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Compound Fertilizer: Goods are on the way, but has the price increase returned to normal levels? Author/Source: China Fertilizer Network Date: 2020-03-23 Clicks: 39 In mid-March, the market for compound fertilizers remained active. Although prices did not rise significantly, shortages of supply were still observed in some areas; many dealers had their goods still en route and could not deliver them yet. As market demand increased and farmers needed these fertilizers urgently, supply remained tight in certain regions. Overall, however, compound fertilizer prices stayed stable. Will they return to more rational levels or see a slight increase in the future? Firstly, the local market demand for fertilizer preparation amounts to 60-70%, leaving little room to fill additional orders in the future. Recent market surveys in the Northeast and Central China regions have shown that downstream distributors in these areas already have 60-70% of their fertilizer stock covered by compound fertilizers; there is little room for additional demand in the future. So why is there still a shortage of supplies in some areas? Primarily, there has been a surge in demand at the grassroots level in the Central Plains and Northeast regions, and transportation conditions are strained; as a result, distributors in some areas have run out of stock, while the goods that were ordered in advance are still on their way. Secondly, there is significant demand in the southern market, with fertilizer demand ongoing. Although the fertilizer supplies in the Northeast and Central China regions are relatively sufficient, the supply of raw materials remains tight. In the southern regions, where temperatures are higher, the demand for fertilizers for cash crops is at its peak or is about to reach that level, resulting in high market demand. In particular, in Hubei Province, compound fertilizer manufacturers have only recently resumed production; most of these companies have limited inventory, and some even have no inventory at all. As a result, these companies are working overtime to increase production, partly to meet the orders that have been placed but not yet fulfilled ； On the other hand, it also prepares for the subsequent fertilizer needs of the rice plants. Once again, demand is strong, but raw material prices are declining. Since the beginning of this week, the prices of small-grain urea and large-grain urea have shown a downward trend. In particular, the ex-factory prices of small-grain urea in Shandong and the Two Rivers regions have dropped by 20–40 yuan per ton. Currently, the ex-factory price of small-grain urea in Shandong is between 1750–1790 yuan per ton. Meanwhile, in Hubei, the prices of monoammonium phosphate have remained stable on the surface but have actually decreased; currently, the actual ex-factory price of 55% powdered ammonium phosphate is around 1900 yuan per ton, representing a decrease of several dozen yuan compared to earlier levels. In the short term, regarding the market for compound fertilizers, the downward trend in raw material prices has led to caution and pessimism among some downstream users. Finally, although raw material prices have declined, the prices of ammonium chloride, sulfuric acid ammonia, and potassium fertilizers remain high. Meanwhile, market demand has surged, meaning that in the short term the advantages for compound fertilizers outweigh the disadvantages. Until the end of March, compound fertilizers should be able to maintain stable prices, but the situation will be less optimistic from mid-to-late April onward.