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Half a year has passed – can autumn compound fertilizers turn things around? Author/Source: China Fertilizer Network Date: 2019-06-13 Clicks: 10 Time flies; half a year has passed in the blink of an eye. The first half of 2019 for the compound fertilizer market has come to an end, and demand for high-nitrogen fertilizers has also entered a slack season for replenishments. Looking back, the compound fertilizer market had a difficult time during the first half of the year. The only positive aspect was that, thanks to the short-term improvement in urea prices, compound fertilizer manufacturers were able to sell their products to some extent. Although most companies saw a significant decrease in sales compared to the previous year, they were still able to turn a profit. So, what should be done regarding compound fertilizers in the second half of 2019? Is there any possibility of reversing the disadvantage? First of all, as the saying goes: in the first half of the year, focus on urea; in the second half, focus on phosphate fertilizers. Thanks to low production rates and short-term market speculation, urea prices performed well in the first half of the year. The ex-factory prices for small-grain urea in regions such as Shandong’s Lianghe area reached around 2100 yuan per ton, resulting in substantial profits. This situation also increased the cost pressure on high-nitrogen fertilizers; as a result, the average ex-factory price for high-nitrogen fertilizers this year is around 2000 yuan per ton, an increase of 50–100 yuan per ton compared to last year. In the second half of the year, the demand for wheat fertilizers is mainly for phosphorus-rich fertilizers; thus, ammonium phosphate is the key reference product. Currently, the average ex-factory price of 55% phosphate powder in Hubei is around 2,050 yuan per ton, while smaller manufacturers offer prices of around 1,940 yuan per ton. Some compound fertilizer manufacturers have already started to purchase ammonium phosphate at low prices. During the same period last year, the average ex-factory price of ammonium phosphate in Hubei was around 2,200 yuan per ton, which is nearly 200 yuan per ton higher than this year’s price. Therefore, considering the raw material costs, the prospects for the compound fertilizer market this autumn do not look favorable. Secondly, environmental pressure is gradually diminishing, and price increases driven by environmental concerns are not significant. The most crucial term in the autumn fertilizer market in 2018 was \"environmental protection.\" Under the strong pressure related to environmental concerns, the operating rates of fertilizer manufacturers declined significantly. This was especially true for phosphate fertilizers, for which export demand was relatively high; as a result, supply became extremely tight. Consequently, the prices of wheat fertilizers also rose last year due to the shortage of phosphate fertilizers. This year, environmental regulations and safety inspections continue to exert pressure, keeping operating rates low. Additionally, the export situation for phosphate fertilizers is not optimistic at present, so it is unlikely that there will be any improvement in their prices in the short term. Therefore, the possibility of a reversal in the autumn fertilizer market, which is set to start at the end of June, is also low. Finally, most compound fertilizer manufacturers are still in a phase at the end of summer and the beginning of autumn. Some of them have not yet stocked up enough raw materials for autumn fertilizers, yet they have already started discussing and researching the market trends for autumn fertilizers; in fact, a few companies have even introduced payment policies for autumn and winter stockpiling, mainly in the form of rebates. This shows that even before the market truly kicks off, the trend for compound fertilizers is already showing signs of decline. (Yang Xiaomei)