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The Wild Surge in Urea Prices – OneAmmonia Finally Understands Author/Source: China Fertilizer Network Date: 2020-03-02 Clicks: 8 In recent days, urea prices have continued to rise in some areas. In regions such as Shandong and Henan, the prices have stabilized after rising. Currently, the price of urea at compound fertilizer factories in Linyi, Shandong, is around 1,780 yuan per ton. The increase in urea prices is mainly due to the gradual resumption of industrial activities in certain areas, as well as an increasing demand from agriculture in those regions. Transport conditions are fairly good, but supply from companies is somewhat tight. However, in some areas, the rapid increase in prices has led to limited acceptance of higher prices by downstream buyers. With more supplies arriving in various regions, it is expected that even if company prices continue to rise, the pace of increase will slow down. I finally understand why urea prices have risen so sharply recently; however, the situation regarding the price increase of monoammonium is a bit different from that of urea. Recently, the price of monoammonium nitrate has been changing every week. Although some companies have not yet announced prices to external parties, I have learned that they are continuing to raise prices for their key customers. In the early part of February, the ex-plant price of 55% powdered ammonium nitrate from a major factory in Hubei rose to 1850 yuan per ton; the following week it increased to 1950 yuan per ton. Currently, it is reported that some large factories are charging 2050 yuan per ton for 55% powdered ammonium nitrate, and this applies only to their key customers. Although the prices of 58% ammonium sulfate powder and 60% ammonium sulfate powder are not as \"exorbitant\" as those of 55% ammonium sulfate powder, at around 2050 yuan and 2150 yuan respectively, it has been reported that the ex-factory price of 60% ammonium sulfate powder at some large manufacturers in Guizhou has risen by 2300 yuan. What has been mentioned above are merely the quotes provided by companies; these prices have risen to rather absurd levels. However, the current high prices are mainly due to imbalances in supply and demand, shortages in supply, and other factors related to shipping. In fact, since the beginning of this week, the actual transaction prices for ammonium nitrate have stabilized after rising. The actual selling price of 55% powdered ammonium nitrate produced in Hubei and shipped to Shandong is around 1900 yuan, or slightly higher, while large manufacturers sell 58% powdered ammonium nitrate at around 2050 yuan. Therefore, in this environment of rising prices, downstream compound fertilizer manufacturers and traders still need to maintain a certain degree of rationality. So, what is the current situation of Yianmu in all aspects? Firstly, the supply of monoammonium remains tight. Recently, companies have been focusing on the production and shipment of orders that are already pending delivery; they are delaying the acceptance of new orders for now. It is reported that in recent days, some facilities at large factories in Hubei have resumed operations and have accepted new orders amounting to over 40,000 tons, but they are not accepting any new orders at the moment. Recently, the overall production rate of enterprises in Hubei remains below 30%. Locally, it is stipulated that production should not resume before March 10th in principle; however, with regard to ensuring spring plowing activities, it is not ruled out that some facilities at large factories that have stopped production might resume operation ahead of schedule. But it is now early March; even as companies resume production, they will primarily focus on fulfilling existing orders in the short term, and it is not expected that they will take on new orders for some time, likely not until mid-to-late March at the earliest. Secondly, the demand is timely. Currently, it is the peak season for preparing fertilizers for spring plowing, and compound fertilizer manufacturers are stepping up production and shipments. Although some areas are still affected by the pandemic and factory operations are recovering slowly, most companies are doing their best to produce and deliver products. Recently, compound fertilizer manufacturers and traders have considerable confidence in ammonium nitrate; they believe that having stock available in the short term is key. Even though some of these manufacturers still hold backorder stocks of ammonium nitrate from earlier periods, they are concerned about potential future shortages and rising prices, so they take the opportunity to make purchases whenever possible. It is reported that each order placed by ammonium nitrate factories to their key customers does not exceed 2,000 tons. Given this, compound fertilizer companies will still have a certain demand for ammonium nitrate in the future, especially those small and medium-sized compound fertilizer firms that do not have any inventory of ammonium nitrate as raw material. Finally, in addition to supply and demand, attention should also be paid to the situation of ammonium sulfate raw materials. Although the market for sulfur imports at ports has remained relatively calm recently, there is a strong bullish sentiment within the ports. Prices on electronic trading platforms as well as domestic sulfur prices are on the rise. At present, the price of sulfur produced by Puguang in the Wanzhou Port and Dazhou plant has risen for two consecutive weeks, reaching 650 yuan and 590 yuan respectively, and it is expected that this upward trend will continue in the short term. Phosphorus ore prices remain stable for now, with little impact from the pandemic. At present, raw materials are likely to provide greater support for the cost of monoammonium phosphate, thus offering some backing for price increases in this product. In summary, the upward trend in the price of monoammonium phosphate is likely to continue, and in the future it will be necessary to pay attention to the recovery of its supply. (Zhao Hongye)