---
title: "Salt Reform Enters Countdown: Which Listed Salt Companies Deserve Attention?"
description: "The salt industry reform plan, set to take effect on January 1, 2017, is now in its final countdown. Industry insiders expect retail salt prices to drop, benefiting integrated producers. With ex-factory prices at 300-500 yuan per ton and retail prices around 3,000 yuan per ton, there is significant room for price reductions once government pricing is lifted."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-12-23"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/79JooulRtMmIjHm2FZx0_g"
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---

# Salt Reform Enters Countdown: Which Listed Salt Companies Deserve Attention?

> The salt industry reform plan, set to take effect on January 1, 2017, is now in its final countdown. Industry insiders expect retail salt prices to drop, benefiting integrated producers. With ex-factory prices at 300-500 yuan per ton and retail prices around 3,000 yuan per ton, there is significant room for price reductions once government pricing is lifted.

The "Salt Industry System Reform Plan" clearly states it will be implemented from January 1, 2017, and the salt industry reform is now in its final countdown. Industry insiders expect that the market price of edible salt will see a decline, which will benefit integrated production and sales salt enterprises.

According to the National Development and Reform Commission and provincial price bureaus, the ex-factory price of salt is 300 to 500 yuan per ton. Currently, a 500g pack of plain salt is generally priced at around 1.5 yuan, which translates to 3,000 yuan per ton. In other words, from ex-factory to retail, the price of salt has soared by 6 to 10 times. **It is thus clear that after the government pricing mechanism is lifted, there is significant room for edible salt prices to fall. China's salt production capacity reaches over 80 million tons per year, while annual edible salt sales are only about 8 million tons, so there is ample capacity to ensure salt supply. The abundant supply and the stark contrast between cost and market price are driving supply-side reform in the salt industry.**

This salt industry reform will have a significant impact on the existing salt sales system, and may force salt companies to actively seek cooperation with salt production enterprises. **Local salt companies that lack brand advantages and have imperfect channels will face consolidation or elimination; high-quality salt companies will be able to expand to other provinces, leveraging their channel and brand advantages to grow their business. The salt sales landscape is set for a reshuffle.**

Looking at the process of salt deregulation in countries like the United States and Japan, the eventual market structure is likely to evolve into an oligopoly. From a competitive landscape perspective, China Salt's central SOE background makes its brand easily accepted by consumers, making it likely to become one of the oligopolists. At the same time, local salt companies will rapidly differentiate; those without competitiveness will have their channels eliminated, while strong local salt companies will gradually expand from their surrounding areas to a nationwide layout, quickly increasing their market share. Small and medium-sized salt producers will remain in OEM positions, with their share narrowing and undergoing mergers and reorganizations, rapidly decreasing in number. Private enterprises with flexible mechanisms and strong marketing capabilities will see their share rise rapidly.

Currently, there is still a large gap between domestic salt enterprises and foreign markets in terms of the variety and pricing of multi-species salt. After the salt reform, market-oriented salt pricing will stimulate innovation vitality in production enterprises, which is conducive to the development of high-margin multi-species salt. Multi-species salt (currently accounting for about 11%) is expected to become the mainstream salt in the future, with its share further increasing, and salt prices are expected to enter a long-term upward channel.

With the continuous advancement of marketization and natural competition in the U.S. salt industry, salt production in the U.S. is now mainly controlled by a few large enterprise groups. Within these groups, production and sales are integrated, and they adjust according to market demand through a production-based-on-sales approach. The production, sales, and prices of salt in the U.S. have basically maintained balance and stability. **According to the development of the mature salt system in the U.S., the reform of China's salt system will be a major integration of salt enterprises, ultimately achieving integrated production and sales group salt enterprises through reorganization and mergers.**

Below are some listed salt enterprises compiled by the editor. In addition, companies like Sanyou Group and Yuntianhua are also worth attention. From the chart below, it is not difficult to see that among the five major listed companies, four are mainly engaged in salt production, and only Yunnan Energy Investment is integrated in production and sales. With the implementation of the salt reform, these listed companies face both opportunities and challenges.

Industry insiders point out that salt industry reform is imperative, but it should be gradual rather than hasty. The state should still guide and adjust salt prices, especially edible salt prices, for a certain period. After marketization, salt prices are bound to fluctuate, and whether they rise or fall, it is not conducive to the healthy development of China's salt enterprises, nor to people's livelihoods. **The state should set a range to avoid large fluctuations, and gradually lift price controls after the market stabilizes.**

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