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Who’s to Blame for the Poor Winter Stockpiling of Diammonium Phosphate? Author/Source: China Fertilizer Network Date: November 18, 2019 Clicks: 29 The phosphorus compound fertilizer conference was held in Qingdao, Shandong, and the event was bustling with activity. However, the market situation for diammonium phosphate was quite different; at present, the amount of this product being purchased in regions such as the Northeast and Northwest is relatively low. Although some companies have shipped their goods from various ports, these goods often lack a clear owner. The reference price for picking up 64% diammonium phosphate at the port in Bayuquan is 2350 yuan per ton. In Heilongjiang, the pre-payment price for 64% diammonium phosphate upon arrival is between 2450 and 2480 yuan per ton, while in Xinjiang it’s between 2600 and 2650 yuan per ton. These prices are more than 400 yuan higher than those in the same period last year, and there are also policies such as price guarantees and interest calculations. Yet, the downstream market remains cautious. As of now, even the purchasing volume by fertilizer manufacturers in regions like the Northeast is minimal. This year, the winter stockpiling of diammonium phosphate is once again facing difficulties. The main reasons for the poor market conditions for diammonium phosphate this year are as follows: Firstly, the overall weak economic environment has contributed to the decline in both the quantity and price of diammonium phosphate. After the market sales concluded this autumn, prices of various major types of fertilizers dropped across the board. First, environmental protection warnings in key regions such as Shandong and the Two Rivers areas forced downstream chemical manufacturers to reduce production, yet even these measures were not enough to prevent price declines. The initial pricing for winter stockpiling by compound fertilizer manufacturers also continued to reach new lows compared to last year. In the potassium fertilizer market, each manufacturer set its own prices for sales; however, port inventories of potassium chloride, amounting to millions of tons, put significant pressure on industry players. Even though diammonium phosphate manufacturers reduced production, the output resulting from these cuts still exceeded China’s current apparent consumption levels, giving the downstream market a relative advantage. Under such supply pressures, it is inevitable that the prices of diammonium phosphate will continue to decline. Secondly, the accumulation of raw material sulfur reduces cost support. In previous years, during the phosphorus compound fertilizer conferences, the price of sulfur remained stable or at least did not rise. However, this year the overall trend in the sulfur market is slightly different from previous years; currently, the stock levels in ports exceed one million tons, and prices remain low. The price of sulfur at ports such as the Yangtze River Port has dropped to 525 yuan, a decrease of 45 yuan compared to last week. At the Puguang Wanzhou Port and the Dazhou plant, the prices of sulfur have fallen by 50 yuan each this week, to 560 yuan and 510 yuan respectively. As the price of sulfur, the raw material, continues to decline, the cost support for production weakens, leading to a downward trend in prices. Once again, the decline in export prices has left some companies feeling frustrated. This year, the market for international diammonium phosphate has been relatively sluggish; overall prices have continued to decline since the end of the spring fertilization period. Currently, the offshore reference price for 64% diammonium phosphate in China has dropped to $302–304. At the current exchange rate, even without taking into account the profits of intermediaries, the ex-factory price for some manufacturers is already below 2,000 yuan. At this stage, companies that decide to export will incur losses, while if they do not export, domestic demand has not yet been satisfied and inventory levels remain high. Thus, exporting becomes a less attractive option for these companies. Finally, the poor performance of winter storage for diammonium fertilizers over the years has led to caution on the part of downstream users. In recent years, the start of the peak season for winter storage of diammonium phosphate has been gradually delayed. Coupled with the upcoming plan for no increase in fertilizer usage in 2020, and given that the supply of diammonium phosphate remains relatively stable, downstream manufacturers are not in a hurry to purchase it. As a result, even though shipments have begun, there isn’t actually much available supply. In summary, although diammonium compounds hold a certain share in the winter storage market, based on the current market situation, overall prices are not expected to rise after the phosphorus compound fertilizer conference; in fact, there is even a risk of further declines. Therefore, before making procurement plans in the downstream market, it is necessary to consider various policies aimed at ensuring minimum prices.