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The Dream of Rising Urea Prices Comes to an End; Phosphorus-Potassium Compound Fertilizers Face Their Own Challenges Author/Source: China Fertilizer Network Date: April 20, 2020 Clicks: 19 After the Qingming Festival holiday, urea prices continued to rise slightly, but recently this upward trend has slowed down. Currently, the price at compound fertilizer factories in Linyi, Shandong is around 1,760 yuan per ton. Prices have remained stable for now, mainly because a large amount of urea from Shandong is supplied from Heze. The demand from the large compound fertilizer factories in Shandong and Hubei located in Heze has increased relatively. However, as the orders held by urea manufacturers are gradually fulfilled, supply has increased slightly. Although there is still some demand in the agricultural sector, industrial users have seen a reduction in demand due to the impact of the pandemic, which in turn has led to a decrease in demand for urea. At present, during the production of high-nitrogen corn fertilizers and rice fertilizers by some compound fertilizer manufacturers, there is still a demand for urea. However, there is a strong tendency to buy when prices are high and avoid buying when prices drop. As a result, these manufacturers continue to purchase urea in batches according to their actual needs, without taking any reckless actions. Recently, the overall operating rate of various compound fertilizers has been around 60%. Most companies are currently producing high-nitrogen fertilizers for corn and rice. Some companies have nearly completed receiving orders for spring fertilizers, and the spring market is now in its final stages, with significantly reduced demand from end-users. Although production of summer fertilizers has begun, the market is progressing slowly, and there is limited willingness on the part of downstream buyers to purchase these fertilizers. Compound fertilizer manufacturers face considerable pressure to sell fertilizers during the summer; the prices of raw materials such as nitrogen, phosphorus, and potassium are unstable. Although quotes are available at present, no specific policies have yet been established, and these manufacturers are waiting to see how the market for raw materials develops before making decisions. So, what about the other ingredients of compound fertilizers? The market for ammonium chloride is characterized by weak performance, with transaction prices declining slightly. Companies face considerable pressure to sell their products. According to market feedback, the reference price for dry ammonium chloride produced by a large factory in Sichuan is 550 yuan; the price when delivered to some provinces outside this region is around 670–680 yuan. Fertilizer manufacturers have not shown much interest in them recently. The monoammonium phosphate market remains sluggish. After lowering their quotes by 50–100 yuan, manufacturers’ prices have stabilized for now; some companies continue to withhold their quotes. Transactions are being conducted on a case-by-case basis. Reportedly, in Hubei, the delivery price for 55% powdered monoammonium phosphate with payment terms accepted in Shandong has dropped to 1,900–1,930 yuan. For smaller producers at the lower end of the market, the delivery price is merely 1,850 yuan. Calculated accordingly, the actual ex-factory price for 55% powdered monoammonium phosphate in Hubei is around 1,720–1,800 yuan. In Sichuan, major manufacturers are selling 55% powdered monoammonium phosphate at approximately 1,700–1,750 yuan per unit. Compound fertilizer manufacturers have already made moderate stockpiles of monoammonium phosphate as raw material in the early stage; they still have a number of pending orders to fulfill, which can be executed through late April. It is expected that in the near term, these manufacturers will not have many new procurement plans for monoammonium phosphate. However, demand for purchases is likely to pick up around the end of this month or early next month. Potassium chloride and potassium sulfate are on a downward trend. The delivered price of 60% crystalline potassium chloride from Salt Lake is currently between 2,000 and 2,050 yuan, which represents a decrease compared to earlier levels; moreover, minimum price guarantees still apply for large orders. Recently, industry players have been paying close attention to the signing of major import contracts for potassium chloride, but no definitive news has emerged yet. China’s asking price is unlikely to exceed $220 per tonne CIF. As potassium chloride prices decline, the market for potassium sulfate is also being somewhat affected. For the time being, compound fertilizer manufacturers are focusing their attention on large-scale contracts regarding potash fertilizers; there are not many new procurement plans at present. In summary, the fertilizer market is relatively sluggish. Although recent fluctuations in urea have drawn some attention to the market, they have not significantly improved the negative sentiment surrounding it. It is expected that the market will remain weak in the short term, with little interest in purchasing raw materials for compound fertilizers. (Zhao Hongye)