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Few new orders at high prices; is diammonium phosphate on the decline? Author/Source: China Fertilizer Network Date: 2020-03-23 Clicks: 39 As mid-to-late March arrived, the restrictions imposed by the pandemic on the sales and transportation of fertilizers gradually eased, and fertilizer markets across various regions began to operate through distributors. However, shortages still existed in some areas. The orders held by most factories would be sufficient to cover demand until early April. Nevertheless, even under these conditions, the price of diammonium phosphate stopped rising since the New Year. Currently, the delivery price of 64% diammonium phosphate in Heilongjiang remains stable at 2,550 yuan per ton. There are few new orders at high prices, and recently distributors in certain areas have started to reduce prices. Is diammonium phosphate truly on the decline? In terms of the market, due to low enthusiasm for stockpiling before the Lunar New Year and delayed transportation after the holiday, downstream demand surged in March. As a result, some regions experienced shortages of goods. However, according to China Fertilizer Network, the arrival volume of diammonium phosphate in most regions has reached 70% or even more. At present, there are still ongoing orders placed at low prices from earlier periods, while new orders at higher prices are being concluded by factories in smaller numbers. All these factors indicate that the shortage in the diammonium phosphate market is mainly due to slow stock procurement by agents and delayed transportation at the rural level. However, as the pandemic improves, the transportation of fertilizers becomes smoother and the amounts owed from previous credit sales are recovered, which naturally **accelerates the pace of product distribution; as a result, the panic-driven bulk purchases by downstream customers ease off. On the factory side, enterprises in Hubei that had suspended production have resumed full operations, with overall production levels remaining high. The biggest positive factors for the diammonium phosphate market in spring are the shutdowns of factories in Hubei Province and delays in the transportation of fertilizers in certain areas. However, this Friday, even the last factories in Hubei that were shut down began operations again, resulting in high overall production levels across the industry. However, most of the orders currently held by factories were placed at low prices earlier on, and there are few new orders at higher prices. To alleviate their supply pressures, some factories have also begun to look for orders in the gradually improving international market. Regarding raw materials. Although the overall operating rate of phosphoric acid and ammonium phosphate manufacturers downstream is high, weekly inventory levels at the sulfur port decreased by 368,000 tons on a monthly basis; however, the total port inventory remains around 2.6 million tons. Due to the consistently high inventory levels and the recent sharp drop in international crude oil prices, which have negatively impacted commodity trading markets, sulfur prices have declined. Currently, the price of granular sulfur at the Yangtze River Port is around 670 yuan, while the price of sulfur at Sinopec Puguang Wanzhou Port is 700 yuan. In Hubei province, the price of liquid ammonia has also risen by around 150 yuan due to the resumption of operations by phosphatic ammonium manufacturers; currently, the standard reference price for delivery from the factory is around 2600–2750 yuan. Ore processing enterprises in Hubei region have gradually resumed operations, easing the supply shortage, and prices have remained relatively stable. Raw material prices show fluctuations, making it difficult to maintain the cost support for diammonium. In summary, supply levels are generally satisfactory in most regions. The shortages observed in some areas are mainly due to slow distribution by distributors. The prices of DAP in the spring market have reached their peak; however, since some distributors still have inventory acquired at lower prices earlier on, this can easily lead to chaotic pricing and cutthroat competition in the market. Therefore, it is necessary to keep a close eye on any further developments in the fertilizer market. (Rong Guangwen)