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Hubei enterprises set to resume operations – will diammonium nitrogen continue to surge in price? Author/Source: China Fertilizer Network Date: 2020-02-28 Clicks: 113 The Spring Festival is over, and fertilizer manufacturers are resuming operations. According to China Fertilizer Network, the production volume of urea has reached 140,000 tons, while the production of compound fertilizers is also gradually returning to normal. As for diammonium fertilizers, the factories that were shut down in Hubei are expected to resume production in the first half of March. Enterprises in the southwest region are operating at a high level to ensure smooth progress in spring plowing. Currently, the price of 64% diammonium phosphate upon arrival in Heilongjiang is between 2400–2450 yuan per ton (the same unit is used thereafter); in the northwest region, the price is 2400 yuan per ton, while in Xinjiang it is 2650 yuan per ton. Currently, the price of diammonium is slightly higher than it was before the New Year, but some manufacturers have stopped accepting payments. Could prices surge even further in the future? Firstly, inventory levels in the downstream markets are low, and there is a certain degree of panic among rural farmers and distributors. In recent years, dealers in the winter storage market have been earning increasingly less profit. Coupled with the earlier arrival of the New Year this time, which provides more time for operations after the holiday, the overall amount of fertilizer stockpiled has decreased significantly compared to previous years. But no one expected that after the New Year, everyone would stay at home and become otakus; as a result, the fertilizer market remained largely stagnant in the early stages, and the production and transportation of diammonium phosphate in Hubei province were severely affected. This has resulted in a relatively limited supply available on the market, and rural farmers as well as distributors are beginning to worry about insufficient stock; once demand from downstream sectors increases, it could lead to a rise in the price of diammonium phosphate in certain areas. Secondly, the resumption of work upstream is imminent. One of the main reasons why the price of diammonium nitrate continues to rise is that factories in Hubei province have reduced their production significantly due to the impact of this pandemic, and shipments have been hindered, which has further intensified panic in the downstream market and driven up prices even more. However, as time goes by and to avoid delaying agricultural activities by ensuring a timely supply of fertilizers for farming, phosphate fertilizer manufacturers in Hubei Province have been included in the list of key enterprises designated for resuming production. Factories in the southwestern region are also operating at full capacity, doing their utmost to support this spring plowing campaign. Thus, once enterprises in Hubei resume normal operations, the shortage of supply in the downstream market will be alleviated. Finally, there is insufficient support from raw material prices. The spring market has already begun, but the overall production capacity of phosphate ammonium companies has been reduced due to the impact of this pandemic compared to previous years. Coupled with high inventory levels at ports, there is little incentive for an increase in sulfur prices; as a result, the price of granular sulfur at the Yangtze River port remains stable at 610 yuan. In terms of liquid ammonia, its overall price has also risen driven by the strong performance of the urea market. However, the reference price for liquid ammonia at manufacturing sites in Hubei is around 2150–2250 yuan, which is significantly lower compared to the price of around 2450 yuan before the New Year. Phosphorus ore has also benefited from policies aimed at ensuring smooth spring plowing, with overall prices remaining relatively stable. Therefore, in the short term, the impact of raw material prices on supporting the diammonium market is limited. In summary, as the spring market gradually comes online, the prices of diammonium phosphate have risen by around 50-100 yuan compared to the period before the New Year; however, with factories in Hubei region resuming operations one after another, it is unlikely that these prices will see a further significant increase. (Rong Guangwen)