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Urea Plummets Again; High-Nitrogen Fertilizers Begin to Take Self-Help Measures Author/Source: China Fertilizer Network Date: 2020-03-23 Clicks: 51 In late March, the spring fertilizer markets in various regions were progressing in an orderly manner. Compared to previous years, the fertilizer market this spring has been rather unusual. Affected by various force majeure factors, the prices of most fertilizer types have risen since the end of February, with urea and monoammonium phosphate showing particularly sharp increases. With rising raw material costs providing support, the prices of compound fertilizers have increased accordingly; the typical increase in prices is between 50 and 100 yuan per ton. However, since this week, prices have remained stable in many areas, with the market showing a trend of consolidation. The main reason for the slowdown in the price increase of compound fertilizers is the weak market situation for urea in recent times, with a lack of positive factors. Although most companies are currently fulfilling orders received in advance, this situation only adds to the challenges facing the high-nitrogen fertilizer market during the upcoming summer. We are currently in the early stages of the development of the high-nitrogen fertilizer market, and companies are actively introducing new pricing structures and favorable incentives. In the face of the sudden collapse in urea prices, the high-nitrogen fertilizer market has had to take measures to save itself. First, mainstream prices have stabilized. Until this week, prices of compound fertilizers have been on the rise; whether through direct price increases or reduced discount amounts, it is evident that companies have a strong inclination to raise prices. After the decline in raw material prices, the situation regarding new orders for some companies has become less favorable. If prices continue to rise, it will somewhat suppress demand from downstream industries. As a result, the mainstream prices have gradually stabilized; the ex-factory prices for the 45% chlorine/sulfur-based general-purpose series have remained stable for two consecutive weeks at 1950–2050 yuan/ton and 2150–2350 yuan/ton respectively. With the announcement of prices for high-nitrogen fertilizers by various companies, these prices are likely to remain stable as well. Secondly, downstream demand is growing slowly. The spring fertilizer market has not yet fully concluded when the summer fertilizer market has already begun to operate. Currently, in the northern regions, about 70% of the compound fertilizers needed for spring planting arrive by that time; there is little left to meet the demands of spring plowing. The seamless transition into the summer fertilizer market facilitates an increase in demand from downstream users. One reason for this is that the price trend for spring compound fertilizers sets the basis for the prices of high-nitrogen fertilizers in the summer, and it also helps to predict the direction in which those high-nitrogen fertilizer prices will evolve ； The second reason is driven by the market trading atmosphere; the fertilizer market was relatively active in spring, and the concentrated release of demand in the latter part of that period could facilitate the development of the high-nitrogen fertilizer market. Finally, upstream supply was restored. Affected by the pandemic, the operation rate of compound fertilizer manufacturers has remained at a relatively low level since the Spring Festival. As the pandemic situation improved in various regions, the operation rate of these manufacturers began to rise sharply starting from early March; by the end of this weekend, it had reached around 73%. The rapid recovery in production rates is attributed, firstly, to the large backlog of winter storage orders held by enterprises; in order to ensure the smooth operation of the spring planting markets in various regions, those with the necessary conditions have actively resumed production ； The second reason is that the summer fertilizer market is about to see full-scale development; by ensuring an adequate supply in spring, having some stock of summer fertilizers ready will be more conducive to the progress of the market. In summary, the weak market conditions for raw materials are not conducive to determining the prices of fertilizers for the summer season. However, with downstream demand set to increase and upstream supply returning to normal, the high-nitrogen fertilizer market is expected to start off on a stable note. (Feng Hongyang)