Yuntianhua International Suffers High Phosphate Fertilizer Stocks and Plunging Sulfur Prices      

Operation in Yunnan Yuntianhua International Chemical Company Ltd.'s Furui subsidiary, located in Anning county, Yunnan province, has been irregular recently. The once busy packaging line now was suspended, with packaged phosphate fertilizer products piled up high in and outside the warehouses.
    According to one employee, there are 100 000 tons of phosphate fertilizer stockpiled in the plant, plus another 200 000 tons at ports.
    As of middle November, the Yuntianhua Group also held additional 390 000 tons of sulfur in stockpile.
    Furthermore, the falling sulfur price resulted in Yuntianhua Group's huge loss for expensive raw material purchase.
   Yuntianhua International is a holding company for phosphate fertilizer business of Yuntianhua Group. It is China's largest phosphate compound fertilizers producer with annual capacity of 5.1 million tons and a domestic market share of 20%.
    "The real production is about 4 million tons per year for the company, which has to purchase more than 2 million tons of sulfur, mainly by imports from North America (the United States, Canada), Middle East (The United Arab Emirates, Kuwait, Qatar), Central Asia and a bit from Singapore." The source of Yuntianhua International says.
    "The sulfur we use for production now was purchased in the first and second quarters," one company official said helplessly. "Based on the current speed of phosphate fertilizer, we estimate sulfur stockpile will fall to 300 000 tons by the end of November and to zero by January next year."
    Yuntianhua International's case is not an isolated one, as the drastic fluctuations in raw materials prices have made the global fertilizer industry experience ups and downs. In the first half, international fertilizer prices had surged and China's exports also soared. "If we export now, we will book huge losses."
    Yuntianhua Group has quit the Vietnamese market, and its market share in Iran and Pakistan has also been nearly grabbed by rivals. The export business of Yuntianhua International has been nearly brought to standstill at present.
   As a result, Yuntianhua International has to shift the original overseas shipments to domestic sales, a move taken by many other domestic fertilizer companies, causing huge domestic inventories.
   An industry insider, declined to be identified, said Yuntianhua International has to cut production.
   In the past, Yuntianhua International's production is intended to meet home market while the export market was used as a tool of adjustment. When there was an off-season for fertilizers in domestic market, it used exports to ease pressure on sales, which will help the company reach a full-year balance. "That is the particularity of the industry. Adjustment in exports could ensure a stable and long-term development for the fertilizer sector," the insider said. "I hope the situation could be eased by the spring farming season next year."