Phosphate Fertilizer Industry Faces Problems   

By Xiu Xuefeng, China Phosphate Fertilizer Industry Association  

After decades of rapid development, China's phosphate fertilizer output reached 13.86 million tons (calculated by diphosphorus pentoxide content) in 2009, a record high, up 36.2% over 2004. Of that, the output of high-content phosphate & compound fertilizers was 10.615 million tons, up 93.3% over 2004, and the combined output of calcium superphosphate and calcium magnesium phosphate was 3.242 million tons, down 30.8% from 2004. (According to the National Bureau of Statistics, China's phosphate fertilizer output was 14.8 million tons in 2009, also counting on diphosphorus pentoxide.) Among the high-content phosphate fertilizers, the output of diammonium phosphate (DAP) was 10.454 million tons (physical quantity) in 2009, up 139% over 2004, the fastest growth of all phosphate fertilizer products; the output of monoammonium phosphate (MAP) was 8.352 million tons, up 101% over 2004; the output of phosphate based NPK compound fertilizer was 8.499 million tons, up 32.4% over 2004; the output of triple superphosphate (TSP) was 1.316 million tons, up 47.5% over 2004; and the output of NP binary compound fertilizer was 663 000 tons, tying with the 2004 level. High-content phosphate fertilizers accounted for 76.6% of all phosphate fertilizer production in 2009, increasing by 22.6 percentage points from 2004. The market share of domestically produced DAP in the domestic market reached 95.1%, increasing by 35.1 percentage points over 2004. Meanwhile, more than 20% of China-made DAP has found a place in the international market.

1. Capacity of phosphate fertilizers is in serious excess

As of the end of 2009, China's phosphate fertilizers capacity was about 20 million t/a (based on 100% diphosphorus pentoxide), of which the DAP capacity was 14 million t/a (physical quantity), but the domestic annual demand for DAP was only between 5.50 million tons and 6.5 million tons; and the MAP capacity was 14 million t/a while the domestic annual demand was only about 6 million to 7 million tons. But some enterprises and local governments are still constructing new plants or expanding their capacity. It is expected that, by the end of 2010, China's high-content phosphate fertilizers capacity will increase by 1.5 million t/a (based on 100% di-phosphorus pentoxide). Until then, the competition will be growing even fiercer.

2. China lacks sulfur and potassium resources

In 2009, China imported 12.17 million tons of sulfur, up 44.6% year on year, accounting for 1/3 of the world's total sulfur trade volume. Along with the sulfur contained in imported sulfuric acid and various raw materials imported by the non-ferrous metal smelting industry, China's dependency on imported sulfur was about 60%.
   For a long time now, because of limited resources, China has found it necessary to import large quantities of potash fertilizers every year, mainly potassium chloride. In 2009, because the operating rate of domestic compound fertilizer plants was low and some compound fertilizer producers changed the formula of compound fertilizers due to high potash fertilizer prices, China's import volume of potash fertilizer plummeted. In 2009, China's import volume of potassium chloride was 1.98 million tons, down 61.4% year on year; and the import volume of potassium sulfate was 91 000 tons. Even so, China's overall dependency on imported potash fertilizers was still nearly 60%.

3. Industrial concentration is low

At present China has over 130 companies making phosphoric acid, of which nearly 100 are DAP and MAP producers. Their average phosphoric acid capacity is less than 110 000 t/a. There are too many phosphoric acid producers here with small capacity. China has more than 4 400 certified compound fertilizer producers, with an average capacity of less than 50 000 t/a.

4. Innovative capability is weak

Due to small scale, most Chinese phosphate fertilizer enterprises are not able to invest much in R & D and lack the ability to innovate.

5. Market environment needs to be further purified

Local protection is very serious in China. Fake products prevail despite prohibitions. It is urgently needed to establish a fair competitive environment and an orderly and efficient market order.
   In 2009, the world's diphosphorus pentoxide capacity reportedly was about 46.6 million t/a and output was 33.2 million tons. China's output accounted for 41.7% of the world total. The global trade volume of DAP was 6.4 million tons (on diphosphorus pentoxide). China's import and export volume of DAP together accounted for 18% of the total world trade.
   Because of the geographic distribution of natural resources, the world's major exporters of phosphate fertilizers are concentrated in North America, North Africa and China, and the importers are mainly concentrated in Asia, South America and Western Europe. In the next few years, the increase of the world's phosphate fertilizer output will mainly occur in the Middle East, North Africa and China. In addition, Mexico, Vietnam, Venezuela, Russia, India, Jordan and Egypt will increase their phosphate fertilizer capacity. Gradually stabilizing international crude oil prices are now suppressing the enthusiasm to produce biomass diesel that needs consume fertilizers. Hence, the international fertilizer supply and demand will not have a big gap.

Tough work must be done in the next five years

During its "12th Five-Year Program" Period (2011-2015), the Chinese government will not encourage construction of DAP, MAP, TSP, NP and phosphate-based NPK compound fertilizer projects. As for calcium superphosphate and calcium magnesium phosphate, their phosphorus content is lower, but they contain sulfur, calcium, magnesium, silicon and other elements needed by crops. At the same time, their production can use lower content of phosphate ores and can meet the needs of different levels of demand. Their existing capacity can be maintained, but the government should not encourage the further expansion of their capacity.
   The government should prohibit new construction and expansion of wet-process phosphoric acid projects and their supporting phosphate fertilizer projects. The government should establish an elimination mechanism. Within three years, the following kinds of units should be phased out: existing pyrite-to-sulfuric acid units with water-washing and cleaning processes, pyrite-to-sulfuric acid units less than or equal to 100 000 t/a, and sulfur-to-sulfuric acid units less than or equal to 200 000 t/a.
   The government should continue to promote the research and development of the selection and enrichment technology of medium and low-grade phosphate ores, especially collophanite ores, and encourage the comprehensive utilization of phosphate ores. The government should strengthen the development of low-content collophanite ore selection technology, accelerate the industrialization of medium- and low-grade phosphate ore selection technology, encourage the exploitation of poor phosphate ores and raise the protection level of phosphate resources to ensure the sustainable development of the phosphate fertilizer industry.
   The government should promote wet-process phosphoric acid purification technology in large-scale wet-process phosphoric acid enterprises to produce food grade and industrial grade phosphoric acid and phosphates to replace those produced from yellow phosphorus, promote the research and application of phosphorus-based flame retardants and phosphate products used in feedstuffs, plastics and water treatment agents, and actively recycle associated resources, such as fluorine, silicon and iodine, in phosphate ores.