Thread Content
Urea under the shadow of printing labels – can it boost the fertilizer market in summer? Author/Source: China Fertilizer Network Date: 2020-04-09 Clicks: 31 At the beginning of April, the spring fertilizer market is in what can be called its \"golden period\"; once the fertilizer goods from upstream reach the market, the end-user market becomes fully active. Compared to the beginning of the spring market season, the trading atmosphere has weakened slightly recently. Apart from the limited demand for additional replenishments on the downstream side, the gradual decline in raw material prices is also a factor that hinders the progress of the market for finished fertilizers such as compound fertilizers and water-soluble fertilizers. However, as spring comes to an end, tenders for urea in India have once again brought some hope to the fertilizer market. To date, the results of India’s urea tender have been announced: approximately 710,000 tons and 90,000 tons were awarded to bidders on the east and west coasts respectively, for a total of almost 800,000 tons. Of this amount, 340,000 tons was urea from China; excluding the 50,000 tons destined for export, the amount of domestic urea that participated in this tender was around 290,000 tons. Considering that domestic factories currently produce around 160,000 tons of urea per day, this figure isn’t particularly attractive. However, with the increased demand for fertilizer raw materials during the summer, participation in this tender can be considered a modestly positive development. The strong demand for urea not only boosts the market for high-nitrogen fertilizers but also acts as a further boost to the market for water-soluble fertilizers, which are also in peak demand during this period. Firstly, the cost of raw materials remains relatively stable. Not only do raw material costs play a key role in determining the price level of compound fertilizers, but the costs of raw materials for water-soluble fertilizers are also crucial to their price trends. Compared to traditional fertilizers, the raw material costs for water-soluble fertilizers are relatively high. As for potassium nitrate at present, the ex-factory price in the main production areas of Sichuan and Shanxi is around 4,100–4,300 yuan per ton. Although the price has dropped compared to earlier periods, it remains high. The more stable the raw material costs, the more stable the prices of water-soluble fertilizers remain. Recently, the main pricing trends among companies have been stability with only minor fluctuations, and some of the earlier discounts have also been reduced accordingly. Secondly, seasonal demand is relatively good. Spring and summer, as the best seasons for agricultural cultivation in most areas, mean that the total area under cultivation is considerable, resulting in a high demand for fertilizers. In recent years, the traditional fertilizer market has become increasingly sluggish, while new types of fertilizers are gradually coming into focus. The reason for the increasing demand for water-soluble fertilizers is, first, the improvement in the structure of crop cultivation; the area dedicated to economic crops is gradually expanding. Especially this spring, due to the low prices of field crops, there was a significant decline in willingness to cultivate such crops, while fruits and vegetables have become very popular ； The second reason is that the market for traditional fertilizers is chaotic, which increases the operational risks for distributors and limits their profits; expanding the market share of water-soluble fertilizers can help mitigate these various shortcomings to some extent. Finally, upstream supply remains relatively stable. Affected by the pandemic, fertilizer production enterprises were forced to suspend operations, which slowed down progress across the entire industry. However, as the pandemic was brought under control, companies began to resume normal production activities starting in early March. To date, the overall operational rate of water-soluble fertilizer manufacturers is around 70%; while meeting the demands of existing orders, some of these companies have also stockpiled an appropriate amount of inventory to avoid supply shortages during periods of high demand. A stable upstream supply can ensure the orderly development of the water-soluble fertilizer market to the greatest extent, and it can also boost purchasing willingness in the downstream market. In summary, after a brief \"winter,\" the overall fertilizer market began to recover. With the summer fertilizer market about to open, water-soluble fertilizers are seeing increased demand, and it is likely that their prices will remain stable.