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Phosphatic ammonia is seeing another price increase – how many more days will the increases continue? Author/Source: China Fertilizer Network Date: 2020-03-02 Clicks: 7 Although the fertilizer market gradually started up in spring and prices of various major types of fertilizers tended to rise as expected, the upward trend in the phosphate fertilizer market this year was particularly notable. In particular, the market for monoammonium phosphate, which had been sluggish earlier on, is now characterized by tight supply and rising prices, to the point where it has become synonymous with high prices for this type of fertilizer. At present, some manufacturers of monoammonium phosphate have stopped providing quotes; although they can still supply products to their key customers, the prices of goods from Hubei and Sichuan regions are relatively high. The current premium outlet price for 55% powdered monoammonium phosphate is 2050 yuan per ton (prices are given per ton thereafter). There is a significant difference in prices for this fertilizer before and after the New Year ； After the New Year, the market for diammonium phosphate saw a surge in prices of monoammonium phosphate. Coupled with limited supply in the market prior to the New Year, prices rose accordingly. It is reported that at present, the prevailing delivery price for 64% diammonium phosphate in Heilongjiang region has risen to 2450–2500 yuan. Although this increase is not as significant as that of monoammonium phosphate, it still represents a reversal of the downward trend, with further price increases likely. Regarding this rise in prices of phosphatic ammonium compounds, the author has summarized the similarities and differences in these price increases as follows: Similarities: Supply is tight due to the impact of the pandemic. As one of the main production areas for phosphate fertilizers, Hubei has been severely affected by this pandemic, whether it comes to companies that produce monoammonium phosphate or diammonium phosphate. Since the Spring Festival, the overall production rate in this region has remained relatively low; currently, the overall production rate of enterprises in Hubei is less than 30%. Local regulations stipulate that production should not resume before March 10th, and transportation conditions are also poor. Although fertilizers are considered agricultural supplies, they still hold a lower priority compared to medical supplies and other essential goods for daily use. Under the combined pressure of reduced production and difficult transportation, the supply of phosphate ammonium fertilizers in the market has become tight, leading to an increase in prices. Secondly, there is an overcapacity in phosphate ammonium production, with pessimism prevailing. In recent years, the start time for preparing fertilizers in the winter storage market has been shifting later and later, resulting in an increasing number of downstream users who prepare fewer fertilizers or even none at all. The annual production capacity of phosphate ammonium exceeds domestic apparent consumption by 100%; some in the industry even joked before the New Year that, unless extreme conditions arise, the likelihood of price increases for phosphate ammonium is relatively low. According to incomplete statistics from China Fertilizer Network prior to the Spring Festival, the reserves of monoammonium phosphate as raw material in various compound fertilizer manufacturers account for around 30% of the total demand for this season ； The share of diammonium phosphate is even less than 30%; in some factories, the total amount shipped to Bayuquan is less than 10,000 tons. Initially, there were few stocks in the market, and as consumption increased, the overall supply of phosphatic ammonium compounds became insufficient, leading to an imbalance between supply and demand and thus an increase in prices. Difference: The timing of demand initiation varies, which results in different price trends for monoammonium and diammonium compounds. Taking the Northeast region as an example, the actual time for procurement at the grassroots level has not yet arrived at this stage, while industrial demand is somewhat tight. This is one of the main reasons why ammonium nitrate prices have soared, with overall prices rising by more than 150 yuan compared to earlier levels; meanwhile, the price increase for diammonium nitrate has been smaller, by only a few dozen yuan. The downstream market remains uninterested for these reasons. However, given the current production cycle and the supply volume of ammonium nitrate, it is likely that the use of compound fertilizers in the grassroots market will decrease this year, while the use of blended fertilizers will increase. It is therefore easy to predict that although ammonium nitrate prices will rise in the future, the increase will not be extremely drastic. As for diammonium nitrate, industrial demand is expected to increase in the coming period, and since it is currently the settlement period for diammonium nitrate, prices are likely to continue rising. In summary, under extreme conditions, an increase in the price of phosphate ammonium is a reality. Given the current supply and demand situation, it is unlikely that there will be a large supply of first-grade phosphate ammonium in Hubei in the short term, while the supply of second-grade phosphate ammonium in the southwest region remains sufficient. It is expected that prices for phosphate ammonium will remain high in the near future, and they may even rise further. However, as factories gradually resume production, the likelihood of another significant increase in prices is relatively low. (Wu Wenchao)