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Ammonium nitrate takes center stage in autumn – how much is the demand? Author/Source: China Fertilizer Network Date: 2019-06-27 Clicks: 11 It seems that Harbin has just entered the hot summer season; recently, the market for monoammonium phosphate has also begun to show signs of activity, with demand increasing slightly in autumn. New orders for monoammonium phosphate are being processed more efficiently. Several large manufacturers in Hubei have stopped accepting new orders, with orders scheduled to be fulfilled until late July. Some large manufacturers in Sichuan still have orders pending fulfillment. The actual selling price of 55% powdered monoammonium phosphate produced by large manufacturers in Hubei is around 2020–2030 yuan per ton (the same unit is used throughout). Some smaller manufacturers offer a lower price of 1950 yuan per ton or slightly more. The actual selling price of 55% powdered monoammonium phosphate produced by large manufacturers in Sichuan is around 1900–1950 yuan per ton. Recently, some enterprises in Hubei have suspended taking orders and are not providing quotes at the moment. A large manufacturer in Sichuan states that the lowest selling price has risen to 1,950 yuan. Some enterprises in Yunnan have increased their quotes by 50 yuan. Enterprises across various regions plan to raise the price of monoammonium phosphate, and some industry insiders believe that an increase in its price is an inevitable trend. However, others think it will be difficult for the price to rise compared to previous years, and if there is an increase, it will be no more than 50 yuan. Is demand really that good in autumn? The author provides the following analysis on this issue: As is well known, the demand for ammonium phosphate in autumn is indeed higher than in other seasons. However, the situation varies from year to year. In the first quarter of this year, ammonium phosphate manufacturers had accumulated large amounts of inventory. In an effort to clear this inventory quickly, low prices appeared frequently in the market. These companies did not develop effective marketing strategies, which led to rapid sales of their inventory. Downstream compound fertilizer manufacturers also considered the price of ammonium phosphate to be favorable, so they purchased large quantities. Additionally, due to various reasons, the overall production capacity of compound fertilizer manufacturers remained low this year; as a result, these manufacturers consumed ammonium phosphate at a slower pace. It is reported that some companies have enough ammonium phosphate purchased earlier to last until the end of June or even July. Around mid-month, large compound fertilizer manufacturers in Shandong, Henan and other regions began to purchase monoammonium phosphate. Some compound fertilizer companies also intended to buy this material for use in the fall, but they held off temporarily due to issues such as funding constraints. By the end of the month, some smaller and medium-sized compound fertilizer companies, fearing an increase in the price of monoammonium phosphate, started to prepare to purchase it as well. However, this year’s circumstances have resulted in a smaller autumn shortage of monoammonium phosphate compared to previous years. For example, large manufacturers in Henan have an autumn demand of around 70,000–80,000 tons, with a shortage of about 30,000–40,000 tons; additionally, around 10,000 tons worth of purchase orders have been placed recently. It is clear that demand for these large manufacturers will not be high in the coming period. Hebei’s compound fertilizer manufacturers have an autumn demand of around 20,000 tons of monoammonium phosphate, and they currently have 15,000–16,000 tons in stock, leaving a shortage of only about 5,000 tons. It is also understood that in recent times, small and medium-sized compound fertilizer manufacturers in regions such as Henan and Shanxi have purchased 7,000–8,000 tons of ammonium phosphate as raw material, and the demand for this material during the autumn period has likely been met. It seems that this autumn, demand will indeed be as predicted by some in the industry – characterized by uneven purchasing patterns and low volumes. Given these demands, some in the industry believe that the supply of monoammonium nitrate is limited. Some enterprises in Hubei are operating at reduced capacity due to environmental and safety inspections, resulting in a low overall utilization rate for monoammonium nitrate. This low level of operation has persisted for a long time, including during the first quarter. It is understood that it is mainly small and medium-sized enterprises whose operations are affected, and this does not have a significant impact on the overall supply of monoammonium nitrate. There have been no positive effects either in terms of raw materials; sulfur remains at low prices, with both the price of sulfur at ports and that of sulfur produced in Puguang remaining below 1,000 yuan in recent times ； The price of liquid ammonia is also at a low level; currently, the prevailing ex-plant price for liquid ammonia in Hubei is only slightly above 2,700 yuan ； Phosphorus ore prices remain stable with no signs of increase. It is reported that in Hubei, 55% ammonium sulfate of lower quality is being sold at a factory price of 1,950 yuan, and factories still manage to make a profit; this shows that ammonium sulfate raw materials provide little support in terms of cost control. Based on this analysis, although there is a demand gap for monoammonium phosphate, the remaining quantity is likely to be limited. Factories have stopped taking new orders; rising prices for monoammonium phosphate could lead to an increase in its price. However, the industry believes that the increase in price will not be significant, and a new price level cannot be established for now. In the short term, prices of monoammonium phosphate are likely to remain stable, and if there is an increase later on, it is likely to be within 50 yuan. For more detailed information on the fertilizer market, you can call the consultation hotline at 0451-88001128, or visit the official website of China Fertilizer Network (www.fert.cn), its mobile app (www.fert.cn/app), and its WeChat official account (fert-cn). You can also become a member of China Fertilizer Network to enjoy more premium services. 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