Be all-sided, where does the gas fertilizer go?

Several large-scale gas-to-liquid fertilizer companies in the southwestern China, the main producing area of ​​gas-to-gas fertilizers, recently announced the 2014 first-quarter performance forecast. From the notice, we feel that the gas-head chemical fertilizer industry in the southwest region is facing a straitjacket, and the development is hanging from the frontline, and it is urgent to find a way to break through. The living conditions of the southwestern enterprises are a microcosm of the nationwide gas fertilizer industry.

Four songs of Chu

Large-scale gas fertilizer companies in Southwest China include Yuntianhua, Chitianhua, Lutianhua, Sichuan Tianhua, Sichuan Chemicals, Sichuan Meifeng, Jianfeng Chemical, and foreign-funded enterprises Wuyuan Chemical. In the first quarter of this year, the operating performance of these gas-to-liquid fertilizer companies all complained, and most companies even suffered serious losses. The reason is mainly due to the shortage of supply of natural gas and rising prices; at the same time, the market demand for fertilizers is sluggish, and the price of urea has fallen sharply.

In recent years, the contradiction between the supply and demand of natural gas in China has become increasingly prominent, and the “gas shortage” phenomenon has become increasingly serious. In particular, since the release of the “National Ten Measures” for atmospheric management in September last year, coal-to-gas boilers and coal-fired power plants have started “coal-to-gas” projects in various regions, bringing the “gas shortage” phenomenon to the highest level in history.

According to the information released by the National Development and Reform Commission, China’s natural gas production in 2013 was 121 billion cubic meters, up 9.8% from the previous year; apparent natural gas consumption was 169.2 billion cubic meters, up 12.9%; natural gas imports were 53.4 billion cubic meters, increasing 25.6%; External dependence rose to 31.6%, up 2.8 percentage points from the previous year. Even so, China's natural gas supply still can not meet the demand. According to Lian Weiliang, deputy director of the National Development and Reform Commission, the gap between the supply and demand of natural gas in China reached 22 billion cubic meters in 2013, which is equivalent to the amount of gas used in Beijing for three years.

Under the policy background of pressure industry and civil protection, the use of gas by chemical fertilizer companies has also been restricted. "Although chemical fertilizer is a support agriculture industry, with the serious excess of urea production capacity, the company's gas consumption has received no special care." Li Feilin, party secretary of Sichuan Tianhua Co., Ltd. said.

According to Li Feilin, due to the tight supply of natural gas, Sichuan Tianhua Chemical Fertilizer Production Plant was overhauled from December last year to March this year, and the company’s urea production has dropped significantly compared with the same period of last year.

Yun Tianhua related sources told the China Chemical Daily reporter that the company is located in Yunnan Shuifu annual output of 500,000 tons of synthetic ammonia, 800,000 tons of urea plant, due to lack of natural gas supply, can only reach about 70% of the operating rate. The device requires 500 million cubic meters of natural gas per year, but the amount of gas used for chemical fertilizers is only about 180 million cubic meters per year. The rest of the gas use is based on natural gas for industrial use. The price is much higher than that of fertilizer. However, even if large quantities of natural gas for industrial use are purchased, water-rich fertilizer plants will not be able to produce at full capacity.

“The equipment can't produce at full capacity, which means the loss of the company's efficiency.” Yang Xin, Deputy Director of Sichuan Tianhua Economic Operations and Director of the Dispatch Center, said, “A large-scale gas-to-air urea plant's load must reach 80% to achieve a break-even.”

In addition, China's natural gas prices are also rising. Since July 10, 2013, the National Development and Reform Commission once again raised the price of non-residential natural gas. According to the increase in the price of anaerobic fertilizer gas, the upper limit of 0.25 yuan per cubic meter, and the consumption of natural gas in urea products of 600 cubic meters to 800 cubic meters, the price adjustment will increase the domestic gas urea production cost by 150 to 200 yuan per ton.

House seemingly endless rain. While the supply of natural gas was insufficient and prices were rising, the prices of gas fertilizers were still “slumping”. This year, the urea ex-factory price from the beginning of January 1700 yuan (ton price, the same below) to the later 1600 yuan, to 1500 yuan, and finally to 1400 yuan up and down. Even in the peak season for agricultural fertilizers, the urea market has not been rescued from the downturn.

It is understood that the high platform diving of urea prices is due to a serious surplus of production capacity. On April 11, the China Petroleum and Chemical Industry Federation issued an early warning report on overcapacity in the petrochemical industry, showing that the urea production capacity has been excessively surplus. In 2013, the profit margin of the urea industry was only 2.31%. The report said that since the "Eleventh Five-Year Plan", China's nitrogen fertilizer production capacity has grown rapidly, and in particular, the growth rate of urea production capacity has been the largest. From 2005 to 2013, the average annual growth rate of urea production capacity in China was 8.7%, while the average annual growth rate of apparent consumption during the same period was only 5%.

