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Urea Price Exceeds 1600 Again; Much to Be Expected in Winter Stockpiling Ahead Author/Source: China Fertilizer Network Date: 10-12-2019 Clicks: 7 After the National Day holiday, the market for autumn fertilizers officially entered the sales phase. The sales volume of compound fertilizer companies began to decline. Some of these companies had already announced their winter stockpiling prices before the holiday; although these prices were much lower than those in previous years, the market response was not favorable, and sales performance was average. Why is this happening? The main reason why the low prices for winter storage of compound fertilizers in October were not accepted by the market was the continuous decline in the prices of nitrogen, phosphorus, and potassium-based fertilizers. During the National Day holiday, the standard Out of factory prices for small-grain urea in Shandong dropped by 20–50 yuan per ton, reaching around 1,780 yuan per ton. After the holiday, there was only a slight increase in prices, after which urea prices once again entered a stable phase. However, recently, the prices for large-scale purchases of urea in Inner Mongolia have dropped to 1,520–1,530 yuan per ton, while the standard selling prices for urea in Shandong have also fallen to around 1,700–1,740 yuan per ton. Thus, the ongoing decline in urea prices has further undermined downstream producers’ confidence in stocking up fertilizers for winter use. Meanwhile, the prices of monoammonium and diammonium fertilizers also declined to varying degrees after the holiday. The ex-plant price of 55% ammonium phosphate in Hubei province has dropped to 1,850 yuan per ton, while the delivery price of 64% diammonium phosphate in the Northeast region has fallen to around 2,520 yuan per ton. Even before these products reach the market for sale, dealers who had stocked them up in advance are already suffering losses; as a result, no matter how attractive the winter storage offers put forward by compound fertilizer manufacturers may be, the downstream industry remains uninterested. Furthermore, the concept of winter stockpiling is fading year by year, especially at the local level in the northeastern region. It is currently October, and there is still half a year left until the need for fertilizers arises next April. Moreover, the Spring Festival falls in January, leaving ample time to prepare fertilizers after that festival; as a result, the necessity of stocking up on fertilizers in advance has diminished once again. The psychological impact of \"price increases during the off-season and price drops during the peak season,\" which has persisted over the years, also continues to influence people’s decisions. There is another important factor: the gradual decrease in the amount of subsidies for grain production. In mid-September, the standard subsidies for grain production in Heilongjiang Province for 2019 were announced – 30 yuan per mu for corn producers, 255 yuan per mu for soybean producers, and 133 yuan per mu for rice producers using surface water, and 93 yuan per mu for those using groundwater. These amounts represent a significant drop compared to last year. On the one hand, low grain prices restrict producers’ ability to invest in production; on the other hand, reduced subsidies along with frequent disasters have led to a decline in the enthusiasm of farmers for planting. As a result, fertilizer usage in the Northeast region this year will be lower than last year. Overall, various factors suggest that the winter storage market for fertilizers in the Northeast region will be quite challenging. Given the large inventory of diammonium phosphate and low prices, could there also be opportunities in the future for compound fertilizers and blended fertilizers? Let’s wait and see. (Yang Xiaomei)