Whose fault is it that the price of monoammonium has dropped?

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Whose fault is it that the price of monoammonium has dropped? Author/Source: China Fertilizer Network Date: 2019-08-08 Clicks: 8 Recently, it was reported that the purchase price for 55% powdered ammonium nitrate by large manufacturers in Shandong is only 2100 yuan per ton. Converted to the price at the factory in Hubei, this would be around 1950 yuan or slightly more. Currently, the actual factory price for 55% powdered ammonium nitrate offered by large manufacturers is around 2000–2030 yuan per ton, while some smaller manufacturers charge 1960–1970 yuan per ton. If this price applies to large manufacturers, it is quite low; if it applies to smaller manufacturers, it’s more or less reasonable. However, large compound fertilizer manufacturers usually purchase their raw materials from large manufacturers, and they tend not to consider products from smaller manufacturers. Recently, the ex-plant price of 55% ammonium sulfate produced by large manufacturers in Sichuan was reduced by 30 yuan to 1,950 yuan, and the prices of monoammonium phosphate offered by enterprises in Henan were also slightly adjusted. Although Hubei Yian maintains a firm pricing stance, most transactions are negotiated on a case-by-case basis. It is evident that the price of monoammonium is indeed showing a downward trend. 　　So whose fault is it that the price of monoammonium has dropped? What are the reasons for the price drop of monoammonium? 　　Affected by environmental protection and safety inspections, the overall production of compound fertilizers is insufficient, resulting in slow consumption of raw material inventory. In July, the overall operating rate of compound fertilizers saw a slow recovery driven by demand in the autumn season. However, last week this rate declined rather than increased, with a significant drop. It is understood that regions such as Shandong, Henan, and Hebei experienced reduced production due to environmental and safety inspections; some large factories were undergoing routine maintenance, while many small and medium-sized enterprises stopped production, with uncertain dates for resuming operations. Such circumstances led to a slow consumption of their finished product inventories. The disruption in production also slowed down the consumption of ammonium sulfate, which was purchased earlier, and new purchases of ammonium sulfate were likewise delayed. 　　Demand in autumn was not satisfactory; collections for winter storage in the northeast came in early, and there was low acceptance among end-users. The policies regarding autumn compound fertilizers have been largely clarified in various regions, but the payment behavior of downstream distributors is not satisfactory. There is still inventory available of the popular products from earlier periods for sale, so there is little enthusiasm among them to purchase compound fertilizers for the autumn season; only large distributors or long-term customers make partial payments to stock up on these products. Recently, it has been reported that large compound fertilizer manufacturers across the country have introduced certain winter storage policies for the Northeast region and are collecting payments at this time, which is earlier than in previous years. It is understood that many distributors are unwilling to comply with these policies; those who do make payments are mainly long-term customers, and most distributors lack confidence in the fertilizer market and therefore refrain from making purchases so early on, opting instead to wait and observe. 　　Transportation is slightly hindered in some areas. Similarly, affected by environmental protection measures and safety inspections, transportation is slightly hindered in some areas; in other places, vehicle permits are required and queues have to be formed. This leads to some transport vehicles being reluctant to carry fertilizers or to enter industrial parks. In some areas, road repairs are still underway during the summer vacation. As the National Day on November 1st approaches, transportation across various regions becomes more affected. Not only is the transport of fertilizers disrupted, but also the transport of some raw materials used in fertilizer production is hindered. As a result, freight costs may rise in certain areas, which could have a negative impact on the price of ammonium nitrate. 　　Raw sulfur prices continue to decline. The sulfur market is sluggish, with prices gradually falling. There is a strong atmosphere of caution among downstream buyers, and inventory levels in ports remain high. Suppliers are taking advantage of this situation to reduce prices in order to sell their stock. Currently, the price of granular sulfur at the Yangtze River Port and Fangchenggang Port has dropped to around 770 yuan. The prices of Puguang sulfur at the Wanzhou Port and Dazhou plant sites continue to fall, to 790 yuan and 750 yuan respectively. The industry believes that sulfur prices will continue to decline. 　　There isn’t much left in the factory to be shipped, and new orders are not performing well. Recently, the orders pending shipment at ammonium nitrate factories have been gradually being used up, and there are also few new orders. It is reported that although the quotes from large manufacturers for 55% powdered ammonium nitrate remain stable, the actual price at which new orders are delivered from the factory has dropped to 2000 yuan; these manufacturers claim that each order is negotiated on a case-by-case basis. It is evident that not many orders are left pending shipment, and the pressure is increasing steadily. Some companies that produce high-concentration ammonium nitrate such as 58% and 60% powder ammonium nitrate still have a decent amount of orders pending, and it is expected that they will be able to continue operating until the end of the month. However, the situation regarding new orders is not favorable, with most being small-scale orders. 　　In summary, monoammonium phosphate is indeed at risk of price cuts; there are more negative factors than positive ones. The industry believes that the price reduction should be around 50 units, with some in the industry suggesting that as overall production of compound fertilizers declines in September, demand for monoammonium phosphate will also be affected to some extent, and at least no increase in prices is expected. 　　(Zhao Hongye)