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No major breakthroughs in the short term; should we place hopes on it in the future? Author/Source: China Fertilizer Network Date: 2019-09-25 Clicks: 12 Recently, urea prices have been volatile, with continuous changes in a bearish market trend. Meanwhile, ammonium nitrate, which had been relatively quiet for several months, has seen no significant movements as of late September. The ammonium nitrate market is currently in a sluggish state; although there are some new orders, they are mostly small-scale or low-priced orders. Currently, quotes from various companies are of little significance; the final price is usually determined through negotiation based on factors such as delivery distance. Currently, the actual ex-factory price for 55% powdered ammonium sulfate in Hubei is around 1,850 yuan per ton (the same unit is used throughout). The actual ex-factory price for 58% powdered ammonium sulfate is around 2,020 yuan. In the Yunnan, Guizhou, and Sichuan regions, the actual ex-warehouse price for 55% powdered ammonium sulfate is below 1,800 yuan, while Henan-based companies sell 55% powdered ammonium sulfate at prices between 1,800 and 1,850 yuan per ton. Recently, it was also reported that the delivery price for 55% ammonium sulfate in the hands of traders in Liaoning is only 2,050 yuan; the factory price is roughly around 1,750 yuan, less than 1,800 yuan. The emergence of such low prices indicates that the market for ammonium sulfate is indeed weak, and it also reflects to some extent the significant pressures faced by companies in this industry. At present, there are companies willing to offer guaranteed prices. Industry experts generally believe that ammonium nitrate is unlikely to see any improvement in the short term. It is reported that the low-end cost of 55% powdered ammonium nitrate is around 1,700 yuan, while the high-end cost is only between 1,850 and 1,900 yuan. This shows that the profits of companies dealing in ammonium nitrate are very limited; some of these companies are even selling it at prices below their costs. So, does Yian expect a positive atmosphere to emerge around the phosphorus compound fertilizer conference in the coming period? The author believes it is not necessarily the case. The fertilizer market has been relatively quiet this autumn, and it is now coming to an end. Recently, I heard that some large manufacturers are offering lower prices for compound fertilizers in the Northeast region. It seems that the situation is fairly good at present; however, in such a sluggish fertilizer market, only low prices can possibly attract the attention of some distributors and farmers. According to feedback from distributors across various regions, the overall demand for compound fertilizers in the first three quarters of this year has indeed decreased compared to previous years, and it is likely that demand for compound fertilizers will remain low in the fourth quarter as well. The decline in downstream demand directly affects the sales performance of compound fertilizer manufacturers, who are under considerable pressure. Coupled with the ongoing safety and environmental inspections, the overall operating rate of compound fertilizer production has remained low this year, resulting in lower demand for raw materials. The consumption of ammonium nitrate, a key raw material, was slow in the third quarter. Although some companies have limited stock of such raw materials, they remain cautious about future purchases. At present, companies are acquiring ammonium nitrate only in amounts needed, and only a few believe that its price is already at a low level, so they have stocked up on it at these low prices. With weak demand, the operating rate of ammonium sulfate plants remains low, but it has increased compared to the previous months. Currently, only a few companies have suspended production due to poor sales, indicating that conditions regarding plant operations are unfavorable. The key point is that there has been a severe backlog of ammonium nitrate inventory in recent times; although some companies are under considerable pressure, their higher management has not yet ordered them to stop production, which to some extent has forced these companies to compromise and sell their inventory at low prices. Due to the Saudi crude oil incident, sulfur prices at ports rose by 30 yuan, but this improvement was short-lived; weak demand from downstream industries caused prices to start falling again. Currently, the price of granular sulfur at the Yangtze River port is 655 yuan, while the prices at the Puguang Wanzhou port and the Dazhou facility have dropped to 640 yuan and 610 yuan respectively. Given the high inventory levels of around 2.4 million tons, it is unlikely that raw sulfur prices will see a significant increase in the short term. It is also reported that there is a risk of a slight decline in the price of phosphate rock. It is evident that the role of raw materials in supporting costs is also precarious. In summary, negative factors hold the upper hand. Perhaps some large compound fertilizer manufacturers will take action before and after the phosphorus-based compound fertilizer conference to purchase some ammonium phosphate, which could lead to an improvement in demand. However, given the current high inventory levels and corresponding pressure, it is unlikely that prices will see a significant rise. (Zhao Hongye)