*** bull market or will end

Excessive growth in domestic demand growth slowdown in domestic demand growth in exports increased Sinochem New Online News Since mid-February, due to the large decline in the previous period, *** in the traditional off-season spending out of a wave of small rally. Compared with mid-January, international prices generally rose by US$10 to US$20 (t price, the same below), and domestic ex-factory prices generally rose by 50 to 130 yuan. Many people in the industry are optimistic that: *** The market will end the adjustment and get out of a wave of big rally. However, a combination of various factors analysis, this year the market is unlikely to re-elevate the bull market, and even the industry's long-term boom lasting for several years may also end this year.

Demand drives prices and prices to rise *** The consumer market is mainly composed of three parts: one is used as raw materials for civil explosives, the second is modified or processed into compound fertilizers for agricultural fertilizers, and the third is exports. In addition, there are a small number of applications for refrigerants, nitric oxide absorbers, and chromatographic analysis reagents. Among them, the consumption of explosives in civilian explosives equipment accounted for about 64% of the total consumption, the amount of agricultural fertilizers accounted for about 26%, exports accounted for 6% to 8%, other areas only accounted for 3%.

During the “Eleventh Five-Year Plan” period, China’s social economy has continued to develop rapidly, and mines, coal, non-ferrous metals, highways, railways, bridges, docks and other industries and fields have experienced rapid development, boosting the average annual demand for civil explosives by more than 11%. In 2011, despite a series of national regulatory policies and the impact of the international environment, the civil explosive equipment industry still maintained a 10% growth. As the main raw material for production, the sustained and rapid growth of the civil explosion industry has increased the demand for ***. In addition, zero-tariff and international demand growth led to a surge in exports and a modest increase in domestic nitro-compound fertilizer usage, boosting consumer spending in recent years. Driven by the rapid growth in demand, the price of *** has also come out of a wave of rising bull market. The ex-factory price has soared from 1,550 yuan at the lowest level in 2008 to 3,150 yuan at the highest level in 2011, an increase of 103%. Chemical market has become the most beautiful scenery since the financial crisis.

Sudden growth in production capacity has gradually revealed from 2009 to 2011. Another reason why the *** market continues to go bullish is that the state strictly controls ***, and the State Council issued the “Notice on Further Strengthening the Safety Management of Civilian *** Products”. , Including the sales, purchase and use of *** into the management of civil explosive equipment. Strict approval and supervision of new construction, renovation, expansion projects, and sales, storage, and circulation were implemented. In addition, from 2002 to 2007, the *** industry was at a low point. Many companies were unwilling and unable to launch new projects because their products were not profitable. The growth of *** production capacity was very limited. When it suddenly encountered the country’s 4 trillion yuan investment stimulus plan and the sudden increase in demand at home and abroad, the market was in short supply and prices continued to rise.

But capital is always profitable. The big bull market that lasted for three consecutive years from 2009 to 2011 has made the vast majority of *** companies earn enough money to attract more capital to invest in the industry that was originally unattractive, and its production capacity has expanded rapidly. In 2009, China's *** production capacity was 5.2 million tons, which increased to 6.90 million tons in 2010 and climbed to 7.5 million tons in 2011. This year, Inner Mongolia Datang Dingwang, Hubei Yihua, Shanxi Yangmei Fengxi and several other projects will be completed and put into production. The domestic production capacity of *** will increase by 1.5 million tons to 9 million tons. This year's production will increase from 4.58 million tons in 2011 to more than 5.6 million tons, an increase of 20% and 33%, respectively, much higher than the average annual growth rate of 12% in the past four years. The problem of overcapacity in the industry has become apparent.

Difficulties in the inner hardships and difficulties, "cattle" in the end in the rapid growth in production capacity at the same time, if the demand can be synchronized as 2009 to 2011 increased substantially, then the market can still be stubbornly stubborn. However, this is not the case. In 2012, when the capacity growth rate hit a record high, due to the impact of domestic and foreign policy environment, the growth of *** demand will be very limited.

In the civil explosion, the slowdown in domestic economic growth has been established and GDP growth is expected to remain at around 8.5%, far below the average increase of 9.3% in previous years. This means that the development of industries such as energy and chemicals, infrastructure construction, mining and coal will slow down, and the demand for civil blasting equipment will decrease. In particular, after continuous investment and rapid development from 2006 to 2011, China’s “village-village-pass” project target has basically been realized; the rapid growth of the high-speed railway construction project was due to the fact that the scale and speed of the construction have been compressed; the degree of mechanization in the coal industry and machine mining The rate has been significantly boosted by the consolidation of resources. These factors will lead to a reduction in related projects, a decrease in the demand for **, and a reduction in *** consumption.

In terms of agricultural chemical fertilizers, although the nitro compound fertilizer and nitrate nitrogen have the characteristics of being easily soluble and quick-acting, they not only meet the nutrient requirements of nicotine crops such as **, vegetables, etc., and crops with short growth periods, but also are compatible with ammonium nitrogen and amides. Rational use of nitrogen can also increase crop yields and improve crop quality. The Ministry of Agriculture is also actively promoting the promotion of nitro compound fertilizers. However, due to the fact that the nitro-nitrogen fertilizer is a small-scale chemical fertilizer in China, the application area is small, and the awareness of farmers is low. Especially in the current situation where compound fertilizers, urea, phosphate fertilizers, potash fertilizers, ammonium bicarbonate, and other farmers are accustomed to using sufficient chemical fertilizers, promotion of nitro-fertilizers is very difficult. At least this year, it is difficult to play a major role in supporting the market.

In terms of exports, exports grew by 33.3% and 36.2% in 2010 and 2011 respectively. However, the momentum of such rapid growth is unsustainable this year. On the one hand, with the contagion and intensification of the European debt crisis and the turmoil in the Middle East, the global economic recovery is still slow and difficult. Mining, infrastructure construction, energy and chemicals, roads, railways, water conservancy, bridges and other projects will be built. This setback will reduce the consumption of civilian blasting equipment. On the other hand, the successful development and utilization of unconventional natural gas in countries such as the United States and Europe has led to the resumption of production of international facilities that have been unable to tolerate continued increases in natural gas prices, which have reduced production and production, and reduced imports from China.

Once the export is blocked, coupled with the reduction of domestic demand and the rapid growth of production capacity, the government will repeat the mistake of oversupply of chemical fertilizers and some chemical products. It is difficult to carry the bull market to the end.