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Regional analysis and outlook for Chinese fertilizer import export volumes for a strategic port investment

The Client is a major international port operator and services provider with operations across Europe, Asia and the Americas.

The Client's fertilizer business unit was evaluating a project to develop a major fertilizer hub at a Chinese port. In preparation of the business case to be made to senior management, the fertilizer business unit required a detailed understanding of future trade flows of fertilizer exports and imports through Chinese ports. To strengthen the case, the business unit also needed to identify individual potential customers which would use the fertilizer hub when completed. 

Our recommendation
CRU Consulting identified which fertilizer product trade volumes would increase or decrease in future and assessed implications for trade volumes passing through regional ports. This was supported by CRU’s detailed outlook for Chinese fertilizer supply, demand and trade on a national and regional level for individual fertilizer types including nitrogen, phosphate, potash and NPKs. Having completed this detailed analysis the CRU Consulting team also identified and profiled those fertilizer producers and exporters/importers with the strongest growth prospects to be targeted as future customers of the planned fertilizer hub.

Supported by CRU's Beijing-based consultants and fertilizer analysts, the team first presented CRU's detailed outlook for individual nitrogen, phosphate, potash and NPK markets in China. This drew upon the extensive data which accompanies CRU’s broad catalogue of regular fertilizer market outlook reports.

For the Client, understanding the shifting Chinese policy and regulatory environment and how it relates to China’s fertilizer production, application rates and the wider agricultural sector was of critical importance to understanding how the market will develop. CRU's Beijing-based consultants and analysts provided a detailed explanation of the policy changes and analysis of how they will affect the market in future years. This was of key importance in substantiating the case being prepared for the Client’s senior management.

Our team then undertook in depth analyses of the individual provincial fertilizer markets in proximity to the proposed fertilizer hub. We calculated current market balances on a provincial level and analysed how individual regional market surpluses and deficits will develop and impact trade volumes through Chinese ports in the region of interest. This included a discussion of how stricter regulatory enforcement and rising environmental compliance costs will affect exports from the focus region surrounding the proposed port investment. We also mapped individual plant capacities in export-oriented product markets which could be a source of export supply through the fertilizer hub.

Having completed this analysis, the CRU Consulting team then summarised the implications of our market analysis for the proposed fertilizer hub and identified specific market risks and opportunities for the Client. Using CRU’s fertilizer capacity database we identified and profiled Chinese fertilizer producers which could represent future clients of the completed fertilizer hub as exporters. We also identified major external suppliers and importers which would potentially use the hub.

We presented our findings to the Client and responded to further detailed questions to support them in presenting their case to senior management. The CRU Consulting report enabled the Client to substantiate the case for the proposed investment and respond to senior management questions on market risks and commercial opportunities. The investment case is now under consideration.

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