There are reasons for the rise in urea prices; the attempt to maintain high prices for monoammonium phosphate has caused concerns

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There are reasons for the rise in urea prices; manufacturers facing difficulties in maintaining prices Author/Source: China Fertilizer Network Date: 2019-09-05 Clicks: 8 In this period of weak market conditions, starting last weekend, the prices of urea in Shandong, a key production region, began to rise slightly. Some companies noted a slight increase in market demand and more orders pending fulfillment, which led to higher prices. However, most in the industry still believe that there is no substantial demand in the current market, especially in the agricultural sector. The price increase is mainly aimed at preparing for future exports. Moreover, with September arriving, there is a possibility of a decline in urea production, so companies do not face much pressure at present; therefore, it is normal for them to maintain their prices. 　　There are reasons for the increase in urea prices, but it is even more difficult to maintain stable prices for monoammonium nitrogen; industry experts say that it is also challenging to keep the prices of monoammonium nitrogen steady. At the current stage, the quotes offered by ammonium sulfate manufacturers hold little significance; transactions are usually negotiated on a case-by-case basis. Currently, the actual ex-plant price for 55% powdered ammonium sulfate in Hubei has dropped to 1900 yuan per ton (the same unit is used throughout). Larger manufacturers charge slightly more; in Sichuan, the actual ex-plant price for 55% powdered ammonium sulfate is around 1850 yuan. Prices in Yunnan are slightly lower than those in Sichuan. In Henan, the actual ex-plant price for 55% powdered ammonium sulfate is also around 1900 yuan or slightly higher. It is also reported that in the Shandong market, the price for 55% powdered ammonium sulfate at the lower end is only 2050 yuan, while the higher end is around 2100 yuan. Many traders are trying to get rid of their stock. 　　It can be seen that the price of monoammonium has declined compared to previous periods, and there is a possibility of further drops; the main factor influencing this is demand. Recently, demand for monoammonium has been very weak. Fertilizer manufacturers have seen their production rates fluctuate slightly at low levels due to environmental and safety inspections; moreover, there is no certainty regarding production rates in September, with some companies either limiting or shutting down their operations. Moreover, at present, most compound fertilizer manufacturers are in the stage of producing and shipping autumn fertilizers, so they pay little attention to ammonium sulfate as a raw material; they mainly rely on using the inventory of raw materials purchased earlier. In addition, some of the raw materials purchased previously have not yet arrived at the factories, resulting in limited stock levels. Even if there is a demand for raw materials in the future, there is no immediate intention to make large-scale purchases. Currently, orders are mostly small-scale ones aimed at replenishing stock, and it is reported that the prices offer greater discounts compared to before. 　　It is evident that Yiammonium enterprises have made certain compromises, which proves that they are indeed facing difficulties. In the first half of August, ammonium sulfate manufacturers almost exhausted the pending orders from earlier periods; new orders were few and mostly small in size. As a result, by the end of August some companies began to accumulate inventory, and by early September the inventory pressure on these companies increased gradually. Although the overall production rate of enterprises remains around 50% at present, it has increased compared to previous periods due to adjustments in each enterprise’s own production levels. Recently, only enterprises in Henan have indicated that some of their facilities might stop operating for maintenance if inventory levels become too high; no other enterprises have announced any plans to reduce their production volume. 　　In addition to supply and demand factors, raw material costs have also influenced the fate of ammonium sulfate in recent times. In the past few months, the inventory of sulfur at ports has remained around 2 million tons; in previous years, the highest levels reached only about 1.7 million tons, while this year it has exceeded 2.3 million tons. Such high inventory levels have contributed to a decline in sulfur prices. Currently, the price of granular sulfur at ports such as the Yangtze River Port is 710 yuan, while the prices at Puguang Wanzhou Port and the Dazhou manufacturing site are 730 yuan and 700 yuan respectively. The industry believes that there is still a risk of further declines in sulfur prices. 　　In summary, amid this sluggish atmosphere in the fertilizer market, monoammonium phosphate is also forced to compromise; demand from downstream users is low, putting pressure on companies, and the role of raw materials in supporting costs is diminishing. It is expected that prices of monoammonium phosphate will continue to fall. 　　(Zhao Hongye)