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Compound Fertilizers: Slowing Demand in the Fertilizer Market, Making Purchases Difficult Author/Source: China Fertilizer Network Date: 2020-03-23 Clicks: 52 The demand for compound fertilizers during spring has largely come to an end, with factories entering the production and shipping phase. In the nearly two weeks since the outbreak of the pandemic, the overall operational rate of compound fertilizer factories has increased significantly, reaching around 70%, in sharp contrast to the low operational rate of just 30% before the Spring Festival. Currently, companies are mainly focusing on producing orders that are already pending shipment; new orders are being placed at a moderate pace, and there is not much remaining demand. Most downstream distributors began making purchases ahead of the Spring Festival, and now as the compound fertilizers ordered are arriving, they are gradually being distributed to local distributors and farmers. In the future, most distributors will only make minor replenishments. For the summer market, compound fertilizer manufacturers are currently formulating pricing strategies for high-nitrogen fertilizers for this season; dealers tend to wait for the manufacturers’ decisions before making purchases. However, given the unstable prices of raw materials used in compound fertilizers at present, there is little enthusiasm for purchasing high-nitrogen fertilizers in the short term. So, what has been the trend in the prices of raw materials for compound fertilizers recently? In Shandong, the Two Rivers region, and other areas, urea quotes continue to trend downward. Currently, compound fertilizer manufacturers in Linyi, Shandong, are purchasing urea at a price of 1,810 yuan per ton (the same unit applies hereafter). In the Central Plains and other regions, topdressing of winter wheat has largely been completed, so agricultural demand has temporarily subsided. In the short term, agricultural demand is unlikely to have much of an impact on urea prices. Meanwhile, factories such as plywood mills and power plants are resuming operations at a relatively slow pace, meaning industrial demand will also see little improvement. Although urea producers still have some pending orders to fulfill in the near term, there is a lack of new orders to sustain this momentum. The peak period for the large-grain urea market has passed; downstream users are less willing to accept high prices, and the industry as a whole holds a somewhat pessimistic outlook. Currently, the price of large-grain urea at Qiqihar in Heilongjiang is around 2,100 yuan per unit. In the near term, compound fertilizer manufacturers have little interest in purchasing urea. It is reported that some of these companies still buy urea in multiple batches in moderate quantities; they stocked up on supplies ahead of any price increases and adjust the amount purchased each time according to the situation, rather than making large purchases all at once. Recently, urea prices have shown a downward trend, and compound fertilizer manufacturers remain relatively cautious. Recently, the price of monoammonium nitrate has remained stable on the surface but has actually declined. Factory owners are fulfilling orders placed at higher prices from earlier periods, and they have limited capacity to take on new orders; as a result, their quotes remain relatively high. Currently, the ex-factory price for 55% powdered ammonium nitrate from large factories in Hubei is around 1980–2000 yuan, with the actual delivery price being 1900–1950 yuan, and in some cases it’s 1850 yuan. It is reported that the incoming price of this product from Shandong for these large factories is less than 2100 yuan. At present, compound fertilizer manufacturers have largely completed the procurement of ammonium monoamide, the raw material needed for spring use. Unlike in previous years, when demand for ammonium monoamide is already low in spring, the impact of outbreaks in regions such as Hubei has led these manufacturers to believe that supply will be tight and prices will rise. As a result, they purchased an appropriate amount of ammonium monoamide before the Spring Festival and around February; their new procurement plans have been slowed down, with them waiting for the previously purchased ammonium monoamide to arrive at the factories. Procurement of raw materials for summer use has not yet begun, and companies are adopting a wait-and-see approach. It is expected that compound fertilizer manufacturers will consider starting a new round of procurement by late March or at the end of the month. Regarding potassium fertilizers, the overall price of potassium chloride has eased, but prices in the Northeast region remain high, while the price of potassium sulfate remains stable. Reportedly, in Hubei, the two Hebei provinces, Shandong and other regions, the delivered price for agents purchasing 60% crystalline potassium chloride from salt lakes remains around 2,050 yuan. Recently, shipments from salt lakes have been constrained; as a result, compound fertilizer manufacturers show relatively low enthusiasm for procurement, with most merely fulfilling previously placed orders. Recently, the industry has been paying close attention to news regarding large-scale contracts for potassium chloride. It is expected that these contracts will be signed as early as the end of this month; otherwise, it may not happen until mid-April. In the northern regions, prices for Mannheim potassium sulfate have remained firm following a rise. Currently, the actual ex-factory price for 52% fully water-soluble powder is around 2,800 yuan. Although there are not many new transactions, manufacturers have a substantial backlog of orders to fulfill, so they are not under much pressure. There is still a need for potassium sulfate in later-stage water-soluble fertilizers. In summary, as compound fertilizer manufacturers enter the production and shipment phase for spring fertilizers, there is little immediate demand for new amounts of nitrogen, phosphorus, and potassium as raw materials. However, since the demand for potassium fertilizers arises relatively late, fertilizer companies that produce compound fertilizers, blended fertilizers, water-soluble fertilizers, etc., have not yet fully met this demand. (Zhao Hongye)