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Nitric acid producers said that they chose to reduce their production to help themselves. This is due to the overcapacity of concentrated nitric acid in recent years and the overall loss of the company. From April 2004, the price of concentrated nitric acid soared. In 2005, it reached a high of 2,100 yuan/ton, and it rose by an average of 100 yuan/ton per month. The skyrocketing prices have led to an expansion of production and a new boom. The unprecedented increase in production capacity has been unprecedented. In 2005, the total output of concentrated nitric acid in China was 1.57 million tons, a year-on-year increase of 21%; in 2006, the new production capacity reached 1.17 million tons, which was approximately 2/3 of the existing production capacity, and the capacity expansion rate reached the highest level in history; with the new installation in 2007 Put into production, the production capacity reached nearly 3 million tons. However, after the concentrated nitric acid market experienced high prices and high returns for two consecutive years in 2004 and 2005, the price quickly fell to around 1,300 yuan per ton in 2006, and this price has been floating in 2007, showing no signs of rebound. At the same time, the substantial increase in prices of upstream raw materials, coal, electricity, rail freight, and various auxiliary materials has also pushed up the production cost of concentrated nitric acid.
Under the dual pressure of declining markets and rising costs, concentrated nitric acid-deficient companies accounted for 80% of the total number of companies in 2007, and the rest of the companies also supported the loss on the verge of losses. As a result, concentrated nitric acid production companies began to enter the vicious competition stage of price cuts, the market price was approaching production costs. To this end, some domestic companies have cut production in succession to seek self-protection and self-rescue. The reduced production has temporarily warmed the nitric acid market. According to reports, from January to February of 2008, the national output of concentrated nitric acid decreased by 10% to 15% from November to December 2007, and the market price per ton rose by 100 to 120 yuan. Therefore, some people think that reducing production and self-help is effective, and reducing production is a good way for companies to save themselves.
However, quite a number of people in the industry have put forward different views. They generally believe that the reduction in production is only an expedient measure for nitric acid producers. Only by constantly adjusting the product structure and extending the industrial chain can companies achieve long-term development. In fact, the main factor in the temporary rise in the price of concentrated nitric acid is the increase in production costs rather than the reduction in production. Due to the snow disaster leading to poor transportation of raw materials and products, the price of ammonia as an important raw material has risen from RMB 2,700 to 2,800/ton in late December last year to RMB 3,150 to RMB 3,200/ton currently, and there is a possibility of further increase. In March, the platinum price in the domestic market reached 505 to 507 yuan/g, and the price of antimony rose to 2390 to 2410 yuan/g. At the same time, domestic steel prices have also risen sharply and the price of major steel products has risen by as much as 20%.
Sun Lihui analyzed that since the crux of the excess capacity of the device has not been completely eliminated, once the market turns, these devices will soon re-drive and resume production, and then the market price will decline again. In the past five years, the growth rate of concentrated nitric acid in China has reached 18% to 20%. This year, the production capacity of concentrated nitric acid may exceed 3 million tons.
Experts from the National Chemical Nitrate and Nitrate Technical Cooperation Network believe that, in addition to excess production capacity, the important reason for the production of concentrated nitric acid production enterprises is that they have a single product type, and they cannot change production or co-produce other products after the sharp reduction in profit of concentrated nitric acid. Only production can be cut or stopped, which puts great pressure on the company's survival. As in 2006, the largest nitric acid production in Shandong Province (production accounted for 30% of the national total output), only one of the 7 concentrated nitric acid enterprises has aniline facilities, and the remaining concentrated nitric acid is exported as a commodity, and the market price will fall sharply. The expert further analyzed that concentrated nitric acid producers should actively seek their own way out. First, to extend the industrial chain, such as Shandong Huayang Deere Chemical Co., Ltd. has formed an industrial chain of nitric acid-nitrobenzene-aniline-rubber antioxidant, which can flexibly circumvent market risks; Second, adjust the product structure, such as Shandong Union Chemicals The joint-stock company launched an annual output of 110,000 tons of nitro compound fertilizer, which not only changed the status quo of a relatively simple product structure, reduced market risks, but also solved the difficulty of storing and transporting concentrated nitric acid.
Experts said that there are many products that use concentrated nitric acid as raw materials, and there are also many models for using dilute nitric acid as an intermediate product. Enterprises should choose the right path for their own development. Reducing production from relief is ultimately not a long-term solution.
Did the nitric acid company save itself by reducing its production?
"Now the market price of concentrated nitric acid per ton has risen by 100 to 120 yuan." Sun Lihui, general manager of Shandong Huayang Deere Chemical Co., Ltd., told reporters at the end of last year that some nitric acid companies had limited production and reduced their output to save themselves.