Thread Content
It’s hard to see an increase in prices for autumn fertilizers, and even harder to see a decrease! Author/Source: China Fertilizer Network Date: 2019-09-10 Clicks: 1 As of now, the autumn fertilizer market seems to be quite predictable; no major fluctuations have occurred throughout its development. In the initial stage, compound fertilizer manufacturers were able to attract significant purchasing interest from end-users by offering high-quality products and temporary price incentives. However, due to cost pressures, the standard pricing levels returned after those incentives expired. Thereafter, demand from end-users declined steadily, and even though some companies adjusted their prices and policies, it seemed that these changes did not meet the expectations of end-users. Wheat fertilizers account for a large proportion in the autumn fertilizer market. According to Zhongfei Net, currently across the country, the prevailing wholesale price of 45% chlorinated high-nitrogen, high-phosphorus wheat fertilizers (such as 25-14-6/18-22-5) is around 2050–2250 yuan per ton. It is worth noting that since the end of July, there has been no significant fluctuation in the prices of wheat fertilizers, with overall stability in prices. Given the constant changes in raw material costs and supply and demand conditions, it’s difficult to predict the price of compound fertilizers – it’s hard to see price increases, and even harder to see price decreases! “\"Difficulty in raising prices\": First, the prices of raw materials and fertilizers are not high. In this autumn’s fertilizer market, a sluggish atmosphere prevails. Although urea prices have seemed to rise recently, they are still down by over 100 yuan compared to previous high levels. Weak domestic demand and no clear trends in the international market mean that significant price increases are unlikely in the short term ； Demand for phosphatic fertilizers is high in autumn, yet their prices continue to fall. Sulfur prices are also dropping, resulting in insufficient cost support for monoammonium fertilizers. Companies face increased inventory pressures, and prices are likely to keep falling ； The price of diammonium has dropped significantly compared to the same period last year; demand remains low, and prices are likely to continue to fall ； Second, demand is suppressed. Apart from the disadvantages related to raw materials, insufficient demand on its own has completely hindered the development of the autumn fertilizer market. Low prices of agricultural products and limited funds for preparing crops, coupled with floods caused by frequent rainfall this summer, have all contributed to suppressing demand at the downstream level; there is a clear lag in the market ； Third, the impact of low-priced supply sources. In an era dominated by best-selling products, traditional pricing models are no longer advantageous. Companies strive to increase sales volume by offering lower prices, which leads to a wide variation in market prices. Even when there are positive factors, it is difficult to raise prices easily. ““It’s harder to cut prices”: First, buy when prices are rising, not when they are falling. The price of compound fertilizers is more stable compared to other types of fertilizers; arbitrary price adjustments could affect the purchasing attitude of end-users. Given the current conditions in the fertilizer market, it might be reasonable to lower the price of compound fertilizers slightly. However, as autumn planting approaches its later stages, which represent a final push for planting, companies are more inclined to maintain high prices ； Second, the price tone has already been determined. In an effort to secure market share ahead of others, the pre-payment collection for compound fertilizers this autumn started a bit earlier than in previous years. Based on the current costs of compound fertilizers, most companies have set relatively low prices for wheat fertilizers; the goal behind this is to encourage downstream customers to make payments and place orders promptly. As a result, payment collection at the initial stage is satisfactory. However, if prices are reduced, it will not only affect the progress of payment collection in later stages but also make it difficult to provide a reasonable explanation to those customers who made payments earlier on ； Third, to take over the winter storage market. The intervals between fertilizer application in autumn and winter are not very large; before the effects of autumn fertilizers have fully taken effect, local winter storage activities begin to emerge. The market conditions for autumn fertilizers to some extent determine the trends in the winter storage market. If prices drop significantly at the end of the autumn fertilizer application period, it will have devastating consequences for subsequent winter storage efforts. Therefore, it is much harder to reduce prices than to increase them. In summary, the market for compound fertilizers in the later stages of the autumn fertilizer season may find itself in a difficult situation: there is no basis for price increases, and there are insufficient reasons for price cuts. If raw materials and supply-demand conditions remain relatively stable in the short term, then the autumn fertilizer market may continue as it is until the winter storage period begins. (Feng Hongyang)