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Urea and monoammonium fertilizers are widespread; are compound fertilizers seeing price increases of over 100%? Author/Source: China Fertilizer Network Date: 2020-03-02 Clicks: 8 At the beginning of March, the spring fertilizer market officially started operating. As time goes by, the spring plowing season is approaching, and fertilizer preparation activities downstream have also begun one after another. Given the special circumstances this spring, the fertilizer market is facing significant challenges, particularly in the case of compound fertilizers, which still show a certain degree of lag compared to the same period in previous years. Both upstream manufacturers and downstream distributors are struggling to survive under these difficult conditions, yet the recent trends in the market are cause for optimism. Since mid-February, prices of compound fertilizers have been on the rise in various regions. This is evident in the fact that the initial low-end prices have increased by 30–50 yuan per ton. As of this weekend, the main export prices for 45% chloro/sulfur-based general-purpose fertilizers across the country were 1900–2000 yuan per ton and 2050–2200 yuan per ton, respectively. Some companies have also reduced or eliminated the preferential pricing policies they had earlier; in short, there is a strong tendency for prices to rise in the market. With the market for fertilizers booming everywhere, the likelihood of a significant increase in the prices of compound fertilizers seems to have increased. So, how will the prices of compound fertilizers evolve during the spring season? First, raw material prices. When it comes to the raw material market, the prices of urea and monoammonium nitrate have been attracting a lot of attention recently. Currently, the mainstream ex-factory price of urea in Shandong and the Two Rivers regions is between 1,730 and 1,770 yuan per ton. In Linyi, compound fertilizer manufacturers are purchasing urea at prices ranging from 1,770 to 1,780 yuan per ton. Demand in the surrounding markets is strong, with industrial and agricultural demand gradually recovering; as a result, supply is somewhat tight in certain areas, and there is a possibility of further price increases in the future ； Regarding monoammonium phosphate, the ex-plant price of 55% powdered monoammonium phosphate at some manufacturers in Hubei, the main production region, has risen to 2050 yuan per ton, with shipments being made to orders that are ready for dispatch. Recently, some companies have continued to raise their ex-plant prices, but many are unable to take on new orders; they mainly serve existing clients. It is expected that actual transaction prices will remain at the elevated levels seen earlier in the short term. Secondly, downstream demand. In addition to favorable raw material prices, downstream demand in spring is also worth looking forward to. Taking the northern regions as an example, in spring, the planting area of crops such as corn and rice in the fields is very large, which leads to a higher demand for compound fertilizers. It is understood that as of the eve of the Spring Festival, the arrival volume of compound fertilizers in some areas was less than 50%; the remaining demand will be met after the festival. The reason for this is that the fertilizer market was subject to frequent fluctuations and unstable price trends before the festival, prompting distributors to be cautious about stocking up on fertilizers ； The second reason is that there is sufficient time for plowing and preparation after the festival, which helps to ensure a stable development of market conditions; this also reduces risks for distributors. Although large-scale releases of demand from downstream sectors are rare, there is still some room for such demand. Finally, upstream supply. When it comes to the supply chain, it can be said to be the most problematic aspect at present. The operation and transportation conditions of compound fertilizer manufacturers are not very promising; the overall rate of production resumption among these companies has been very slow since the end of the holiday period. Moreover, some companies had limited inventory levels in advance, which leads to a slight supply shortage ； In terms of transportation, conditions have improved in many areas recently, with road transport showing some improvement; however, some regions still face shortages of transport vehicles and a lack of production workers ； Additionally, another reason for the low operating rates of some compound fertilizer manufacturers is a shortage of raw materials; the goods purchased earlier have not arrived on time, which limits their ability to take on new orders and forces them to maintain only limited production levels. In summary, favorable factors such as raw material prices, downstream demand, and upstream supply have driven up the prices of compound fertilizers at the current stage. As for whether prices will continue to rise significantly in the future, it is necessary to approach the development of market conditions with caution. (Feng Hongyang)