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A gentle continuation – can urea bring a glimmer of hope? Author/Source: China Fertilizer Network Date: 2019-09-16 Clicks: 6 The market for compound fertilizers has been sluggish recently. Although it is currently the peak season for autumn fertilizer sales in regions such as the Central Plains, the volume of compound fertilizer sales is not as high as in previous years, and it continues to decline year by year. At present, some compound fertilizer manufacturers still have orders pending shipment, and they do not pay much attention to raw materials such as nitrogen, phosphorus, and potassium. The overall operating rate of compound fertilizer plants remains low. Although it has seen a slight uptick in recent weeks, this is mainly because manufacturers are rushing to increase production in anticipation of potential shutdowns or production cuts later on. In the southern regions, plants are operating below capacity due to weak demand; those in the northern regions are faring slightly better than their southern counterparts. As the National Day holiday approaches, the overall operating rate of compound fertilizer plants in Shandong, Henan, and Hebei is expected to be somewhat affected. As can be seen from the above, the situation for compound fertilizers is not good; there is caution in purchasing raw materials, and a cautious attitude prevails. The specific situation is as follows: Urea – Since last week, the price of urea has risen due to the release of pricing guidelines and large-scale purchases by domestic traders. Currently, the price of urea remains stable in major production areas such as Shandong and the Two Rivers region. Some urea manufacturers still have enough stock to last for a while; at the beginning of the week, there was even a shortage of available urea in the market. At present, the price of urea for use in compound fertilizers in Linyi, Shandong, is between 1,890 and 1,900 yuan per ton. Some compound fertilizer manufacturers intend to purchase a few thousand tons of urea, but given the chaotic market conditions and the difficulty in finding urea at reasonable prices, they are cautious and prefer to wait before making any decisions. They believe that this increase in urea prices is more likely to be driven by speculation, as agricultural demand is weak and industrial demand shows no signs of improvement. With the National Day approaching, the actual demand for urea remains uncertain, so purchases are being made cautiously, in moderate amounts. Ammonium nitrate: The market for ammonium nitrate is sluggish, with increasing inventory pressure on companies. Some of the stock awaiting shipment has no clear destination yet, and prices continue to fall. Currently, in Hubei, small manufacturers sell 55% powdered ammonium nitrate at prices as low as 1850–1860 yuan per ton, while larger manufacturers offer it at around 1900 yuan. Large manufacturers sell 58% powdered ammonium nitrate at 2020 yuan per ton, while in Shandong the price is 2200 yuan per ton upon delivery. Recently, it was reported that there are supplies available at ports in Shandong at 2160 yuan per ton. Traders who currently have stock are also selling it at low prices. Fertilizer manufacturers had large reserves of ammonium nitrate stored earlier on, and they are primarily using up those stocks. Some companies have not yet received all the ammonium nitrate they ordered previously, and due to lack of confidence in this product, they have few new purchase plans; orders are mainly small-scale, so there is little hope of improvement in the short term. Potash fertilizers: The price of imported potassium chloride is low, with large inventory in ports. Currently, the price of 62% pure potassium chloride at ports is around 2300 yuan, while actual transaction prices range from 2250 to 2280 yuan. The price at Bayuquan Port is slightly higher due to factors such as lack of shipments through border trade. The arrival price of 60% crystalline potassium chloride from domestic salt lakes fails to stay above 2150 yuan, with overall arrival prices ranging from 2100 to 2150 yuan. The market for potassium sulfate is average, neither strong nor weak. Fertilizer manufacturers pay relatively less attention to potassium fertilizers compared to urea; demand for them is modest. There are still inventory levels from previous purchases, and companies purchase based on their needs or in accordance with existing contracts, with little interest in making large-scale purchases. In summary, recently there has been only a slight improvement in the urea market situation, but it remains to be seen whether this can reverse the downward trend in the fertilizer market. Compound fertilizers are currently in the production and shipment phase, and due to the impact of the National Day holiday, there will likely be little activity in purchasing raw materials in the short term. (Zhao Hongye)