of fertilizer use, to be transferred to customs sales and suppress the price of chemical fertilizers in the country to go down. Guo Quanpu also stated that due to insufficient production, the supply and demand of chemical fertilizers in Northeast China will be nearly 2 million tons each year. Guanhai fertilizer production enterprises and large-scale distributors will generally send the fertilizers to the northeast region in advance during the spring and winter seasons, and will sell local fertilizers in the previous season in April. Due to the concentration of fertilization in Northeast China and the large demand, it has become a leader in driving the national chemical fertilizer prices up every spring. However, due to the continuous cold and dry weather in the early period, the area of ​​spring sowing in northeast China was reduced this year, and the amount of chemical fertilizers dropped drastically. Not only did it not raise the price of fertilizer, but it also returned the more than 1 million tons of fertilizer originally digested in the local customs, exacerbating the contradiction between supply of chemical fertilizers in the customs. , suppressing the national chemical fertilizer prices down.

Similar to the situation in the Northeast, Henan, Shandong, Hebei, Shanxi, etc. Since last November, dry weather has continued until March this year. Southwest, northwest, and southern China have also continued to dry until May in late February. Affected areas in East China and Central China. Due to the various degrees of drought in about three quarters of the country, the national chemical fertilizer consumption has dropped by more than 20%. Taking urea as an example, the actual consumption of agricultural urea in China is about 46 to 48 million tons each year, and 70% of it is consumed in the first half of the year. Affected by the continuous dry weather, in the first half of the year, the demand for agricultural urea decreased by about 6.4 million tons, which caused the oversupply to be even more severe. As a result, from January to June, the fertilizer market did not show a slight rebound.

Contrary to the reduction in the price of traditional urea and compound fertilizers, the slow and controlled release fertilizer market this year is unusually hot. Both production and sales have grown by more than 20% year-on-year. “Slow and controlled release fertilizers have the characteristics of providing nutrients according to crop growth requirements, and are equivalent to health foods for plants. They can make the roots of plants more developed, the branches and leaves more robust, and the drought resistance and lodging resistance are stronger. Therefore, there are many natural disasters. In the first half of this year, it was sought after by farmers, and the production and sales volume rose sharply year-on-year.” Zhang Peisheng, deputy general manager of Shijiazhuang Zhongjia Fertilizer Co., Ltd., told reporters.

The conservation of agricultural products such as water-saving irrigation equipment and agricultural films is also favored by farmers because of dry weather. Lin Ping, deputy director of the National Engineering Center for Water-saving Irrigation Equipment of Xinjiang Tianye Group, told reporters: As more than 40% of water is saved compared to conventional irrigation technology, water-saving irrigation is increasingly valued and respected in the northwestern region where water resources are becoming increasingly scarce. Since 2002, the promotion area of ​​drip irrigation water-saving equipment and complete sets of technology under the Tianye membrane in Xinjiang has not been expanded. This year, a large area of ​​drought in the country, the demand for drip irrigation and water-saving technologies and equipment has increased more than in previous years. Tianye water-saving equipment production and sales have increased by 20% year-on-year, and water-saving technology has been expanded to more than 30 million mu, only in Xinjiang. The promotion area reached 20 million mu. The agricultural film has the functions of heat preservation, moisture conservation, and seedling protection. Under the conditions of frequent occurrence of abnormal weather such as drought, the above functions of the agricultural film have been better reflected. According to Liu Min, secretary-general of the National Association of Agricultural Plastics of the China Plastics Industry Association, from January to June this year, the output of agricultural film enterprises above designated size was 732,600 tons, an increase of 20.43% over the same period of last year. Agricultural film covers an area of ​​310 million mu, a record high. The price of plastic film has increased significantly compared with last year.

Drought not only has a great impact on the agricultural capital market, because water shortages and power shortages also have a direct impact on chemical production.

Wang Jilong, Sichuan Jinlu Resin Co., Ltd., said that since the beginning of this year, the continuous dry weather in the southwestern region has experienced rare weather. In particular, from April to May, many reservoirs have experienced sudden drop in water levels and rivers have been cut off, causing serious shortage of hydroelectric power. In order to give priority to guaranteeing residents' water use, local governments have had to switch off electricity to high-energy-consuming enterprises such as calcium carbide and polyvinyl chloride, and many calcium carbide companies that use hydropower as raw materials in the southwest have been forced to suspend production in large areas, including the Jinlu Group. Polyvinyl chloride enterprises also cut production or even stopped production due to lack of electricity, water shortages, and lack of calcium carbide raw materials.