What is the Northeast waiting for in terms of winter storage?

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What is the Northeast waiting for in terms of winter storage? Author/Source: China Fertilizer Network Date: 2019-11-20 Clicks: 28 Recent heavy snowfalls have hit the Northeast region, and this sudden snowfall has truly brought winter to the area. As the phosphorus compound fertilizer conference came to an end, most market reports had predicted that winter storage activities in various regions would accelerate following the conference and enter a more organized phase. From the perspective of market sentiment, the phosphate fertilizer conference does play a certain role in boosting market activity. As an important milestone in the winter storage market each year, the end of this conference usually signals the actual start of the winter storage period. At the beginning of the week, the compound fertilizer market across various regions was in a state of recovery; however, no significant improvement was observed after the meeting. In some areas, the outlook for the future market remained poor, with pessimistic views prevailing. Taking the Northeast region as an example, the atmosphere of winter stockpiling is as lifeless as the weather. The start of winter storage in the Northeast came earlier than in previous years, yet progress has lagged far behind usual levels. Both companies and distributors are adopting a wait-and-see attitude. With no clear direction outlined at the phosphate fertilizer conference, what exactly is the Northeast waiting for in terms of winter storage? First, wait for the price. At the beginning of the winter storage market, only a few compound fertilizer manufacturers in the Northeast region introduced buyout prices for a short period of time; after that temporary phase of advance payments ended, no clear pricing was offered. The prevailing approach was based on interest calculation, with very few cases of fixed minimum prices. The advance pricing cannot be determined for the time being. One reason for this is the high cost pressures faced by enterprises. As is well known, since the second half of this year, fertilizer prices have shown a general downward trend, and to date, the drop in prices for certain types of fertilizers has been far greater than expected; as a result, the cost basis for compound fertilizers has also **decreased** ； The second reason is the frequent emergence of highly popular products at low prices; if companies set prices too high, it affects their market share, while if they set prices too low, their profit margins shrink. Considering all these factors, they have to be cautious when setting prices. Secondly, wait for the policy. With uncertain winter storage prices and a lack of confidence among downstream parties to make payments, some companies have introduced conventional prepayment policies such as interest calculation in an effort to motivate them, but the downstream parties are not receptive to these measures. As the saying goes, \"the cost falls on those who produce the goods\"; interest-based pricing is ultimately just a temporary solution. Companies cannot set advance payment prices nor provide any guarantee policies, and downstream parties receive almost no form of protection, which naturally leads to low acceptance of such approaches. In recent years, the fertilizer market has been highly volatile. Downstream distributors not only fail to make a profit from winter stockpiling but often even incur losses. The awareness of carrying out winter stockpiles is decreasing, and in some areas, distributors have altogether given up on this practice, opting instead to purchase fertilizers as needed during the sales season – which can also be a good way to avoid risks. Finally, wait for the request. Excessively high or low winter storage prices are not the only factors hindering the development of the winter storage market; weak demand from downstream sectors is likely the underlying problem. Lack of demand has not only existed during the winter storage period; it has also appeared in various seasons earlier on. At present, there is still a long way to go before the fertilizer sales start again in the spring of next year in the Northeast region; demand from downstream users is at a \"dormant\" level, and making preparations too early means taking on greater risks ； Furthermore, the region of Northeast China has a large area dedicated to single-season crops; at present, the autumn harvests in most of these areas have not yet been sold, making it difficult for distributors to recover their funds. As a result, payment plans have had to be put on hold, which also contributes to a reduction in demand. In summary, it is believed that following the phosphorus compound fertilizer conference, most market participants are waiting to see how the market for compound fertilizers will develop. Considering the current situation in both upstream and downstream sectors, rather than hoping for an increase in the prices of compound fertilizers, they are actually hoping for stable price levels. What the winter storage market in the Northeast region is waiting for is not a rise in prices, but rather price stability.