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Urea sees a turnaround in the off-season; how can diammonium phosphate turn things around? Author/Source: China Fertilizer Network Date: 2019-06-26 Clicks: 7 As the summer vacation approaches and planting in the main areas for summer corn is completed, the market for summer fertilizers is gradually coming to an end. The prices of most common fertilizers are declining, and the price of diammonium phosphate is also dropping. Currently, the standard ex-factory price of 64% diammonium phosphate in Hubei is between 2550–2600 yuan per ton; actual transaction prices are usually around 2520 yuan or slightly less. In North China, the estimated ex-factory price for 64% diammonium phosphate is 2750 yuan, with discounts of 50–80 yuan possible for large orders. In some non-main production areas, the standard ex-factory price for 64% diammonium phosphate is around 2650 yuan, with Federation being the main supplier. However, urea, which serves as a barometer for the fertilizer market, has seen price increases in some regions. How can diammonium phosphate, which has been at a low level recently, achieve a similar turnaround like urea? Firstly, overall construction activity has decreased. With lower demand in summer and insufficient supply to meet demand in autumn, companies have begun to carry out maintenance work during the off-season. Some large manufacturers say that maintenance activities scheduled for June will result in a reduction of 200,000 tons in production, and some high-cost manufacturing facilities located along the coast have already stopped operating. It is expected that in the future, companies will reduce their production levels in order to alleviate the supply pressures during the off-season. An overall reduction in supply will help stabilize the prices of diammonium. Secondly, exporting during the off-season has become the main strategy for diammonium phosphate manufacturers to cope with the slow period in the summer. Exports were high in the early part of this year; according to Chinese customs data, a total of 541,200 tons were exported in April, representing a 146.6% increase compared to 220,000 tons in the same period last year. Although the international market is currently weak, the FOB price for 64% diammonium phosphate in China has dropped to $340, which translates to an ex-factory price of 2,180–2,200 yuan for domestic manufacturers, resulting in some companies experiencing losses. However, companies still have some pending orders from previous periods, and with the autumn demand in regions such as India and Southeast Asia eventually setting in, the export market can continue to greatly alleviate domestic supply pressures. Finally, domestic preferential policies. To attract customers during the off-season and maintain supply relationships with major distributors, some companies have adopted a strategy of pooling resources and setting minimum order amounts. The implementation of the Fed’s policies and guarantee programs ensures, on the one hand, companies’ market share and key customers ； On the other hand, it enhances the confidence of downstream distributors in placing orders; a sales model that shares risks helps to improve the flow of products for these enterprises, accelerates the release of market demand, and alleviates their supply pressures. In summary, the main reason for the continuous decline in domestic diammonium phosphate prices is an oversupply relative to demand, which forces companies to lower their prices under pressure. However, if production slows down in the third quarter, coupled with ongoing shipments to export markets and demand driven by favorable policies in the domestic market, it is not impossible for these prices to experience a strong rebound during the off-season, just as urea has managed to do. (Rong Guangwen)