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Compound fertilizers face a ‘triple shortage’ – will prices soar? Author/Source: China Fertilizer Network Date: 2020-03-02 Clicks: 1 At the end of February, the fertilizer market experienced a sudden change – the market for compound fertilizers, which had previously seen very low demand, suddenly became tight. Those who follow China Fertilizer Network should recall that the editor predicted last week that the price of compound fertilizers would rise by around 50–100 yuan per ton. As expected, this week, fertilizer manufacturers began to raise their prices, with increases occurring across the board. Investigations among various compound fertilizer companies revealed that they were facing three main shortages, which is why the price increase was inevitable. Firstly, most compound fertilizer manufacturers are facing a shortage of raw materials. Before the Spring Festival, most compound fertilizer manufacturers did not have large reserves of raw materials. Due to the frequent fluctuations in urea prices, most companies purchased the material as needed. The reserves of ammonium phosphate could last for about half a month, and many compound fertilizer manufacturers collected payments in advance; shipments were scheduled to take place after the New Year. As a result, the products manufactured by these companies in the near term were mainly intended to meet existing orders, while new orders continued to increase. Affected by the pandemic, it was difficult to ship ammonium phosphate from Hubei Province, and there was a shortage of urea at low prices. Therefore, in the short term, most compound fertilizer manufacturers are likely to face the risk of raw material shortages soon. Secondly, most compound fertilizer companies are facing a shortage of workers. During the Spring Festival, most workers in compound fertilizer companies took time off to return home for rest. After the festival, due to the impact of the pandemic, some areas saw villages and roads sealed off, making it difficult for many workers to return to their workplaces. As a result, the production rates of compound fertilizer companies failed to recover significantly. However, this week, the production rates of some compound fertilizer companies in provinces such as Shandong, Jiangsu, and Hebei increased; in some cases, companies with 10 production lines were operating 8 of them. Yet even with extended working hours, it was still not possible to meet both the existing orders and new orders that had arrived. Outside some of these companies, long queues of vehicles waited to receive their deliveries. Once again, local transportation and logistics remain quite strained. As the control of the pandemic shows results, transportation in some areas has slowed down, especially in terms of the logistics of agricultural supplies. **Policies have been introduced to ensure the transportation of supplies needed for spring farming, and there has been some improvement in certain areas; however, delivery remains challenging in some regions. Shipping by sea is the main mode of transport, while road and rail transportation is still facing difficulties. Faced with shortages in raw materials, labor, and logistics, and given the slow recovery in the operating rates of compound fertilizer manufacturers, it has become inevitable for these fertilizers to see price increases. Dealers who have not stocked up before the Spring Festival should hurry to do so. Although these shortages are temporary, in areas where there is an urgent need for fertilizers, it is time to purchase them. However, a comprehensive price increase of over 100 yuan per ton has not yet occurred; we still need to wait a while for that to happen.