Fertilizer prices rise in the off-season; some varieties see a 20% increase in three months

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Fertilizer prices have soared, increasing by 20% in just three months! What is causing such wild fluctuations? It is currently winter, and agricultural inputs generally enter a slow sales period during which prices do not see significant changes. Yet this year, the fertilizer market has behaved abnormally; since October 2017, nitrogen fertilizers, phosphate fertilizers, potassium fertilizers, and compound fertilizers have all seen sharp price rises. In just over three months, the price of some of these products has increased by more than 20%. It is not yet the peak season for fertilizer sales; although there are many farmers inquiring about prices, few actually make purchases. In previous years, fertilizer prices would drop at this time, but this year they have continued to rise. The prices of compound fertilizers from various brands are also rising. Compound fertilizers, which are made from individual nutrients such as nitrogen, phosphorus, and potassium, are also the most widely used fertilizer products by farmers at present. Since early October 2017, the sharp rise in the prices of these raw materials has directly driven up the cost of compound fertilizers. According to statistics, over the past three months, the factory price of nitrogen-based urea has risen from 1,500 yuan per ton to around 1,900 yuan per ton, an increase of over 27%. The factory price of phosphorus-based fertilizers has increased from around 1,900 yuan per ton to around 2,400 yuan per ton, representing a rise of 26%; the factory price of potassium-based fertilizers has risen from around 1,800 yuan per ton to around 2,000 yuan per ton, an increase of 11%. Meanwhile, the ex-factory price of compound fertilizers rose from 2,100 yuan per ton to 2,300 yuan per ton, an increase of nearly 10%. Normally, this should be the period for distributors to stock up for winter, but many distributors have stopped placing orders. The continuously rising prices of fertilizers have made distributors that sell directly to farmers cautious about purchasing goods. On the other hand, compound fertilizer manufacturers are also under pressure due to increasing raw material costs; faced with rising prices for raw materials such as nitrogen, phosphorus, and potassium, these companies are planning to reduce their inventory of such raw materials. It is understood that due to environmental regulations restricting production in the past two years, the operating rate of compound fertilizer manufacturers is currently only around 47%, with many small and medium-sized enterprises having reduced production or shut down. Some large enterprises that are still in production believe that demand will surely rise during the peak period for fertilizer use in March and April this year; therefore, despite a decline in orders, most companies have not reduced their production volume at present. To alleviate the current pressures on costs and sales, it is necessary to reduce some of the raw material inventory. It is understood that among the fertilizers that have seen the most significant price increases this time, nitrogen-based urea stands out as the most affected. Urea is also regarded as a barometer of the fertilizer market; rises in its price directly lead to increases in the prices of other fertilizers. So what are the reasons behind this sharp rise in urea prices? In the past two years, due to the poor performance of the urea industry and environmental regulations that restricted production, many manufacturers ceased operations, leading to a reduction in supply. This year, the shortage of natural gas, which is an essential raw material for production, has further reduced urea output; the decreased supply has caused prices to rise sharply. Furthermore, analysts believe that rising prices of raw materials such as coal and sulfur have also increased the costs for companies that produce fertilizer ingredients like nitrogen, phosphorus, and potassium. Meanwhile, rising prices of imported fertilizers have also contributed to higher domestic fertilizer prices.