Fertilizer Enterprises Accelerate Product Structure Adjustment

Rising electricity prices, high coal prices, insufficient natural gas supply, and overcapacity... In the past 2011, one difficulty after another came to the fertilizer companies. In the face of difficulties and challenges, how do fertilizer companies respond? This reporter interviewed some representative companies.

"In July this year, after the operation of our 20,000-kilowatt generator set, the company's installed capacity of combined heat and power generation will reach 50,000 kilowatts, which will solve 40% of the company's electricity demand and the cost of electricity will be effectively controlled." President of Hebei Zhengyuan Chemical Industry Group Liu Jincheng said in an interview with reporters. According to him, in order to enhance the company's strength and competitiveness, Zhengyuan Group has reorganized several small and medium-sized chemical fertilizer companies, and through continuous technological transformation, it has expanded the scale of alcohol ammonia and reduced the overall energy consumption. In 2010, the company successfully joined Shanxi Yangmei Coal Group to solve the raw material coal supply problem that once plagued the development of the enterprise and the pressure of excessively high coal prices. From December 1st last year, Hebei Province increased the price of industrial electricity including chemical fertilizers by 0.0387 yuan per kilowatt-hour, correspondingly increasing the ton cost of synthetic ammonia by about 55 yuan. In order to absorb the additional costs, Zhengyuan Group is accelerating the implementation of the second phase of the 20,000 kilowatts project. After the implementation of the project, the combined heat and power generation can save the company's electricity costs from 30 million to 40 million yuan each year, basically offsetting the adverse impact of the increase in electricity prices on the company.

Shaanxi Baozigong Industry Group Co., Ltd., which has annual production capacity of 100,000 tons of synthetic ammonia, was affected by many unfavorable factors such as the tight supply of raw material anthracite lump, heavy historical burden on enterprises, single product variety, and low value-added products. Up to 10 million yuan. After the price increase, the company's ammonia ton cost increased by 70-80 yuan. Faced with tremendous pressure for survival, the company decided to adjust its product structure. “We are working with Shaanxi Golden Nest Investment Co., Ltd. to invest 500 million yuan to build an annual production capacity of 50,000 tons of fine paraffin projects using existing gas generation and purification facilities. After the project is put into production in 2014, it can achieve an annual sales income of 600 million yuan. At that time, it will then choose to expand production capacity and transform the intermittent gasifier into a continuous bituminous coal gasification furnace to completely remove the constraints of anthracite lump coal." Zhang Xiaoming, general manager of Baozao Group, stated his ideas.

Insufficient supply of gas is the biggest headache for gas-head fertiliser companies. The reporter learned that many companies have already taken action and taken measures to get themselves out of the trap of being restrained by gas.

Chen Jingqiu, deputy general manager of Guizhou Chitianhua Group, stated that in order to get rid of over-reliance on natural gas, Chitianhua Group started its industrial layout early and took a product diversification line. The company spent 1.8 billion yuan to build a bamboo pulp production line with an annual output of 250,000 tons. It uses local abundant bamboo resources to produce raw materials needed by companies such as advanced paper, fiber, and decorative materials, and has found new profit growth points for the company. In addition, Chitianhua has successively invested 3 billion yuan and 5 billion yuan to build two large-scale coal chemical projects with an annual output of 300,000 tons of synthetic ammonia, 300,000 tons of dimethyl ether and 0.7 million tons of urea. At the same time, it took shares in Tianan Pharmaceuticals, which allowed the company to expand from a single chemical fertilizer manufacturer to chemical, pharmaceutical, and clean energy fields, optimized its product structure, adjusted its raw material structure, and significantly strengthened its competitiveness and risk resistance capabilities.

In 2011, the Cangzhou Dahua Group, Hebei Province, which had suffered repeated “gas shortages”, was unable to enjoy the preferential gas price policy for fertilizer production. It simply attacked on all four sides. Through market-based measures, it was jointly supported by Changqing Oilfield Company and Dagang Oilfield Company. As a result, the company has become the first domestic fertilizer company to solve the "gas shortage" through marketization. "After the planned investment of 7 billion to 9 billion yuan, the annual output of 300,000 tons of MDI and 150,000 tons of ADI will be implemented. The company will have an annual output of 300,000 tons of synthetic ammonia, 520,000 tons of urea, 150,000 tons of TDI and 300,000 tons of MDI. With the production capacity of 150,000 tons of ADI, the proportion of fertilizer output in the entire company will be reduced from the current 50% to 20%, and companies will no longer suffer from single fertilizer products.” Deputy Director, Sales Department, Ganzhou Dahua Group Long Xiechao said.

Shu Chenggui, deputy general manager of Chongqing Jiangbei Chemical Fertilizer Co., told reporters that due to the serious shortage of natural gas supply, their fertilizer plants will be suspended for at least 3 months each year, and the remaining time will only meet 70% of the unit's gas demand. In order to get rid of the predicament of insufficient gas supply, Jiangbei Company is using the relocation compensation fees and related preferential policies to build large-scale chlor-alkali and its downstream deep-processing projects in Chongqing Changshou Industrial Park.

With the annual output of 300,000 tons of synthetic ammonia, 520,000 tons of urea production capacity of Sichuan Tianhua Stock Company, raw material issues have long constrained the development of enterprises. “Our parent company Lutianhua Group is spending huge sums to build a large coal gasification base. Once completed, it will not only solve Lutianhua Group's own raw material supply problems, but also significantly reduce natural gas use,” said Tianhua’s official. In addition, Huatian Co., Ltd. also endeavored to enrich its product structure and is investing 250 million yuan to build an annual production capacity of 60,000 tons of BDO and an annual output of 40,000 tons of polytetrahydrofuran. "The project requires 200 million cubic meters of natural gas per year, only 2/3 of 300,000 tons of synthetic ammonia and 520,000 tons of fertilizer plant natural gas. After the completion of the project, the annual sales income will reach 1.5 billion yuan, which is 1.6 times that of fertilizer plants. The odds are obvious," said the person in charge.

Hu Haifeng, a chemical expert and deputy inspector of the Shaanxi Provincial Office of Industry and Information Technology, said in an interview with reporters that the practices of the above-mentioned enterprises deserve more reference and reference for fertilizer companies. Because whether it is natural gas or anthracite lump coal, it will be in short supply in the long run. The fertilizer market will oversupply for a longer period of time. Under the circumstance of being squeezed at the two ends, the fertilizer companies can only take the initiative and achieve rapid development by adjusting the raw material route, optimizing the product structure, and taking a diversified product line.

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