Urea market trends and potassium fertilizer negotiations – what about monoammonium phosphate?

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Urea market trends and potassium fertilizer negotiations – what about monoammonium phosphate? Author/Source: China Fertilizer Network Date: 2019-08-22 Clicks: 3 The urea market has been sluggish recently, with prices continuing to fall, low market activity, and decreasing interest. Yet the introduction of urea futures is a topic of discussion on a daily basis, and it remains a subject of interest in the fertilizer industry. In the second half of the year, negotiations on large-scale contracts for potassium fertilizer imports have also attracted close attention. Although the potassium fertilizer market is sluggish and negative factors related to potassium chloride dominate the situation, interest in matters such as these large-scale contract negotiations is gradually increasing. So, against this backdrop of a sluggish fertilizer market, what should Yian pay attention to? Demand? Operating rate? Inventory? Raw materials? 　　It hasn’t received much attention recently, but it’s not completely ignored either. It is reported that some large traders and manufacturers of compound fertilizers still have an interest in making purchases. However, the price of monoammonium phosphate has not yet reached the desired level at present, so there is no significant activity in bulk purchasing to take advantage of low prices. Currently, the quoted price for monoammonium nitrate doesn’t hold much significance; companies usually negotiate prices on a case-by-case basis. At present, in Hubei, the ex-plant price for 55% powdered monoammonium nitrate is between 1970 and 2000 yuan per ton (the same unit is used throughout). Some lower-quality products are available at around 1950 yuan per ton. In the Shandong market, the ex-plant price for 55% powdered monoammonium nitrate is slightly higher, at around 2100 yuan per ton, while the ex-plant price for 58% powdered monoammonium nitrate in Shandong ranges from 2270 to 2300 yuan per ton. 　　The main reason for the decline in the price of monoammonium is undoubtedly weak demand. There is still room for price cuts on diammonium compounds. It is reported that distributors in the North China region had already made their purchases by this time last year, but some distributors are still waiting to see what will happen this year. Sales of compound fertilizers have not shown any improvement either; due to the unfavorable prices, many downstream distributors are unwilling to purchase them, and it is reported that purchasing volumes have decreased by at least one-third compared to previous years. The situation of compound fertilizer manufacturers is concerning: sales of the finished products are not satisfactory, transportation is also somewhat hindered, the operating rate remains low for extended periods, and the consumption of raw material inventory is slow. Recently, ammonium sulfate inventory has been the main source of raw materials used, and new purchases are also difficult to make. It is reported that in the recent period, only a few large compound fertilizer manufacturers have replenished their stock in moderate amounts, with no large quantities involved. 　　Although the overall operating rate for ammonium nitrate remains around 50%, the general trend is a slight increase compared to before. At present, the operating rate for ammonium nitrate in Hubei Province has risen to 54.77%, an increase of 6.93 percentage points from the end of last month. Although many enterprises have not yet reached full capacity, the operating rate is still at a relatively high level this year. 　　Recently, due to poor performance in new orders, some goods awaiting shipment have no destination, making shipments somewhat difficult. As a result, the inventory pressure on ammonium sulfate producers is increasing gradually. Even though the overall production capacity of these producers remains around 50%, this does not alleviate the supply pressures they face, primarily because demand is weak. Increased inventory pressure on companies directly leads to compromises in terms of prices. 　　The market for sulfur, a key raw material for ammonium production, remains sluggish. Inventory levels in ports are high and declining at a slow pace. The US dollar is strong, and international sulfur prices are also weak. Sulfur prices have dropped at one point; although there is limited room for further decline so far, the overall trend is not expected to improve in the short term. Currently, the price of granular sulfur at the Yangtze River port is around 740 yuan. This week, prices of sulfur at the Puguang plant in Wanzhou port and the Dazhou plant also saw a slight drop, to 770 yuan and 740 yuan respectively. 　　In summary, there are many factors that need to be taken into consideration regarding monoammonium phosphate, but the key factor remains demand. With weak demand, it is difficult for monoammonium phosphate to perform well; further price declines are likely. It is reported that the price level at which traders are willing to purchase stock at a discount is around 1900 yuan (the ex-factory price of 55% ammonium phosphate powder in Hubei). 　　(Zhao Hongye)