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“Numerous “enterprise maintenance activities”: Is there hope for monoammonium phosphate? Author/Source: China Fertilizer Network Date: October 28, 2019 Click-through rate: 8 Recently, many monoammonium phosphate producers in Hubei Province—a major production area—have either entered or are about to enter a maintenance period. Small and medium-sized enterprises have halted production, while large-scale plants are conducting rotational maintenance. These companies plan to resume operations no later than mid-to-late November. In this light, it seems that the operating rate of monoammonium phosphate has declined. Is there hope for a recovery in the MAP market? Actually, it’s not that optimistic. First, regarding the price of monoammonium phosphate. In Hubei region, the actual ex-factory price for 55% ammonium sulfate is 1,800–1,850 yuan per ton (same unit throughout). For some shipments, a minimum price guarantee can be negotiated; this guarantee is valid at least until the end of December. At Sichuan’s major plants, the ex-factory price for 55% ammonium sulfate is 1,800 yuan. The actual ex-factory price is negotiable; minimum price guarantees can also be discussed. For Henan-based enterprises, the actual ex-factory price for 55% ammonium sulfate is also around 1,800 yuan. In the Shandong region, 55% of powdered ammonium is actually accepted and warehoused at 1,950–2,000 yuan. Reportedly, in the Northeast region, the price of 55% ammonium sulfate from large plants in Yunnan upon arrival at destinations in Jilin and Liaoning is 2,030–2,050 yuan. It can be seen that although the downward pace of monoammonium phosphate prices has slowed compared to earlier periods, the downward trend persists. Secondly, on the demand side. Recently, the market for compound fertilizers has been sluggish, and the winter stockpiling season has not yet officially begun. Only a few major compound fertilizer manufacturers have quoted prices for the Northeast market; these prices are relatively low. However, the current payment collection situation is less than satisfactory. Additionally, it is understood that some large compound fertilizer producers have offered buyout prices to regions such as Guangdong and Guangxi in the south; these prices are also quite low. For instance, the ex-factory price of 45% chlorine-based general-purpose compound fertilizer is merely 1,850 yuan per ton. Distributors describe this as the lowest price seen in the past two years; nevertheless, they have refrained from making large-scale purchases, opting instead to buy only modest quantities. It can be seen that even though the price of compound fertilizer is relatively low, the end-market’s enthusiasm for purchasing it remains relatively low for now. In the compound fertilizer industry, as heating season has gradually commenced in the north, environmental protection and safety inspections have been reinstated recently. As a result, production rates at major compound fertilizer plants in Shandong and other regions remain low; consequently, there is little interest in monoammonium phosphate, which serves as a raw material for these products ； The Southern Compound Fertilizer Plant has largely fulfilled its early autumn procurement orders. Recently, it has entered the off-season for demand, resulting in a low operating rate. It still has inventory of monoammonium phosphate purchased earlier, and most companies have no intention of placing further orders ； Although composite fertilizer plants in the Northeast region have gradually resumed operations, it is reported that they remain cautious regarding the procurement of monoammonium phosphate as a raw material, with purchase volumes remaining relatively low. Once again, the supply side. The overall operating rate of monoammonium phosphate has indeed declined somewhat due to maintenance activities at enterprises in Hubei. However, upon verification and careful analysis, it becomes evident that the drop in the operating rate of major manufacturers in Hubei is not significant, and the duration of maintenance for most companies is relatively short. For instance, last week I learned that one plant planned to undergo maintenance until around November 10; this week, however, I found out that the plant has already resumed production. Whether further maintenance will be carried out in the future remains to be determined. The author learned from some industry insiders that there might be some exaggeration in the maintenance plans of certain monoammonium phosphate producers; the actual maintenance timelines remain to be determined. Similarly, monoammonium phosphate producers still face significant inventory pressure, especially those manufacturing 55% powdered monoammonium phosphate. Industry insiders note that the overall social inventory of monoammonium phosphate remains high; therefore, a decline in production rates is unlikely to improve the overall market conditions for this product in the near term. Finally, regarding raw material costs. The overall price of liquid ammonia remains at a low level; currently, the prevailing acceptance-based ex-factory quote for liquid ammonia in Hubei is 2,750 yuan. Although the inventory of sulfur at ports has slightly decreased recently, standing at around 2.2 million tons, this level remains approximately 500,000 tons higher than the previous annual peak levels. Currently, the price of granular sulfur at ports such as the Yangtze River Port has dropped below 600 yuan. In China, the prices of sulfur at the Wanzhou Port and the Dazhou production site have also seen minor declines, reaching 620 yuan and 590 yuan respectively. It is expected that there will be no significant price increases in the near term. In summary, although the decline in the operating rates of some monoammonium phosphate producers may be beneficial for the market, factors such as the actual maintenance periods of these producers must also be taken into account. Currently, there is a relatively high overall social inventory of monoammonium phosphate, and the raw material market conditions are unfavorable. Even if the upcoming phosphorus compound fertilizer conference brings about some positive effects on demand, it will still be difficult to alleviate the pressure on monoammonium phosphate in the short term. Therefore, it is unlikely that prices of monoammonium phosphate will experience a significant rebound. (Zhao Hongye)