December 2016 Monthly Report on the Compound Fertilizer Market

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December Compound Fertilizer Market Monthly Report
Author/Source: China Fertilizer Network
Date: January 3, 2017
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In December, with raw material prices continuing to rise, compound fertilizer prices also climbed steadily. This trend was mainly observed among enterprises in Shandong, Jiangsu, the two Hubei provinces, and Anhui. Meanwhile, winter storage prices in the Northeast region remained uncertain. Currently, for 45% CL (15:15:15) compound fertilizer, the provisional ex-factory price for winter stockpiling is set at around 1,800–1,900 yuan per ton. For 45% S (15:15:15) compound fertilizer, the provisional ex-factory price for winter stockpiling ranges from 1,980 to 2,180 yuan per ton; in Shandong Province, the higher-end prices are around 2,350–2,400 yuan per ton. Meanwhile, most companies have discontinued their previous preferential policies. 　　In early December, driven by relatively strong support from raw material prices and costs, the provisional quoted prices for winter stockpiling set by a few compound fertilizer manufacturers rose by approximately 50–100 yuan. In some regions, the progress of winter fertilizer stockpiling saw a slight improvement, and the amount of payments received by certain enterprises for winter stockpiling also increased slightly. As a result, production rates gradually rebounded; overall, the operating rate of compound fertilizer manufacturers stood at around 55%. In the second week of December, the provisional quotes for winter storage of compound fertilizers continued to rise. There are three main reasons for this: First, raw material prices have shown a clear upward trend, with nitrogen, phosphorus, and potassium all experiencing overall price increases ； Second, environmental inspection teams have been dispatched to various locations; as a result, some enterprises have ceased operations. The remaining stock of finished products (especially sulfur-based compound fertilizers) is quite limited ； Third, there is a shortage in transportation; raw material supply has been disrupted, leaving enterprises with no materials to work with. In some areas, the availability of goods is rather limited. As a result, prices for lower-end compound fertilizers continued to rise by about 50–100 yuan. However, during this off-season for demand, downstream buyers remain hesitant and cautious; their pace of purchasing compound fertilizers remains slow. Compound fertilizer manufacturers are primarily fulfilling prior orders. As of December 9, the overall operating rate of these manufacturers stood at around 57%. In late December, the progress of winter stockpiling in the southern region was relatively good. However, in the Central Plains and northern regions, the pace of downstream winter fertilizer stockpiling remained slow. This was mainly because raw material prices rose sharply, causing compound fertilizer prices to increase at such a rapid rate that downstream buyers were temporarily unable to afford them. As a result, companies struggled to secure new orders at these higher prices. Most manufacturers fulfilled previously placed orders, leading to a slight increase in shipment volumes. By the end of the month, the overall operating rate of compound fertilizer plants edged up slightly to around 65%. Nevertheless, recent stringent environmental inspections and poor transportation conditions led to a temporary shortage of raw materials for compound fertilizer producers; consequently, a few companies restricted order acceptance and did not offer any quotes. 　　In terms of raw material costs: The operating rate of urea producers in Shandong Province continues to rise, leading to a slight increase in supply. However, the demand for compound fertilizers remains relatively stable. Currently, the prevailing ex-factory prices remain unchanged at 1,660–1,670 yuan ； The ammonium chloride market remains largely stable. At a plant in the Tianjin area, the ammonium chloride production facility has yet to return to normal operation, resulting in insufficient output. Currently, the plant is fulfilling previously received orders; it has suspended quoting prices and is not accepting any new orders at this time ； Due to the fact that some downstream compound fertilizer manufacturers and traders are currently adopting a wait-and-see attitude and have no immediate intention of purchasing, the demand for monoammonium phosphate has slowed down. Recently, manufacturers have been primarily fulfilling prior orders, keeping prices relatively stable. In Hubei, the prevailing ex-factory prices for 55% powdered monoammonium phosphate and 58% powdered monoammonium phosphate remain at around 2,000 yuan and 2,150 yuan per ton respectively. Actual transaction prices may be discounted by 0–50 yuan per ton ； The transportation situation in Qinghai region remains less than ideal; the price of Salt Lake Potash might increase by another 50 yuan in January ； The market trend for potassium sulfate is similar to that of potassium chloride: few transactions at high prices, but the overall price trend remains upward. 　　Overall, raw material prices continue to show an upward trend. Compound fertilizers still face cost pressures, transportation challenges, and environmental regulations; moreover, the supply of production materials remains tight. As a result, compound fertilizer prices are rising. However, downstream buyers have limited acceptance of these new prices, and in some regions there is “high prices but no market demand.” It is expected that compound fertilizer prices will continue to rise, albeit with difficulty, in the coming period.