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What’s going on? Compound fertilizers are being sold at rock-bottom prices! Author/Source: China Fertilizer Network Date: 2019-08-28 Clicks: 1 At present, the autumn fertilizer market seems to be past its midpoint, but in reality it is nearing its end; the peak purchasing season that people were expecting has yet to arrive, and instead, the market shows clear signs of weakness. Following the completion of the first round of payments for autumn compound fertilizers, both companies and distributors are adopting a cautious approach, with many expecting a weak market outlook; as a result, there is very little new business. While some companies are managing to sell their products fairly well, the majority are still dealing with orders from earlier periods. Compared to the same period last year, the prices of compound fertilizers have seen a certain decline. According to Zhongfei Net, the current average ex-plant prices for 45% chloro/sulfur-based general-purpose compound fertilizers are around 1,950 yuan per ton and 2,250 yuan per ton, with some transactions taking place at prices even lower than these levels. It is worth noting that during the initial stage of the autumn fertilizer sales period, the low-priced products offered by some companies did have an impact on the market, and the prices after these adjustments did not rise significantly; in other words, autumn compound fertilizers have been available at very low prices. Firstly, raw material costs are low. As of this weekend, the costs of pure raw materials for the 45% chloro/sulfur-based general-purpose series across the country were around 1,725 yuan per ton and 2,045 yuan per ton respectively. Since the market began, the costs of these raw materials have been declining, and there is no sign of improvement in this trend going forward. Urea is trading in a weak range; expectations of declining industrial demand in China in the future, along with uncertain trends in the international market, are preventing urea prices from rising ； The monoammonium market is moving forward with difficulty; during the autumn period, companies were unable to drive up prices. Factors such as insufficient demand and falling raw material costs posed many negative influences ； Port inventories of potassium chloride have reached record levels; with an oversupply and no finalized large-scale import contracts, prices can only remain low. Secondly, demand shows no sign of improvement. In addition to raw material costs determining the price of compound fertilizers, demand from end-users also influences price trends. Regarding the demand for fertilizers in autumn, there was indeed a positive start at the beginning, but then the market became quiet. Distributors who had placed orders in advance wanted to place further orders once the goods arrived, but farmers remained hesitant. One reason for this is a lack of funds; in recent years, credit sales have been decreasing, and payment in cash upon delivery has become more common. However, farmers’ agricultural incomes are limited, not enough to cover such expenses entirely ； The second reason is abnormal climate conditions, with an increase in droughts and floods, which significantly dampen the enthusiasm of local communities for preparing for farming. Finally, there is an increase in alternative products. With an overcapacity in the production of traditional compound fertilizers and a chaotic market situation, more and more companies and distributors are seeking alternative approaches. As a result, more competitive alternatives to compound fertilizers have emerged, such as water-soluble fertilizers, which not only offer better cost-performance ratios but also have a wider range of applications. In order to gain a foothold in the market, traditional compound fertilizer manufacturers are forced to engage in price wars, using lower prices to increase sales volume ； Furthermore, to cater to the farmers’ desire to prepare fertilizers in advance, low-priced fake products are widespread in the local markets. Since their prices are lower than those of traditional, legitimate brands, farmers tend to prefer these fake products, which puts increasing price pressure on traditional compound fertilizers. In summary, under the continuous influence of raw material costs, downstream demand, and market competition, compound fertilizers are being sold at very low prices. As the autumn fertilizer market enters its second half, companies tend to maintain high prices; however, the increase in demand during the period of concentrated stockpiling in the future can be considered the most important positive factor for the market ahead. (Feng Hongyang)