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Year-End Sale: Prices of Diammonium Phosphate Drop Significantly Author/Source: China Fertilizer Network Date: 2019-12-30 Clicks: 5 As New Year’s Day approaches, all industries are entering a final push phase, with everyone striving hard to get their year-end bonuses. The diammonium phosphate market seems to be experiencing a year-end sale as well; the preliminary prices received in Heilongjiang for 64% diammonium phosphate have dropped to 2420 yuan per ton. This price is already a reduction of 100 yuan compared to previous high prices. Yet this isn’t the biggest discount offered during this year-end sale – there are rumors that the settlement prices between some manufacturers and large traders have reached as low as 2380 yuan per ton. However, even with such aggressive promotions by the diammonium producers, it has not resulted in many orders for these companies, and the market remains stagnant. So why is diammonium so unpopular? Apart from the overabundance of supply and the well-known weak demand this year, what other factors are causing downstream distributors to be extremely cautious about purchasing diammonium phosphate? First of all, it doesn’t make money. In these past two years, the fertilizer market has seen great changes; operating as a fertilizer distributor can no longer rely on experience as it used to be in previous years. Last year, international market prices were high, and the large-scale exports by many manufacturers led to a shortage of diammonium phosphate in the domestic market, keeping its price at high levels. After engaging in winter storage for a year, no significant profit was achieved. This year’s market situation is the complete opposite of last year’s: international prices are low, export conditions are unfavorable for companies, and supplies of diammonium fertilizers have piled up in the domestic market. As a result, the situation of oversupply that existed in 2019 has not improved. During the autumn market period, many dealers, relying on last year’s experience and believing that prices had reached their lowest point, began to stock up on goods. However, they did not expect prices to keep falling further, and the price at which they stocked up ended up being the same as the average retail price. Even with the support of pre-payment guarantees, they still ended up suffering losses. With the autumn market approaching, downstream distributors are extremely cautious when it comes to winter stockpiling, and companies can only continue to adopt a policy of advance payments in order to secure orders. Secondly, alternative products have lower prices and higher profits. As fertilizer types that can partially substitute for each other, diammonium fertilizers and compound fertilizers are closely linked in terms of market trends. The market for winter stockpiling of compound fertilizers remains weak, with prices continuing to decline. The selling price of 45% chlorinated compound fertilizers has dropped to around 1,700 yuan. Additionally, in recent years, downstream distributors have earned much higher profits from selling compound fertilizers compared to diammonium fertilizers; as a result, they give priority to purchasing compound fertilizers when stocking up for winter, which further undermines an already sluggish market. Finally, raw material prices fluctuated at low levels. Recently, the price of sulfur has remained fluctuating around 500 yuan. Although international prices have risen recently and domestic traders’ confidence has increased, the stock levels in China’s ports still remain above 2.5 million tons; therefore, it is unlikely that sulfur prices will see a significant increase in the future. The price of liquid ammonia has also remained low; currently, the ex-plant price for liquid ammonia in Hubei is 2,450 yuan. Sulfur prices are at low levels.** Raw material prices have remained low and volatile; even slight increases in certain raw materials have had a minimal impact and are far from sufficient to support diammonium phosphate prices. In summary, there is no strong demand in the downstream market for diammonium phosphate ahead of the Spring Festival; some companies have launched year-end sales promotions to compete in the market. The overall market trend for diammonium phosphate remains weak, and downstream buyers remain cautious when making purchases. (Rong Guangwen)