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After rising, prices are now declining; is there still hope in the later period? _Author/Source: China Fertilizer Network Date: 2020-04-07 Clicks: 7 From 7th April onwards, the demand for spring fertilizers has largely come to an end, and factory production and shipments are nearing completion. In some areas, compound fertilizer manufacturers have gradually reduced their operations in line with local seasonal demand, while in other regions these manufacturers have already started producing fertilizers suitable for the summer season. At present, the prices of compound fertilizers remain stable compared to those before the Spring Festival. The price policies for high-nitrogen fertilizers for the summer season are not yet clear. Since there is still some time before the summer planting season, downstream distributors are less inclined to make payments. Additionally, as the prices of urea, monoammonium phosphate, and potassium fertilizers continue to decline, both distributors and farmers tend to adopt a wait-and-see attitude. The overall operating rate of compound fertilizer manufacturers has risen to around 60-70%. Although there have been fluctuations recently, this represents a significant improvement compared to the low levels of operation seen throughout most of last year. Due to factors such as the pandemic, these companies stocked up on a certain amount of raw materials such as nitrogen, phosphorus, and potassium ahead of the Spring Festival, as well as in February and March. Some companies still have raw materials purchased earlier that have not yet arrived at their facilities, which has led to a slowdown in new purchases of such raw materials recently. The specifics are as follows: Urea: Recently, quotes from urea manufacturers have been continuously declining. This is particularly evident among urea producers in major production areas such as Shandong and the two He provinces. Currently, compound fertilizer manufacturers in Linyi, Shandong, are paying 1,710–1,720 yuan per ton for urea. After the Spring Festival, the highest purchase price in Linyi was 1,860–1,870 yuan per ton; this represents a decrease of roughly 150 yuan compared to current levels. Recently, the procurement demand from compound fertilizer manufacturers has slowed down. Coupled with the downward trend in urea prices, their purchasing sentiment remains weak. Although market demand may pick up after the Tomb-Sweeping Day holiday, their procurement strategy for urea will still be driven by actual needs. Most compound fertilizer firms will, based on their judgment, make moderate purchases in line with demand during the initial phase of a urea price recovery; large-scale, one-time purchases are unlikely to occur. Ammonium chloride: Currently, the supply of ammonium chloride remains relatively tight. Most companies are fulfilling pending orders. However, overall production activity is at a high level, leading to an increase in supply. The pace of execution of pending orders is relatively fast; thus, prices are expected to remain stable in the short term. The purchasing intent of downstream compound fertilizer manufacturers is gradually waning. The ammonium chloride purchased earlier has been arriving at their facilities one after another, and bearish sentiment regarding ammonium chloride is on the rise. Monoammonium phosphate: Quotations for monoammonium phosphate have been gradually decreasing. In Hubei, the Southwest region, Anhui, Henan, and other areas, some producers of monoammonium phosphate have lowered their ex-factory prices; meanwhile, certain companies have suspended quoting altogether, with transactions being negotiated on a case-by-case basis. Recently, the number of pending orders for various manufacturers has been steadily declining; most of these orders are expected to be fulfilled by mid-month or at month’s end. There are not many new orders in the market currently. At present, the prevailing ex-factory price for 55% powdered monoammonium phosphate in Hubei is between 1,900 and 1,950 yuan; the actual cash ex-factory price ranges from 1,850 to 1,930 yuan. In Sichuan, the lower-end ex-factory price for 55% powdered monoammonium phosphate has dropped to 1,800 yuan. Fertilizer compound manufacturers went through intense purchasing activities in February and March; some of them had relatively sufficient stock of ammonium nitrate, and additional orders from earlier periods were continuing to arrive. Moreover, the amount of ammonium nitrate required for summer fertilizers is relatively low, so new purchases have slowed down recently. Although there is some demand for purchases in April, it is expected that fertilizer compound manufacturers will not be in a hurry to make purchases. As ammonium nitrate manufacturers introduce new prices, these companies will replenish their stocks in an appropriate amount based on their own circumstances. Potash fertilizers: The price of domestically produced potassium chloride remains stable for now. The price of 60% crystalline potassium chloride from salt lakes at the delivery point is 2100 yuan, with a guaranteed price until the end of May; the actual price offered by agents at the delivery point is around 2050 yuan. The price of potassium chloride at ports has dropped, with 62% pure potassium chloride currently trading at around 2150 yuan, with some prices even lower. Recently, price transactions have not been very satisfactory; the market anticipates that major contracts may be signed soon. Recently, compound fertilizer manufacturers have shown little intention to make purchases. They still have inventory from previously signed potassium chloride orders, and there are no major procurement plans at the moment. The price of potassium sulfate remains relatively stable for now; however, it may be somewhat affected by future fluctuations in the price of potassium chloride. Compound fertilizer manufacturers are primarily making purchases based on their needs. In summary, each type of raw material has aspects that are of interest to compound fertilizer manufacturers. There may be no significant fluctuations in raw material purchases in April, but there is still a certain demand for such purchases. It is expected that new raw material procurement plans will be formulated gradually after the Qingming Festival holiday, depending on the circumstances. (Zhao Hongye)