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Urea prices crash, diammonium phosphate prices drop quietly – Is the spring market coming to an end in a hurry? Author/Source: China Fertilizer Network Date: 2020-03-30 Clicks: 94 By the end of March, the spring fertilizer market in some areas had entered the retail phase. Compared to previous years, fertilizer prices this spring have risen sharply due to various force majeure factors; urea, monoammonium phosphate, diammonium phosphate, potash fertilizers, and compound fertilizers all saw price increases of 100–200 yuan per ton (prices are given per ton as well). However, since this week, urea prices have dropped sharply; domestic industrial and agricultural demand has slowed down, and the timing of price fixes is uncertain. In the Northeast region, the price of large-grain urea has fallen below 2,000 yuan. Diammonium phosphate was not spared either; although the prices offered by manufacturers remain stable for now, wholesale prices set by downstream distributors have been decreasing. The mainstream wholesale price of 64% diammonium phosphate in Heilongjiang is between 2520 and 2550 yuan. Why did the spring market for diammonium phosphate conclude so hastily? First, let’s analyze what factors contributed to the rapid rise in the price of diammonium phosphate in the market this spring After the New Year, the overall operation rate of diammonium phosphate factories in Hubei was low, and fertilizer transportation was restricted in most parts of the country. Over time, thanks to the support of policies aimed at ensuring priority for spring plowing, diammonium phosphate manufacturers in Hubei region resumed full production by mid-March, while those in the southwest region continued to operate at full capacity, keeping the industry’s production levels high. In terms of transportation, as the epidemic situation improves across the country and the farming season approaches, the delivery of fertilizers has been given priority. At present, apart from regions such as Xinjiang and Heilongjiang where fertilizer use is delayed and deliveries are still taking place, only occasional restocking is needed in other markets. As the two main issues that caused the rise in the price of diammonium phosphate in spring were effectively resolved, the price of diammonium phosphate naturally stopped rising. Secondly, domestic demand has slowed down, resulting in many transactions at low prices earlier on. With spring sowing approaching, most distributors have begun to distribute products to lower-level markets; as diammonium phosphate reaches these areas, its wholesale price has also decreased. The main reason is that most of the goods available on the market are low-priced advance orders placed before the New Year or around February, and the purchasing costs for dealers are lower than the current prices for new orders. The strong prices in the early stage were mainly due to a shortage of fertilizers among distributors. However, after nearly a month of intensive shipments, according to China Fertilizer, some manufacturers have shipped nearly 500,000 tons of diammonium phosphate to the Northeast market, indicating that the shortage in local markets has been effectively alleviated. Finally, there is insufficient cost support. This year, the price of diammonium phosphate has dropped by 500 yuan compared to last year, primarily due to low prices of raw materials and insufficient cost support. Currently, the total stock of sulfur in Port Sulfur is around 2.77 million tons, nearly twice the 1.48 million tons recorded in the same period last year; it is inevitable that sulfur prices will remain low for a long time. Although liquid ammonia prices have risen recently, they are still slightly lower than those in the same period last year. Regarding phosphate rock, with the resumption of operations at the mines in Hubei, overall prices have remained relatively stable. Lack of cost support prevents diammonium fertilizer manufacturers from having the confidence to raise prices. In summary, the spring market has gradually entered the wholesale and retail phase; low-priced goods have flowed into the market, and wholesale prices are still likely to continue falling. The factories are gradually shifting their focus to export markets, but due to the pandemic and locust plagues, it is uncertain whether prices in key markets such as India will rise. It will be necessary to keep an eye on sales progress in various regions as well as changes in international diammonium phosphate prices to determine how the spring market for this product will conclude. (Rong Guangwen)