Impact of Coal Policy Reform on Fertilizer Production

By CnAgri2013-02-05 10:46:37 Print China’s coal market is completely open this year without the government’s intervention. The coal policy reform includes the following: the withdrawal of arranged coal supply contracts between coal producers and major coal consumers, the abolition of the government’s plan of transprovincial coal shipment by railway, etc.
 
From this year on, all coal producers and buyers can negotiate on the equal and fair basis and make their own decisions, regardless of ownership structure and the relation of administrative subordination. The government no longer guarantees cheap coal supply to so-called major fields of industries. In other words, the fertilizer industry no longer enjoys the government’s preferential coal policy.
 
As the fertilizer industry’s coal consumption accounts for only less than 10% of total coal consumption, fertilizer producers are in an inferior position in price bargain. Besides, coal supply is also curbed by the nation’s slim railway system.
 
It is expected that fertilizer producers may face a grave situation in terms of coal supply. This may promote the integration of coal production and fertilizer production. Large coal producers may speed up their acquisition of urea producers.

From “China Fertilizer Market Weekly Report”