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Rising urea prices: just a fleeting illusion; is the decline for ammonium nitrate not going to last long? Author/Source: China Fertilizer Network Date: 2020-04-16 Clicks: 8 Urine prices have been rising slightly since the Qingming holiday. Currently, the price for urea at compound fertilizer factories in Linyi, Shandong is around 1770 yuan per ton (the same unit is used throughout). It is reported that there is a shortage of urea supply in Linyi these days, mainly because a large amount of urea from Shandong is sent to Heze; as a result, the demand for compound fertilizer production in the factories located in Heze in Shandong and Hubei provinces has increased. By mid-April, some compound fertilizer manufacturers are still in the production phase of high-nitrogen corn fertilizers and rice fertilizers, and there is a demand for urea; coupled with ongoing agricultural demand, a rise in urea prices is justified in the short term. However, a sustained sharp rise in prices might turn out to be just an illusion. Both the compound fertilizer manufacturers and some distributors in the downstream sector are not optimistic about this increase in urea prices; at least they don’t expect a significant rise. Industrial users, affected by the impact of the pandemic, have a reduced demand, which in turn leads to less demand for urea. Although there is still demand from the agricultural sector, it is not substantial. Therefore, many in the industry believe that this increase in urea prices might turn out to be just a pipe dream. So, what will be the trend in the price of monoammonium phosphate, which is also a raw material for compound fertilizers? Recently, the price of monoammonium nitrate has been on a downward trend. Although some companies in regions such as Hubei are not providing fixed prices at the moment and negotiate prices on a case-by-case basis, it is reported that the price for 55% powdered ammonium nitrate in Hubei, once it reaches the warehouses in Shandong, has dropped to 1900–1930 yuan; lower-quality products from smaller factories are sold at 1850 yuan per unit. Consequently, the actual export price of 55% powdered ammonium nitrate from Hubei is around 1720–1800 yuan. The actual export price of 55% ammonium sulfate produced by large factories in Sichuan is around 1,750 yuan, or even as low as 1,700 yuan. The decline in the price of monoammonium is also normal, as demand for phosphate fertilizers is gradually weakening. Currently, compound fertilizer manufacturers are in the production phase of high-nitrogen corn fertilizers and rice fertilizers. Due to unstable prices of nitrogen, phosphorus, and potassium as raw materials – with phosphorus and potassium prices falling while urea prices rising – these manufacturers have quotes for high-nitrogen fertilizers, but the specific pricing policies remain unclear. The downstream fertilizer market is sluggish, with distributors adopting a wait-and-see attitude; moreover, there is no urgency to purchase summer fertilizers at present, so they plan to wait until the pricing policies become clear before making purchases. Fertilizer manufacturers have already stocked an appropriate amount of ammonium phosphate as raw material in advance, and there are still some pending orders. Although demand exists, it is not substantial overall; it is unlikely that there will be large-scale purchases in the short term. There is hope that demand may pick up again by the end of April or early May. The operating rate of ammonium nitrate production remains at a relatively high level compared to recent months; as of the second week of April, the national operating rate for this industry was 44.28%, while in Hubei Province it was 49.31%. It is currently understood that no companies have plans to carry out maintenance work at present. However, given the current demand situation, if market conditions continue to be weak, it is expected that manufacturers of ammonium nitrate will schedule maintenance work. Recently, it was learned that a large factory in Sichuan has a relatively low operating rate due to steam shortages and poor new orders, while some companies in Henan say they plan to carry out maintenance work in May. At the current stage, the inventory pressure on companies producing monoammonium nitrate is not high; some of these companies have no inventory at all, which allows for smooth shipments. As the number of orders awaiting shipment decreases, the sales pressure on companies producing monoammonium nitrate will increase. On the supply side, attention also needs to be paid to changes in the operating rates of ammonium sulfate producers in the future. The stalemate in the sulfur market was recently broken, with prices continuing to fall slightly. This week, the prices of sulfur at the Wanzhou port and Dazhou plant of Puguang dropped to 650 yuan and 620 yuan respectively, while the prices of granular sulfur and block/powder sulfur at the Yangtze River port and Fangchenggang port fell slightly to 610 yuan and 560 yuan respectively. It is reported that current inventory levels of sulfur at ports remain around 2.9 million tons, with several tens of thousands of tons more of sulfur arriving in the near future. It is expected that prices for raw sulfur will remain weak in the short term; although there is no risk of a sharp drop, an upward surge is also unlikely. Phosphorus ore prices have been little affected by the pandemic, but demand has been weak since production resumed; it is reported that prices have dropped by around 10-20 yuan compared to earlier levels. The overall raw material market is weak, providing insufficient support for the cost of monoammonium. In summary, in the coming period, attention should still be paid to changes in operating rates and demand for monoammonium; in the short term, there is still a risk of a slight decline in prices for monoammonium. (Zhao Hongye)