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The end of autumn: Can there be a turnaround for winter storage of diammonium phosphate? Author/Source: China Fertilizer Network Date: October 25, 2019 Page views: 7 As the weather gets colder, winter wheat planting across various regions is coming to an end, and the autumn market has also drawn to a close. Although the autumn fertilizer market is the main battleground for phosphate fertilizers, DAP still failed to reverse its poor performance this year. After suffering setbacks in the autumn market, can DAP reverse its fortunes in the winter storage market? Currently, the ex-port quote for 64% DAP at the Huludao Port is 2,450 yuan per ton (the same unit applies hereafter). The advance price for delivery to Heilongjiang is 2,500–2,650 yuan per ton. For 57% DAP, the ex-port quote at Huludao Port is around 2,100 yuan per ton. Market quotes are rather chaotic, with frequent occurrences of low prices. First, autumn ended on a low note. In the autumn market, prices of DAP have remained low. Currently, in the North China region, the prevailing retail price for 64% DAP is 2,600–2,700 yuan, while that for 57% DAP is around 2,300 yuan. Given that the price of DAP has been declining throughout this year, the autumn market got off to a slow start. To boost sales, DAP producers have largely adopted policies involving advance payments with minimum price guarantees. Currently, the prevailing delivered prices for 64% DAP range from 2,430 to 2,500 yuan, while the delivered price for 57% DAP stands at 2,050 yuan. The relatively low autumn settlement prices, coupled with the lack of any improvement in market conditions, have also led to a slow start for the winter stockpiling market. Some major traders reported that there were hardly any inquiries from downstream distributors. Secondly, supply remains unchanged while demand is relatively low. Unlike other fertilizer producers whose output declined during the holiday period, the overall operating rate of DAP producers has remained largely unchanged since the previous output cut. In some smaller plants, the operating rate even increased slightly. Only a few large plants in the Southwest region underwent temporary maintenance. Overall, the operating rate remains at a high level. Compared to the high level of construction activity, the weak demand is even more frustrating. Currently, we are in the phase where the autumn market is winding down and the winter stockpiling market is just getting underway. Some factories have already stopped producing autumn fertilizers, but the launch of the winter stockpiling market has been relatively slow. Due to the relatively low profits generated from winter stockpiling last year, some major traders reported that there were hardly any inquiries from downstream distributors. Currently, DAP producers are quoting prices chaotically in a bid to secure winter storage orders. For 64% DAP, the advance price upon arrival in Heilongjiang ranges from 2,500 to 2,650 yuan; for 57% DAP, the ex-port price is around 2,100 yuan. This has made downstream distributors, who prefer to buy when prices are rising rather than falling, even more hesitant. Finally, there’s no way to go abroad. Currently, the FOB price of 64% DAP in China is merely $310. This price has fallen below the cost threshold for some companies; most business owners are simply fulfilling prior orders, with only a few enterprises willing to accept new export orders. However, as mentioned earlier, the overall production activity of DAP remains stable. So, where have all these unsold goods gone? The answer is that they were all shipped to the domestic market. The autumn market was the first to be affected, and the price of DAP plummeted far below expectations. At present, the unfavorable environment for exports remains unchanged, and the winter stockpiling market is also expected to be impacted. Additionally, some distributors still have leftover inventory from last year; therefore, initiating winter stockpiling will pose more difficulties than in previous years. The late-autumn winter stockpiling season is approaching. However, with no positive news to support it, DAP prices lack momentum, and downstream buyers show little interest in purchasing. Most enterprises adopt the strategy of prepaying at provisional prices, but the collection results are poor. Currently, quotations in the winter storage market are chaotic. (Rong Guangwen)