Fertilizer prices keep rising in spring; the price of diammonium phosphate continues to soar

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Spring fertilizer prices continue to rise; quotes for DAP keep climbing. Author/Source: China Fertilizer Network. Date: March 9, 2020. Click-through rate: 7. The spring fertilizer market has now officially kicked off, with farmers and local distributors beginning to pay attention to it. Surprisingly, today’s fertilizer market is no longer what it used to be—prices for all types of fertilizers have seen a general increase. Nitrogen-phosphorus-potassium compound fertilizers are seeing a surge in demand as well. DAP isn’t staying idle either; since March, most manufacturers have once again raised their quotes. The price of 64% DAP at delivery points in Heilongjiang has risen to 2,500–2,550 yuan per ton (the same unit of measurement applies hereafter). However, some plants continue to suspend or limit order acceptance. With the fertilizer market in good shape, it seems that diammonium phosphate may continue to rise in price. So, how long will this upward trend for diammonium phosphate last? Firstly, downstream demand is strong. Following the long Spring Festival holiday, the fertilizer market across various regions is booming. The number of inquiries from downstream distributors and local farmers is gradually increasing. Apart from factories that had to halt production due to the pandemic, most DAP producers have resumed full-scale operations; some factories have even shifted entirely to producing DAP. Nevertheless, certain companies are temporarily suspending or limiting new orders due to a large backlog of pending orders. This clearly indicates that both upstream and downstream markets are optimistic about the prospects for DAP prices. Although in most regions, the application of fertilizers at the grassroots level doesn’t occur until April or even May, the volume of goods delivered to most downstream distributors remains low. Additionally, some farmers have begun to make purchases due to the rising prices of DAP, which has further intensified the shortage of this fertilizer. It is evident that there remains a strong agricultural demand for DAP in the later period. Moreover, since the resumption of compound fertilizer production this year was delayed, the usage volume of blended fertilizers has naturally increased, leading to a corresponding rise in the industrial demand for DAP. Secondly, there is a tight supply chain upstream. Currently, enterprises in Hubei that had suspended operations remain shut down; they won’t be able to resume production until at least March 10. Although companies still in operation have largely returned to normal operations—with some enterprises in the southwest region operating almost at full capacity—they still have a large number of pending orders to fulfill, which has led them to limit or temporarily halt accepting new orders. Some industry insiders even stated that the production volume for March has already been allocated, and they expect not to accept any new orders in the short term. Finally, in addition to the focus on supply and demand, we must not forget to pay attention to the shipment status of diammonium compounds and fluctuations in raw material prices. In terms of shipments, except for some areas in Hubei where restrictions remain in place, the transportation of fertilizers across the country has **improved compared to earlier periods. Railway transport has returned to normal, and there are an increasing number of green channels for truck transportation. Over time, the transportation of fertilizers is gradually returning to normal. In terms of raw materials, due to a gradual improvement in demand in the downstream ammonium phosphate market, the price of sulfur at ports has risen to around 685 yuan. The prices of liquid ammonia fluctuate; in areas where the supply of liquid ammonia is higher, prices fall, while in areas with limited supply, prices rise. However, in Hubei province, the price of liquid ammonia remains at a low level of around 2200 yuan. In summary, the spring market is in full swing, with an increasing number of orders from downstream clients. In the short term, there will still be a shortage of diammonium phosphate, and the international market is showing some improvement as well. It is expected that prices for diammonium phosphate will continue to rise. (Rong Guangwen)