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2020 Forecast: Raw material trends will dominate the market, yet this compound fertilizer is set to gain popularity! Author/Source: China Fertilizer Network Date: 2020-01-07 Clicks: 4 2019 has passed in the blink of an eye; the domestic fertilizer market remains sluggish, with small and medium-sized manufacturers across the country feeling pessimistic. The prospects for the future also seem to indicate risks. During the winter of 2019, the compound fertilizer market was generally sluggish. Considering the painful experiences from previous winters’ stockpiling efforts, most dealers were cautious; they tended to avoid accumulating large quantities of compound fertilizers and preferred to wait and see what would happen. Even favorable policies aimed at encouraging winter stockpiling failed to significantly boost dealers’ confidence. It is expected that the price trend of compound fertilizers in 2020 will still be determined by the conditions in the raw material market; the more optimistic outlook is that the market share of functional compound fertilizers will gradually increase. Market demand is expected to grow. The reshuffling of the industry is accelerating. In recent years, the strong push for the development of green agriculture and the emphasis on increasing efficiency while reducing consumption have led to certain misunderstandings regarding the use of chemical fertilizers. In response to this, Bai Youlu, president of the Chinese Society for Plant Nutrition and Fertilizers, said, \"Although the improper use of chemical fertilizers has caused many problems in our soil environment, they still play a very important role in the development of agriculture. We advocate for the rational use of chemical fertilizers, especially those that combine organic and inorganic components.\" ”Li Yuxiao, head of the Marketing Center at Sinochem Green Agriculture Co., Ltd., also said, “In China, the average amount of chemical fertilizer used per mu of cropland is around 21.9 kilograms, which is significantly higher than the global average of 8 kilograms per mu.” In developed countries, the utilization rate of fertilizers is generally between 55% and 60%, while in China, the rate of compound fertilization is only 38.8%. In the future, the use of chemical fertilizers in China is expected to decline, as reflected in a reduction in the amount of pure fertilizers used per mu. However, there is still room for an increase in the amount of compound fertilizers used per mu, and farmers’ demand for compound fertilizers is likely to continue growing. ” At present, in China’s compound fertilizer industry, as production volumes continue to rise, companies are experiencing a decline in revenue and profits. Costs remain high, while profitability stays low; the proportion of losses within this industry is also increasing, making it a challenging task to reduce overcapacity. “As the process of transformation and upgrading progresses, the pace of restructuring in the compound fertilizer industry will continue to accelerate. Faced with unprecedented challenges, the industry will gradually move onto a healthier path. ”Li Yuxiao believes that in the future, the fertilizer market will be driven by the needs of modern agriculture and agricultural productivity. The focus will shift from simply improving nutrient utilization to enhancing the efficiency of fertilizer application, improving soil quality, and boosting crop quality in a targeted manner. In the future, the compound fertilizer market will develop primarily in five directions: slow-release and controlled-release fertilizers, water-soluble fertilizers, organic-inorganic fertilizers, fertilizers containing medium and trace elements, and functional value-added fertilizers. There are many factors that influence price fluctuations. It is important to pay close attention to the trends in raw material prices. With the new year underway, predicting future market conditions is a challenging task for every person working in the agricultural supplies industry. Sun Zhenxing, manager of Dunbin Agricultural Supplies Store in Fengxian County, Xuzhou City, Jiangsu Province, said that there are many factors that affect the price fluctuations of compound fertilizers. Factors such as raw material prices, international situations, safety and environmental protection policies, as well as end-demand all have a direct impact on the prices of compound fertilizers ； Agricultural product prices, climate factors, planting structure, price indices, and labor costs are also indirect factors affecting the price of compound fertilizers. According to Sun Zhenxing’s predictions, in the first quarter of 2020, the fertilizer market remained largely stagnant around the Spring Festival. Around March, as the domestic spring plowing season got under way, raw material prices might experience fluctuations, and the market for compound fertilizers would be unlikely to remain stable. In the second and third quarters, there is a possibility of significant fluctuations in raw material prices. Following past trends, raw material prices tend to decline around the middle of the year, prompting manufacturers to make policy adjustments midway through the year. The period from late July to early August is a critical time for preparing fertilizers for the autumn season; during this time, the prices of nitrogen, phosphorus, and potassium may rise, and the prices of compound fertilizers will generally be higher than the average prices in the spring market, remaining at high levels ； In the fourth quarter, raw material prices may see a slight decline, while compound fertilizers will continue to trade in a range-bound manner. In addition to changes in raw material prices, the impact of safety and environmental policies on production rates, as well as the influence of international situations on fertilizer imports and exports, are also factors that cannot be ignored. Overall, in the face of the volatile market conditions in 2020, businesses of all sizes – large, medium, and small – will face even greater challenges. Manufacturers should enhance their companies’ resilience to pressure and risks, in order to meet **all relevant policy requirements ； Technological upgrades to control production costs, enhance production efficiency, improve supply capacity, and ensure adequate stock of raw materials at various stages ； Emphasize transformation and upgrading to improve the adaptability of compound fertilizer products, paying attention to both field crop areas while strengthening support for cash crop areas. Circulation enterprises must maintain close relationships with manufacturers while also ensuring strong ties with downstream customers. Regarding upstream partners, they should make full use of the manufacturers’ preferential policies to secure competitive pricing for their goods. For downstream customers, they must provide comprehensive supporting services to stabilize their sales channels.