The petrochemical association predicts that the total capacity of the urea industry will further expand this and next year, exceeding the demand growth in the next two years, and the overcapacity will further increase. It is estimated that by 2015, the urea production capacity will reach 95 million tons, while the domestic demand will be only 62.3 million tons. If the urea export volume is kept at the level of 8.5 million tons, the surplus will be as high as 24 million tons – this is a very Amazing numbers.

Seek to break through

In the face of problems, gas-capitalized fertilizer companies have embarked on a journey of breakthrough and self-rescue, and have begun to brewing a deep-seated reform. On the one hand, these companies seek to diversify their raw material routes. On the other hand, they are making efforts to adjust the product structure and increase the added value of their products.

As early as in 2007, Chitianhua decided to move from “headwater” to “coal head” and use the abundant coal and water resources in Guizhou Province to develop coal-based urea and get rid of the shackles of natural gas on companies. On August 28, 2007, the project of the annual production capacity of 300,000 tons of synthetic ammonia / 520,000 tons of urea / 300,000 tons of methanol by the subsidiary of Chitianhua Jinfu Industry Co., Ltd. was started. On January 11, 2012, the entire process was opened up. Enter trial production. At the end of January 2013, it was transferred to formal production. As of the end of 2013, the total production of urea was 359,300 tons, completing 102.07% of the annual plan.

Jin Jie Publicity Officer Hu Jie told the China Chemical News reporter: “The company’s completion and commissioning has left Chitianhua no longer relying solely on natural gas to produce fertilizer. In 2013, the production of the urea plant at Chitianhua’s gas heads was in jeopardy. The average load of the head urea plant reached 84.63%.”

Yuntianhua is leveraging its coal-rich resources in Inner Mongolia to realize its vision of “changing coal into gas”. In early 2008, Yuntianhua completed the capital increase and share expansion of Hulunbeier Jinxin Chemical Co., Ltd., a subsidiary of Hong Kong Jinxin Group, with self-raised funds of RMB 612 million, and controlled 51% of the shares of Jinxin Chemical. On May 9th of the same year, Jinxin Chemical commenced construction of an annual output of 500,000 tons of synthetic ammonia and 800,000 tons of urea using lignite as raw material; in July 2012, the project opened up the entire process and produced urea products. However, the driving of the production line did not go smoothly. China Chemical News reporter recently learned from Yuntianhua that Jinxin Chemical Project is not expected to be put into production until the end of this year. The company said: "The installation of large-scale coal chemical plant equipment and the commissioning and debugging of the equipment are difficult to rectify, and the extreme cold weather in Inner Mongolia also affects the overall improvement of project construction and commissioning."

Fortunately, the sky is a rainy day. In recent years, Yuntianhua has grown from a single gas chemical fertilizer company to a comprehensive enterprise group with four major business segments including fertilizers, organic chemicals, new materials, and phosphate mining through foreign investment and asset restructuring. In particular, last year, Yuntianhua completed and put into production a 100,000-ton/year wet-process phosphoric acid refining project, realizing the conversion of fertilizer plants to non-fertilizer industries.

Sichuan Province is a famous gas tanker, and the proportion of natural gas in the primary energy consumption structure in the region is over 15%, far higher than the national average. However, due to the monopoly pattern of natural gas resources, local gas-to-gas fertilizer companies have been “strong and airless” for a long time, and they have no choice but to embark on the road of “changing gas to coal”.

In August 2006, Lutianhua acquired the entire equity of Sino-foreign joint venture Ningxia Jiemei Fengyou Chemical Co., Ltd., and the Ningxia large chemical fertilizer project contracted by Jiemei Fengyou is a key project approved by the National Development and Reform Commission. In May 2009, Lutianhua, in cooperation with Sichuan Tianhua, jointly increased its investment in Jiemei Fengyou, increased investment, and promoted the construction of an annual output of 400,000 tons of synthetic ammonia, 700,000 tons of urea, and 200,000 tons of methanol using coal as raw materials. On May 9, Jiemei Fengyou Party Committee member Li Hui told the China Chemical News reporter that the Ningxia large chemical fertilizer project had been completed at the end of last year. Currently, each unit has gradually entered the test phase and is expected to be fully put into operation in June this year.

Sichuan Meifeng is a subsidiary of Sinopec and its gas supply is relatively good. Therefore, the transformation and development of the company is mainly focused on the adjustment of product structure, and the negative impact on the company caused by the decrease in the price of urea by increasing the product grade and added value. In April 2013, Sichuan Meifeng completed and put into operation the first set of urea plant for industrial vehicles with an annual output of 600,000 tons in China. By the end of 2013, it had produced 227,000 tons of urea for vehicles with a gross profit rate of 26.07%. “The profitability of urea for vehicles is higher than that of ordinary urea. Together with the advantages of Sinopec, it is expected to open up ample room for growth for Meifeng.” said Wang Dong, Assistant to General Manager of Sichuan Meifeng. “At present, Sichuan Meifeng is starting from a A single gas-to-gas chemical fertilizer company will shift to the direction of multiple sources of chemical fertilizers, clean energy, and environmentally friendly products."

