Supply of monoammonium is scarce – how much longer will compound fertilizer prices remain high?

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Supply of monoammonium is scarce – how much longer will compound fertilizer prices remain high? Author/Source: China Fertilizer Network Date: 2020-03-06 Clicks: 119 At the beginning of March, the fertilizer market was in an upward trend, with continuous price increases. Not only did the prices of compound fertilizers rise, but also the prices of raw materials such as urea, diammonium phosphate, potassium fertilizer, and ammonium phosphate all increased. In particular, ammonium phosphate was in short supply and very difficult to obtain; this shortage posed a significant obstacle to the production of compound fertilizer companies. So, do these companies have sufficient supplies of ammonium phosphate for their production? What is the likelihood of a severe shortage of ammonium-based raw materials in the future? First, what are the reasons for the significant increase in the price of monoammonium? In the second week after the Spring Festival, around mid-February, the price of monoammonium phosphate began to rise steadily. Most manufacturers of this product are located in Hubei Province, while a small number of smaller companies are found in the northwest region. Due to the impact of the pandemic, production rates remained low. Moreover, after the Spring Festival, certain industrial demands started to increase, leading to a surge in demand for monoammonium phosphate and thereby increasing the supply pressure on manufacturers, which in turn caused prices to rise. Currently, the average export price of 55% powdered monoammonium phosphate in Hubei Province has risen to 1,950 yuan per ton; some companies even offer it at 2,050 yuan per ton. Compared to before the Spring Festival, this represents an increase of around 200 yuan per ton. Therefore, unlike other raw materials, the rise in the price of monoammonium phosphate is indeed due to a shortage of supply, with no signs of speculation at present. Secondly, how much ammonium-based raw material do compound fertilizer manufacturers have in stock? According to incomplete investigations, most large-scale compound fertilizer manufacturers currently have enough raw material reserves to last until mid-March; in particular, their reserves of ammonium sulfate are limited. Many small and medium-sized compound fertilizer companies purchase ammonium sulfate as needed. Therefore, it seems that there will still be a significant demand for ammonium sulfate among these companies in the coming period. Assuming that production resumes in Hubei after March 10th, then, if the resumption goes smoothly, an ample supply of ammonium sulfate is likely to become available only in mid-to-late March. Once again, the prices of compound fertilizers have risen, with raw material shortages being the main cause. Recently, the price of compound fertilizers has risen by about 50–100 yuan per ton. At present, most orders are those that were placed before the New Year; although there are many new orders, the shortage of raw materials is the main reason for the increase in prices of compound fertilizers. Of course, a surge in market demand is also a factor, especially the increased demand for wheat fertilizers in the Central Plains region and for corn fertilizers in the Northeast region during spring, which makes an increase in the prices of compound fertilizers inevitable. Finally, the fertilizer market in March is likely to continue on an upward trend, with increases in the prices of ammonium nitrogen fertilizers and compound fertilizers in particular. However, whether prices will remain high after the end of March and the beginning of April will depend on the recovery progress of various companies.