China will allow foreign companies to enter its fertilizer wholesale business from December 11 in a move to further open the fertilizer industry.
Since most domestic fertilizer companies lag behind their foreign counterparts in areas such as company management and technology, they'll have to continue to innovate to keep their dominant positions.
This November the nation's top fertilizer firm, Sinochem Hong Kong Holdings, changed its name to Sinofert Holdings Limited while pushing for more reforms at the company.
Sinofert said earlier it aimed to double its market share in China to 30 per cent by 2008 after setting up sales centres in all the major agricultural counties. "We have 15 per cent of the domestic market and will double our share after distribution centres are set up in 1,800 major counties," said Du Keping, chief executive officer (CEO) of the company.
Sinofert had 1,063 sales outlets, serving 71 per cent of total farmland in China at the end of 2005. It is the fertilizer trading and production arm of state oil trader Sinochem Corp. The company imported more than half of the 11.17 million tons of fertilizer it sold in 2005. It had a total production capacity of 2.73 million tons at the end of 2005.
China BlueChemical Ltd, the fertilizer-making arm of the nation's top offshore oil company, China National Offshore Oil Corporation (CNOOC), also plans to make a series of acquisitions to increase its output and become an industry leader in five years. The company currently has about 4 per cent of the nation's nitrogen-based fertilizer market. "We hope to take a leading position in the industry in five years," said its CEO Yang Yexin.
Yang said many small companies have great potential to grow. "We are eyeing players with a production capacity of at least 50,000 tons." The company has seen its shares jump by over a quarter in Hong Kong trading after a US$341 million offering in September.
"China's fertilizer industry is facing great opportunities," said Li. "With the opening of the fertilizer market, more and more foreign giants will begin to eye the sector."
In February the world's biggest fertilizer enterprise, Canada-based Potash Corp of Saskatchewan Inc, completed a 10.01 per cent purchase of Sinofert for US$126 million. The acquisition boosted Potash Corp's holding in Sinofert to 20 per cent. Potash Corp purchased 9.99 per cent stake in the company last year.
Potash Corp is the world's largest fertilizer firm by capacity, producing the three primary plant nutrients-potash, phosphate and nitrogen. It is the world's largest potash company, with 23 per cent of the world's overall capacity and 86 per cent of unused global capacity.
China has become the world's largest producer and consumer of fertilizer, according to official statistics. It produces about one third of the world's fertilizer every year and consumes about 35 per cent.
China is also a big importer and exporter of fertilizers. Statistics show that in the January-September period of this year, the country imported 7.71 million tons of fertilizer and exported 3.44 million tons.
Currently, the nation's fertilizer price is still controlled by the government, which is much lower than the price on the global market. China will gradually improve its pricing mechanism of fertilizer, said industry insiders.
Source:佚名