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Why was the situation with diammonium in 2019 like that? Author/Source: China Fertilizer Network Date: 2019-12-12 Clicks: 38 Time has flown, and 2019 is coming to an end. Looking back at the trends in the price of diammonium phosphate over the course of this year, we can see that it started high but then declined. Taking Heilongjiang as an example, last year the delivery price for 64% diammonium phosphate in that region was 3,000 yuan per ton; today, the preliminary delivery price for high-quality 64% diammonium phosphate is only 2,500 yuan per ton, representing a drop of around 500 yuan. The winter storage market is caught in a tug-of-war between diammonium phosphate producers and downstream distributors, with no end in sight to this situation. So why has the diammonium phosphate market turned out this way this year? Firstly, the overall environment in the fertilizer market is poor. This spring, although the settlement price for diammonium phosphate was high, sales volume in the Northeast region was low, resulting in a large surplus of stock. Downstream distributors earned little profit from selling diammonium phosphate, and some even incurred losses. Coupled with the frequent fluctuations in urea prices this year, the expansion of production by compound fertilizer manufacturers has been slow, and the overall environment in the fertilizer market has yet to improve. As a result, downstream distributors lack confidence in stocking up, leading to a stagnant market situation. Secondly, low raw material prices reduce cost support. Currently, the inventory of sulfur at the Port of Sulfur is above 2.6 million tons, while the highest levels recorded in previous years were only around 1.7 million tons. The inventory of granular sulfur at the Yangtze River Port has dropped to around 500 tons, yet sulfur continues to arrive at this port. Additionally, phosphate-ammonium manufacturers make their purchases on a quarterly basis, which means that sulfur prices are unlikely to rise in the short term. Lack of cost support means companies lack the confidence to maintain high prices; some factories offer low prices frequently in an effort to relieve their own pressures, resulting in chaotic market pricing. Finally, exports are weak. The biggest difference in the diammonium market this year compared to last year is the weak export performance. Last year, international prices of diammonium phosphate remained high, with strong demand in countries such as India and Pakistan. The offshore price of 64% diammonium phosphate even exceeded $400; some companies in Hubei province opted to target the international market rather than the lower-priced domestic autumn market, which resulted in relatively low inventory levels at the start of last winter’s stockpiling period. This situation created the conditions for higher inventory levels during that subsequent stockpiling phase. However, the international market for diammonium phosphate has been in a poor state this year, with prices continuing to fall. Currently, the offshore price of 64% diammonium phosphate in China is as low as $295–300 per ton. According to customs data, from January to October, China exported 5.3419 million tons of diammonium phosphate, which is nearly 900,000 tons less than the 6.21 million tons exported during the same period last year. Such low prices discourage most domestic companies from exporting, with only a few large manufacturers managing to sell some of their products. Most factories have begun to focus on the domestic market, resulting in increased supply pressure. Coupled with the high levels of inventory in society this year, prices for winter storage are naturally low. Downstream distributors are reluctant to make purchases in order to avoid risks, which has led to the current stalemate in the market. In summary, the price of diammonium phosphate for winter storage this year has dropped by around 500 yuan compared to the same period last year. A cautious attitude prevails in the downstream market, with most distributors hesitant to purchase goods rashly. The overall environment in the fertilizer market is poor: there is a continuous surplus in supply, raw material prices remain low, and demand from international markets is weak. Numerous negative factors have contributed to the dismal situation in the diammonium phosphate market in 2019, prompting downstream distributors to adopt guaranteed-price policies in order to alleviate their operational pressures. (Rong Guangwen)