LONDON, June 9, 2016 /PRNewswire/ --
In May 2016, China's phosphorus chemical industry remains depressed. Market prices and operating rates of most phosphorus chemicals maintain low and manufacturers mainly maintain trading due to orders they have received before.
Market dynamics of phosphorus chemicals in May 2016:
Phosphorus ore: The domestic market is quite stable. Having no faith in the future market, some manufacturers in Sichuan Province disclosed that they may suspend production for overhaul of facilities in the short term.
Yellow phosphorus: The domestic market is stable overall. In some regions, market supply is tight due to the persisting low operating rate. Market price of yellow phosphorus shows no signs of increase. Some manufacturers such as Sichuan Mianzhu Norwest Phosphate Chemical Company Limited and Sichuan Linchen Group Co., Ltd. resumed production at the end of April.
Phosphoric acid: The domestic market remains stable. Boosted by the export market, a few manufacturers in Southwest China raised their product prices slightly; while in Central and East China, market price of phosphoric acid is quite stable.
STPP: Price and operating rate remain low in the domestic market. Many manufacturers have no choice but to reduce prices to run down inventory and relief inventory pressure.
MAP: The MAP market remains depressed. Demand from the downstream market shrink so trading is slack. Under such circumstances, some manufacturers choose to resume production for equipment overhaul or reduce operating rates.
DAP: China's DAP industry enters a period of depression. In the domestic market, trading was slack and in the overseas markets, the price of DAP began to fall.
In Q2 2016, Chinese listed fertilizer enterprises released their 2015 financial reports. Many of them have taken successful steps to correct their deteriorating financial performance. However, CCM found that it was non-recurring profit and loss in particular that has helped some of these enterprises make turnarounds. In this issue, CCM will analysis this phenomenon in detail.In Q2 2016, Chinese listed fertilizer enterprises released their 2015 financial reports. Many of them have taken successful steps to correct their deteriorating financial performance. However, CCM found that it was non-recurring profit and loss in particular that has helped some of these enterprises make turnarounds.
As of May 2016, China's peak season for fertilizer consumption is over and market prices of major fertilizers have begun to show downward trends. However, CCM found that against falling market conditions, the market prices of minor fertilizers such as TSP, calcium superphosphate and calcium magnesium phosphate fertilizers have succeeded in remaining relatively stable. CCM believes this is due to the control of operating rates and stability of domestic and overseas market demand.
In May 2016, China's DAP industry entered a period of depression. In the domestic market, trading was slack and in the overseas markets, the price of DAP began to fall. Under such circumstances, the operating rate of the industry in China began to slide. CCM expects that 2016 may be the most difficult year yet for Chinese DAP enterprises.
In May 2016, Xinyangfeng Fertilizer claimed that it will take part in two national fertilizer projects. CCM believes that this will help the company to maintain the right direction in developing its fertilizer business and further improve the company's brand awareness and reputation.
In early May 2016, CMOC announced that it will acquire Anglo American's niobium and phosphate businesses for USD1.50 billion. CCM believes that this transaction will help CMOC to complete its fully-integrated business layout and improve the company's financial performance in the near future.
In May 2016, the Chinese DAP market is depressed. To better deal with market fluctuation, Wengfu Trading claimed that it is vigorously carrying out market-oriented reform to develop its agricultural means of production business.
In May 2016, China solicited public opinions over the Measures for the Administration of Commercial Reserves of Chemical Fertilizers during Off-seasons (2016 Revision). Compared to the 2015 version, restrictions are eased in general. CCM expects this to stimulate companies' initiative in commercial reserves of chemical fertilizers during off-seasons.
In May 2016, China's MOF and SAOT jointly released a notice on comprehensively propelling resource tax reform, encouraging domestic phosphorus ore enterprises to adopt the filling mining technology in rude ores mining. CCM believes that this will help to minimize environmental pollution and reduce waste of resources.
In April 2016, China's yellow phosphorus market kept depressed. Considering that some manufacturers resumed production and downstream markets (the glyphosate and phosphoric acid markets) were stagnant at the end of April, CCM believes that market price of yellow phosphorus may decline later in China.
In April 2016, China's STPP market remained dull. Low operating rate failed to relieve manufacturers' pressure from inventory. Considering that severe oversupply will exist for a long time, CCM predicts that the domestic STPP market will not be essentially improved in the short run.
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