In recent years, several coal-based fertilizer companies have faced production constraints due to poor winter storage and rising inventory levels. Meanwhile, large-scale chemical fertilizer producers that rely on natural gas as a raw material are encountering severe shortages, leading to plant shutdowns. These companies manufacture fertilizers that are highly favored by farmers, but without sufficient natural gas, even their top-tier products cannot be produced. The persistent shortage of long-term gas supply has become a major challenge for gas-head fertilizer companies in China.
Henan Province, a major agricultural region, is also home to Zhongyuan Dahua Group, the province's only large-scale chemical fertilizer company. Established with advanced natural gas-based technology, the company has continuously innovated and now maintains domestic-level production processes. Its Zhongyuan Chemical Fertilizer has been recognized as a quality-exempt product nationally and is a well-known brand in Henan. However, recent years have brought significant challenges due to natural gas shortages, especially since late 2003, when the situation worsened.
According to a deputy general manager, the company requires 1.2 million cubic meters of natural gas daily for normal operations, but currently receives less than 600,000 cubic meters per day. As a result, the compound fertilizer plant operates at only 50% capacity, and the urea system is barely running. Despite efforts by the Henan Provincial Development and Reform Commission to coordinate with Zhongyuan Oilfield, the situation remains critical. In 2005, the company was unable to operate at full capacity, with daily gas supply fluctuating between 600,000 and 700,000 cubic meters in the first quarter, increasing to around 1 million cubic meters in April to July, then dropping again to 700,000–800,000 cubic meters from August to October, and remaining below 600,000 in December.
Despite strong management and product quality, the company's output this year is expected to be 60,000 tons of synthetic ammonia, 100,000 tons of urea, 150,000 tons of compound fertilizer, and 10,000 tons of melamine, resulting in an economic loss of approximately 100 million yuan.
Other similar-sized companies, such as Hebei Qizhou Dahua and Shaanxi Dagang Gas, are also struggling. Zhongyuan Oilfield reportedly ran out of gas in mid-November, forcing the company to operate at only 50–60% capacity, relying mainly on Shaanxi gas. Even the iron lion urea produced by Chuzhou Dahua has seen reduced output this year.
Guizhou Chitianhua Co., Ltd. planned an annual gas supply of 430 million cubic meters, falling short of the 580 million needed for full production. To address these challenges, many gas-head fertilizer companies are exploring alternative raw materials. Zhongyuan Dahua is investing in coal chemical projects to achieve 30% self-sufficiency in gas for fertilizer production. However, the project is not expected to yield results until 2007.
Gas suppliers often charge higher prices for more gas, increasing production costs. Yet, adjusting urea prices next year is difficult. Despite these challenges, companies prioritize stable gas supply over price concerns. A representative from Suihua stated, "There may be no gas at all. Last year on December 28, we still had materials, but this year on January 1, there will be none!" Zhongyuan Dahua’s management expressed frustration, having submitted over 20 reports to national and provincial authorities, yet still facing production halts.
The lack of natural gas has not only impacted fertilizer companies but also led to underutilization of large-scale fertilizer equipment, reducing the output of high-quality fertilizers and affecting spring planting and other agricultural seasons. This loss far exceeds the damage caused by gas price fluctuations. The situation highlights the urgent need for long-term solutions to ensure stable gas supply and support China’s agricultural sector.
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