Jianfeng Chemical, located in the Fuling District of Chongqing, firmly seized the opportunity of the successful development of Fuling shale gas, becoming the first shale gas user in the country and the first company to use shale gas to produce fertilizer. Prior to this, due to the poor supply of natural gas, the second large-scale fertilizer plant built by Jianfeng Chemical with a cost of RMB 2.7 billion has not yet reached production. As Sinopec developed the first shale gas field in Jiaoshi Town of Liling, Jianfeng Chemical quickly raised funds of more than RMB 50 million to build a gas transmission pipeline and connected it with the shale gas pipelines of Sinopec, which eased its shortage of natural gas supply. The problem also solved the problem of increased waste production caused by the increased production capacity of shale gas in Sinopec and the lack of transportation capacity. As of March 31, 2014, the second large chemical fertilizer plant of Jianfeng Chemical has used 255 million cubic meters of shale gas, and the maximum daily gas supply volume has reached 1.7 million cubic meters.

Way out

We can see that almost all gas-to-gas fertilizer companies are struggling to work hard and try hard to make a breakthrough. However, it is not difficult to find that the transformation and development of gas-to-liquid fertilizer companies is not easy.

“The coal-to-hydrocarbon fertilizer project has a large investment and a long construction period, which is not something that general enterprises can afford.” Hu Jie said that the gold gong project spent more than five years before it was completed and put into production. The total investment of the project exceeded RMB 5 billion. Li Hui also told reporters: “Jiemei Fengyou’s large-scale fertilizer project construction cycle has been more than 5 years and the total investment has exceeded RMB 4.5 billion.” According to the reporter’s understanding, Yuntianhua’s Jinxin Chemical Project located in Inner Mongolia has exceeded the 6-year construction period. Not formally put into production, the investment amount of the project has exceeded 5.3 billion yuan.

Some experts said that "gas to coal" is only the result of the light of the two evils. Coal chemical projects have high water consumption and environmental pressure, and there are many uncertain factors in the industry. In particular, under the current situation of "coal to gas", simple "gas to coal" does not meet the national energy-saving emission reduction.

The thing that most companies can't accept is that this side has not been put into production for several years. The market has already changed its course. When enterprises finally managed to move from “headwater” to “coal head”, the urea production capacity was already in excess, and the market was in decline.

The transformation of fertilizer production with shale gas is also full of thorns. The price of shale gas used by Jianfeng Chemical has not yet been determined - the guaranteed capital of shale gas determined by Sinopec is 2.78 yuan/cubic meter, while the current industrial natural gas price in Chongqing is 2.54 yuan/cubic meter, and the price of chemical fertilizer is 1.30. Yuan/cubic meters. “We hope that the gas cost for shale gas will be below 2 yuan/cubic meter,” said the person in charge of Jianfeng Chemical. It seems that the price of shale gas may also become an unbearable weight for Jianfeng Chemical.

So, where does the gas and fertilizer industry go? The China Chemical News reporter learned from the China Nitrogen Fertilizer Industry Association that the domestic gas and chemical fertilizer industry hopes that the government departments can take measures and take corresponding measures to guide and help gas and fertilizer companies to emerge from the predicament as soon as possible. The specific path may be: exit a batch, transfer a batch, transform a batch, retain a batch.

The first is to increase the exit. It is suggested that the government should provide appropriate financial subsidies, guide a group of enterprises to withdraw in an orderly manner, and maintain social stability. The second is to encourage qualified companies to switch production. It is recommended that government agencies adopt measures such as subsidizing interest rates and exempting new products from VAT to support enterprises in developing new technologies and products. Third, it is recommended that the government support a group of enterprises that have water resources protection and environmental capacity and that are close to the origin of coal resources to carry out the structural adjustment and transformation of raw materials for “gas to coal”. Fourth, it is recommended that the government should give corresponding policy support and reserve certain enterprises with certain conditions to play the role of supply peaking.

Li Feilin said: “The Central Committee has proposed stable growth, structural adjustment, and ensuring people’s livelihood and stability. Among them, steady growth and structural adjustment are all focused on eliminating backward production capacity and solving the problem of excess production capacity. Therefore, enterprises have switched off and eliminated a batch of It is an inevitable trend to close down a batch of enterprises. We, the gas-headed enterprises, must stand at the height of the overall situation to meet the challenges, grasp the production and management in one hand, grasp the deepening of reforms in one hand, and effectively resolve various prominent contradictions and problems that constrain the healthy and sustainable development of the company."

It is reported that China Nitrogen Fertilizer Industry Association has submitted policy recommendations to relevant government departments and is actively communicating and coordinating them.