Recently, the Chinese government decided to increase the level of flood prevention and control. As of July 12, this year's flood disaster has affected 37.89 million people in 27 provinces and cities including Jiangxi, Anhui, Hubei, and Hunan, and 141 people have died or disappeared. The rainstorms in the south of my country have been severe and the flood situation is severe. Many cities have started an emergency and require enterprises to strictly guard against it. If necessary, they must decisively shut down, stop production, suspend business, and withdraw people. (CCTV News)
The upgrading of the Yangtze River flood situation may affect the supply of some pesticides (Jiangsu Province) and phosphate fertilizers (Hubei Province) in the short term.
This flood situation mainly affects six provinces in the middle and lower reaches of the Yangtze River, including Hubei and Jiangxi. According to the statistics of various provinces, the provinces affected by the flood situation accounted for the national chemical industry revenue in 2018: Jiangsu (14.4%), Zhejiang (9.1%), Hubei (3.6%), Anhui (2.9%), Hunan (2.6%) , Jiangxi (1.9%). The chemicals that are widely distributed within 3 kilometers along the Yangtze River are mainly pesticides and phosphorus chemicals: 1. In 2019, the output of pesticide raw materials in Jiangsu Province was 740,000 tons, accounting for 33% of the country, and more than 20% of the production capacity was distributed along the Yangtze River Within 3km. Among them, the output of pesticides, herbicides and fungicides accounted for 47%/39%/56% of the country respectively. 2. The production capacity of phosphorus chemical products is mainly distributed in Hubei, Sichuan and other provinces. It is estimated that the production capacity of monoammonium phosphate is within 1km along the Yangtze River, and the proportion of 1~3km is 16% and 7% respectively; the production capacity of diammonium phosphate is within 1km along the Yangtze River The proportion of 1~3km is 11% and 4% respectively. It is expected that the flood situation will cause some enterprises along the Yangtze River to stop production, and the production capacity of pesticides and phosphorus chemicals may be affected in the short term.
We should pay attention to the price fluctuations of pesticides and phosphorus chemicals due to changes in supply in the near future. Although the supply and demand of these products are weak due to floods, considering the relatively concentrated distribution of their production capacity, the impact of the flood situation on the supply of some products is more obvious. For example, glufosinate-ammonium rose more than 10% in the past month because of the flood situation in Hubei province, which caused an intermediate plant to stop production and the timing of resumption of production could not be determined for the time being.