The three main raw materials for fertilizers are nothing but mud – should we collect it or trample on it?

Thread Content

The three main raw materials for fertilizers are nothing but mud – should we collect it or trample on it? Author/Source: China Fertilizer Network Date: 2019-08-26 Clicks: 86 At present, the three main raw materials used in fertilizer production are in poor condition, and the market situation for compound fertilizers in autumn is also not optimistic. It seems that the demand for fertilizers this autumn has yet to reach its peak before it comes to an end. Currently, it is the period when autumn fertilizers are produced and shipped; however, due to environmental and safety inspections, the operating rates of compound fertilizer manufacturers remain low, at less than 50% on average. As a result, the rate at which raw materials are consumed is also slow. Additionally, the revenue generated by these manufacturers from selling autumn fertilizers this year has not been satisfactory. Therefore, it is unlikely that these companies will include new plans for purchasing raw materials in their short-term agendas. So what kind of mud is it? The specific situation is as follows: Recently, urea prices have been on a downward trend. Domestic market demand is weak, with only occasional demand from the agricultural sector. After completing their export orders, companies are having difficulty securing new orders. Although the amount of urea awaiting shipment has increased compared to before, high prices are not well accepted by downstream buyers. At present, compound fertilizer manufacturers in Linyi, Shandong, are purchasing urea at a price of 1790–1800 yuan per ton (the same unit applies hereafter). Although compound fertilizer manufacturers do not stock up on large quantities of urea as raw material, they remain cautious in their purchases of urea, which is in a downward trend; they purchase only what they need and do not keep large reserves. In some areas, the urea that companies stocked up on earlier has not yet been used up, and there are no new purchase plans for the time being. 　　The situation with urea is not favorable, and this has also affected the overall atmosphere in the fertilizer market to some extent. The price of diammonium fertilizers is gradually falling, sales of compound fertilizers are sluggish, and the market for monammonium fertilizers is also declining. Monammonium fertilizer manufacturers are facing difficulties in securing new orders at present; some of the products awaiting shipment have no clear destination yet, resulting in increasing inventory pressures. It is possible that prices could drop below market levels. Currently, the actual ex-factory price of 55% powdered ammonium fertilizer produced by large factories in Hubei is around 1970–1980 yuan, while some smaller factories are offering prices that are close to 1900 yuan. In Sichuan, the actual ex-factory price of 55% powdered ammonium fertilizer is below 1900 yuan, and in Yunnan, it is 1850 yuan or even lower. It is clear that monammonium fertilizer manufacturers are under increasing pressure. Fertilizer manufacturers also lack confidence in monoammonium phosphate; it is reported that they are currently using up their existing inventory, with very limited new purchases being made, and the prices are likely to remain low. There is no expectation of any significant improvement in new purchases in the short term. 　　The price of potassium fertilizer has not changed much compared to urea and monoammonium compounds, though there are slight variations. Recently, salt lake producers have required that the delivery price of 60% crystalline potassium chloride to their agents be no less than 2150 yuan; otherwise, shipments will be halted. This represents a certain degree of price maintenance, but many in the industry believe that 2150 yuan may not be sustainable, and confidence in potassium fertilizer remains low. At present, compound fertilizer manufacturers have little demand for potassium chloride and are not in a hurry to make purchases, with some large companies focusing on fulfilling existing orders. There has been little change in the price of potassium sulfate; compound fertilizer manufacturers mainly purchase what they need locally. Some companies still have stock from previous purchases that hasn’t been used up, so there isn’t much new purchasing activity at the moment. 　　In summary, the prices of the three main raw materials are weak; compound fertilizer manufacturers pay little attention to purchasing new raw materials, relying instead on their existing stockpiles. Moreover, in some regions during September, companies were concerned about having to suspend or reduce production, so they were not eager to carry out any new purchases of raw materials. (Zhao Hongye)