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If we get through these next two weeks, won’t the price of compound fertilizers drop? Author/Source: China Fertilizer Network Date: 2020-04-15 Clicks: 44 As of now, the provisional ex-factory prices for 40% chlorine-based high-nitrogen fertilizers (such as 28-6-6/30-5-5) across the country are around 1,800–1,920 yuan per ton. Some companies will continue to introduce tentative prices and promotional offers for summer fertilizers, but buyers on the downstream side are not very enthusiastic and approach the market cautiously. In late April, the market situation for summer fertilizers will become clear. If the prices of high-nitrogen fertilizers remain stable or rise over the next two weeks, then the price support during the peak season is likely to **increase. In other words, if we get through this half month, the prices of compound fertilizers won’t drop? Firstly, the urea market saw short-term positive trends. Recently, the urea market has remained relatively stable. The prevailing ex-factory prices for urea in Shandong and the Two Rivers regions are between 1,700 and 1,720 yuan per ton. Currently, the daily production volume of urea in China is around 160,000 tons. The downstream compound fertilizer industry is entering the season for high-nitrogen fertilizer production, resulting in a slight increase in demand for urea as a raw material compared to earlier periods ； The market for top-dressing in agricultural fields in the northern regions is about to emerge, and there is an immediate demand for fertilizers for summer rice cultivation in the coastal areas of the south. Demand for urea is likely to remain strong in the future, but due to an increasing domestic supply and obstacles in the export market, the long-term outlook remains unfavorable. Secondly, terminal demand remains negative in the long term. As one of the key factors affecting the market for compound fertilizers, the term \"demand\" has become a topic of intense discussion. It appears that the overall demand for high-nitrogen fertilizers this summer may decrease. One reason for this is the low prices of crops, which has led to a significant reduction in farmers’ willingness to plant crops. In addition, many farmers are seeking alternative approaches, resulting in a decrease in the area devoted to crop cultivation ； The second reason is that as the pandemic situation eases, the operating rates of compound fertilizer manufacturers have been increasing gradually; they are currently around 63%. This not only ensures timely delivery of fertilizers for use in spring but also helps to guarantee an adequate supply during the summer preparation period for fertilizers. With sufficient supplies available, it is unlikely that there will be a situation of tight supply leading to rising prices. Given insufficient demand on the end side and excessive supply from upstream, the overall outlook remains negative in the long term. Finally, preferential policies are introduced cautiously. Compared to the factory prices, the preferential policies offered by compound fertilizer manufacturers in different seasons also attract a lot of attention. Even if a company advertises low prices, the lack of corresponding discounts at the time of purchase will dampen downstream companies’ willingness to stock up. At present, some companies have introduced preferential policies for high-nitrogen fertilizers in order to facilitate the closure of new orders, but they proceed with caution. One reason is that raw material costs may fluctuate in the future, and the extent of these discounts affects their profit margins; given the ongoing compression of existing profits, the level of these discounts is of crucial importance ； The second reason is the strong bidding mentality among enterprises; aside from the factory price, which can stimulate demand at the downstream level, corresponding preferential policies are also crucial. In summary, in the initial stage of the development of the high-nitrogen fertilizer market, prices will remain relatively stable. Companies will also introduce various incentive measures to boost demand from end-users; however, in the long term, decisions will still need to be based on the factors mentioned above. (Feng Hongyang)