Urea prices drop sharply; diammonium phosphate prices also fall greatly. How will compound fertilizer prices decline?

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Urea prices drop sharply; diammonium phosphate prices also fall greatly. How will compound fertilizer prices decline? Author/Source: China Fertilizer Network Date: 2019-07-24 Clicks: 10 As time goes by, the autumn compound fertilizer market has now fully kicked off, with regional marketing meetings being held one after another. These meetings feature the introduction of new products, best-selling products, as well as various promotional offers. To encourage downstream customers to make payments promptly, companies often adopt a phased payment collection approach. So far, the first round of payment collection activities is largely complete; going forward, companies will temporarily implement interest-based or guaranteed-payment policies. Some companies, however, wait for clearer market trends before considering price adjustments. Generally speaking, the compound fertilizer market in each season is a spectacle worth looking forward to, with a fairly positive trading atmosphere. However, the recent performance of compound fertilizers has become increasingly disappointing; the market remains sluggish and fails to see any improvement. It is evident that demand is growing very slowly, which vividly illustrates the situation of a \"slow pace during peak seasons\". It is a critical period for the market this autumn, yet overall, the situation remains bleak. Firstly, raw material prices are weak. As the key player in the autumn fertilizer market, the demand for wheat fertilizers is considerable. Currently, the pure raw material cost of 45% chloride-based products (25-14-6/18-22-5) is around 1795/1770 yuan per ton, remaining roughly the same as in previous weeks; however, there is a possibility of a decrease in the future. After the labeling process, the domestic urea market did not see any recovery; instead, as downstream demand declined, prices continued to fall, with no positive developments expected in the short term ； Demand for monoammonium is high in autumn, and companies are trying to raise prices, but so far there has been little tendency toward price increases ； Port inventories of potash fertilizers are at record levels, and weak demand keeps prices under pressure. Secondly, the price of diammonium has dropped significantly. It is understood that currently, in Hubei province, the mainstream ex-factory price for 64% diammonium phosphate is around 2,450–2,500 yuan per ton, with discounts of around 50 yuan per ton possible depending on the terms of the deal ； In some areas of the southwest, prices even reached around 2,300 yuan per ton. The reason for such low prices is, firstly, the poor conditions in the international market, resulting in relatively low export prices and a lack of increase in demand ； The second reason is the weak market conditions for raw materials; for example, sulfur prices at ports have remained at low levels over the past few weeks. The price of diammonium phosphate is now approaching its bottom level. In regions where there is high demand for phosphorus-rich fertilizers in autumn, such as North China, downstream users are more inclined to choose diammonium phosphate over compound fertilizers, which have relatively higher prices. Finally, downstream demand is weak. At the beginning of this autumn, when the compound fertilizer market started to operate, companies relied on best-selling products and relatively flexible promotional policies to encourage downstream buyers to make payments and stock up on supplies. However, once the policy-based advance payments came to an end, demand dropped sharply and the market reached a deadlock. One of the reasons for this was the weak trend in raw material prices, coupled with the competition from alternative products; as a result, there is a possibility of declining prices for compound fertilizers in the future ； The second reason is insufficient purchasing power at the downstream level. Although wheat production is high in some areas, prices remain relatively low; thus, despite good yields, there is no real economic benefit from them, which has significantly reduced farmers’ enthusiasm for cultivation. Additionally, frequent natural disasters in certain regions have to some extent hindered the normal progress of agricultural production and activities. In summary, the autumn fertilizer market is currently facing difficulties; not only have the prices of raw materials such as urea and its alternative, diammonium phosphate, declined, but demand has also remained weak. Recently, many companies have stopped offering time-limited or quantity-limited discounts, and it is expected that fertilizer prices will remain low in the future. (Feng Hongyang)