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Under attack from all sides – what is the future for diammonium? Author/Source: China Fertilizer Network Date: 2020-04-10 Clicks: 14 The domestic spring market for diammonium phosphate is gradually entering the retail phase, with wholesale prices declining in regions such as the Northeast and Northwest. According to China Fertilizer, the settlement price for 64% diammonium phosphate stored during the winter in Heilongjiang was between 2360–2450 yuan per ton (the same unit is used throughout). Due to the relatively large supply of goods at low prices in the earlier period, the wholesale price of 64% diammonium phosphate in Heilongjiang Province has now dropped to 2500 yuan or slightly less. The northwest region is not exempt from this trend either; at present, the wholesale prices in Gansu, Shaanxi, Xinjiang and other places are 50-100 yuan lower than their peak levels in early March. Although there is a certain demand for fertilizer for summer corn in North China and East China in the later period, the potential demand for diammonium phosphate is not high; coupled with the currently weak market conditions, some distributors said they will consider purchasing diammonium phosphate in May. So currently, the domestic market only has replenishment needs in the Northeast and Northwest, as well as minor stockpiling needs in regions such as North China. In the international market, although the pandemic has hit international trade, most countries will ensure the production of fertilizer manufacturers; overall international supply has not declined significantly. Only India’s domestic production capacity has dropped, but it still has 4.2 million tons in stock at its ports as a safety net. As a result, it is unlikely that the offshore price of diammonium phosphate in China will rise substantially. Domestic demand is about to enter a slow period, and as has been the case in the past, the price of diammonium nitrate is set to drop sharply. However, in my opinion, there are still ways out. First, limit production to maintain prices. At present, most diammonium fertilizer plants are operating at full capacity in order to fulfill the orders they have pending, with overall production levels remaining high. But taking Heilongjiang and Northern Xinjiang, where fertilizer application occurs later in spring, as examples, fertilizer is applied at the local level in early May; the transportation by train takes about a week. The latest possible production date for spring orders at factories is around April 20th. Although there is demand from North China and East China in later periods, it still cannot compare to the consumption levels in the Northwest and Northeast. Looking at the measures taken by various manufacturers over the past few years to cope with the slow season in summer, it is evident that limiting production capacity is essential. Especially this year, due to the temporary shutdowns of enterprises in Hubei, most factories in the southwest have been operating at full capacity since they resumed production; therefore, carrying out scheduled maintenance during the slow season could be an effective way to address this issue. Second, actively expand export markets and understand the fertilizer import policies of various countries during the pandemic. Based on past export data, India has always been the main destination for China’s diammonium phosphate exports. However, Chinese companies do not have an advantage in competing with those from Saudi Arabia and Morocco, and the price of diammonium phosphate exported to India is not high. Although the demand in the East Asian and Southeast Asian markets is lower compared to that in India, the offshore prices are often higher than those in Indian tenders. Currently, the COVID-19 virus is spreading worldwide, and major import markets for diammonium phosphate, such as India, have adopted measures such as lockdowns and port closures to deal with it. The local subsidy policies for fertilizer imports have not been introduced yet, and measures such as city and port closures could affect port operations, thereby introducing uncertainty regarding China’s future exports of diammonium fertilizers. In summary, the domestic market has entered the final stage of the spring season, and the wholesale prices of diammonium fertilizers have seen a slight decline. To avoid suffering setbacks in the summer, as has happened in previous years, manufacturers need to focus on the fundamental aspects of supply and demand in the market. (Rong Guangwen)