Weak fertilizer market in July: Has diammonium phosphate reached rock bottom?

Thread Content

The fertilizer market was sluggish in July: Has diammonium phosphate reached rock bottom? Author/Source: China Fertilizer Network Date: 2019-08-05 Clicks: 17 The fertilizer market was in a poor state during July, with prices for various major types of fertilizers falling. Taking urea as an example, its factory prices have dropped since July; in regions such as Shandong, the factory prices have fallen to 1850–1900 yuan per ton. The price at which urea is purchased in Linyi has also dropped to 1850–1860 yuan per ton. In some areas, factory prices for urea have even decreased by 100 yuan. However, the situation for diammonium phosphate is even worse compared to urea; in Hubei province, the pre-payment price for 64% diammonium phosphate at the factory has dropped to 2,450 yuan, while the price for some batches of 64% diammonium phosphate sold on a fixed-price basis at the factory has fallen to 2,350 yuan. The estimated price of 64% diammonium phosphate delivered to northern China by large manufacturers in the southwest region has also dropped below 2,600 yuan. This peak summer for diammonium is truly tough, but the arrival of August signals the approach of autumn’s demands; let’s analyze whether diammonium prices have reached their bottom. 　　First, domestic demand is still far away and progressing slowly. In the domestic autumn market for diammonium phosphate, the North China region plays a key role, with lower demand in other areas. On one hand, the demand for this fertilizer for basic agricultural use in North China will start to rise around mid-October ； On the other hand, in recent years, the profits earned by distributors from selling DAP have been relatively low compared to those from compound fertilizers. Recently, heavy rainfall in some parts of North China has caused inconveniences in the storage and transportation of DAP. Most distributors are not very enthusiastic about making large purchases of diammonium phosphate, which leads to some companies reducing prices in an attempt to boost sales. This further increases the concerns of downstream distributors, who choose to wait and see, adopting a strategy of buying when prices rise rather than falling. 　　Secondly, exports are hindered. The international market for diammonium phosphate has been poor this year. The commissioning of new production capacities in countries such as Morocco and the Middle East has increased supply pressure in the international market. Coupled with poor sales conditions in India this year, which has resulted in a large surplus of stock, these factors have further exacerbated an already weak market situation. In China, the FOB price of 64% diammonium phosphate has dropped from $375 after the end of the spring demand period to the current level of $334–338. At present, there are no new export orders, and it is likely that export sales will continue to decline in the future. Export conditions are poor; most companies have begun to ship their products mainly to the North China market. However, there is still a difference of around 200 yuan between export prices and domestic prices, and domestic diammonium prices have further room to fall. 　　Finally, the impact of low prices for compound fertilizers and other types of fertilizers. At the beginning of July, some compound fertilizer manufacturers began to introduce high-performing products: the factory price of 45% chloride-based general-purpose compound fertilizer was around 1,900 yuan, while that of 44% chloride-based high-phosphorus wheat fertilizer was around 1,950 yuan. Compared with diammonium fertilizers, whose price is often around 2,500 yuan, these low-priced compound fertilizers are easier to handle for distributors, and it is also simpler for them to achieve profits. In recent years, agricultural product prices have remained low, prompting farmers to prefer purchasing inexpensive compound fertilizers over diammonium fertilizers, which are relatively more expensive. As mentioned earlier, urea prices have been declining continuously, with factory prices in some areas dropping by as much as 100 yuan, which undoubtedly casts a shadow over the entire autumn fertilizer market. Faced with the price cuts from other fertilizer manufacturers and competition from other diammonium phosphate producers, although most of these companies maintain stable pricing, their actual sales volumes continue to decline. 　　In summary, the purchasing boom in autumn has not yet arrived; the domestic market for diammonium phosphate remains in a situation of supply exceeding demand, and there is still room for a decrease in its prices. In the short term, if there is an urgent need, purchases can be made as required; however, if one intends to stock up for the autumn market on a long-term basis, it is better to wait until the price of diammonium falls to its lowest level before taking action. Moreover, guarantee and interest policies are essential. 　　To stay informed at any time about detailed and accurate market trends and related information regarding fertilizers such as diammonium compounds, (Rong Guangwen)