Compound Fertilizers: Demand Depends on the Peak Season; It Appears in Spring

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Compound Fertilizers: Demand Depends on the Peak Season; It Appears in Spring. Author/Source: China Fertilizer Network. Date: 2019-03-11. Clicks: 5. In mid-March, fertilizer markets across the country began operating again. Compared to before, the fertilizer market has indeed become more active recently; although overall prices remain relatively low, trading conditions have improved. As the market progresses, the spring plowing market is becoming clearer; recently, some compound fertilizer manufacturers have revised their prices and policies. New orders have followed up after the completion of previous orders, and the enthusiasm among downstream buyers for purchasing fertilizer has also increased. 　　Generally speaking, we are currently in the peak season of the spring market. As the saying goes, \"in the peak season, demand is what matters; in the off-peak season, costs are key.\" Therefore, demand from downstream sectors receives close attention, and it is precisely the increase in demand in certain areas recently that has driven the development of the compound fertilizer market. Amid the unfavorable overall conditions in the fertilizer market, the price of compound fertilizers has seen some improvement. As for why the compound fertilizer market, which had suffered from weak demand for some time, has suddenly started to recover, the author believes there are several reasons: First, the season is approaching. It is understood that spring crop planting takes place in most areas of our country, and coupled with the application of additional fertilizers to winter wheat in some regions, demand in the downstream areas becomes very high once March arrives. In the northern regions of our country, the planting season for field crops generally starts around May, while the grassroots markets begin to become active around early April. With less than a month left until the time for bulk purchases at the grassroots level, and taking into account delivery times and transportation distances, some distributors are forced to restock their supplies. As the planting season approaches, demand for compound fertilizers in these areas is increasing; it is expected that prices in these regions will become relatively stable in the short term. However, a trend of moderate stability will remain the dominant pattern. 　　Secondly, the gap is large. As of the end of February, the overall inventory levels in the key spring plowing markets were only about half of those in previous years; there is still a considerable amount of remaining demand. The main reasons for this are, firstly, the high prices of compound fertilizers for winter storage in some areas, which pose significant risks for inventory buildup, forcing dealers to proceed with caution ； The second reason is that the market started slowly after the New Year; prices of nitrogen, phosphorus, and potassium all declined, resulting in insufficient cost support for compound fertilizers. Their prices remained stable on the surface but actually dropped, forcing distributors to continue to wait and see. Since last week, urea prices have continued to rise following a rebound, with increased costs for compound fertilizers adding to this trend. As the sales season approaches, dealers with significant shortages are gradually purchasing more supplies, which in turn boosts market activity. 　　Finally, the discounts are expanded. Since last winter’s stockpiling period, the compound fertilizer market has remained stagnant, with the conflict between manufacturers and distributors continuing to this day. Currently, the prices of compound fertilizers are falling; in major regions, the decrease ranges from 50 to 100 yuan per ton. In some areas, prices appear stable on the surface but actually drop secretly, and the scope of discount offers has expanded. For now, prices remain stable. One reason for this is that some companies charged high prices earlier, and setting too low prices for new orders could harm their reputation, so they are forced to adjust their policies ； The second reason is that the raw materials used in production by some companies were mostly purchased at high prices earlier on; due to cost pressures, the possibility of significant price cuts is virtually zero. As a result, increased discounts further stimulate purchasing activities downstream. 　　In summary, with spring plowing approaching and demand increasing, the development of the compound fertilizer market accelerates as a result. Recently, urea prices have continued to rise, while prices of ammonium phosphate and potassium fertilizers have remained stable or slightly declining. Driven by demand, it is expected that compound fertilizer prices will remain weak and fluctuate within limited ranges in the coming period. 　　(Feng Hongyang)