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After getting through these two weeks, will the price of compound fertilizer no longer drop? Author/Source: China Fertilizer Network Date: 2020-04-15 Clicks: 200 As of now, the provisional ex-factory prices for 40% chlorinated high-nitrogen fertilizer series (such as 28-6-6/30-5-5) across the country are around 1,800–1,920 yuan per ton. Some companies will still attempt to set prices and offer incentives for summer fertilizers, but buyers are not very enthusiastic about purchasing them and approach the market with caution. In late April, the market situation regarding summer fertilizers will become completely clear. If the prices of high-nitrogen fertilizers remain stable or rise in the next two weeks, this could **strengthen price support during the peak season. In other words, once this half-month period passes, the prices of compound fertilizers are unlikely to decline? Firstly, the urea market saw short-term positive trends. Recently, the urea market has remained relatively stable. In Shandong and the Henan-Hebei regions, the prevailing ex-factory prices for urea are between 1,700 and 1,720 yuan per ton. Currently, China’s daily urea production totals around 160,000 tons. Downstream compound fertilizer manufacturers are entering the peak season for high-nitrogen fertilizer production, leading to 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 given the increasing domestic supply and difficulties in the export market, the long-term outlook remains uncertain. Secondly, terminal demand remains negative in the long term. As one of the key factors influencing the market trends of compound fertilizers, the term “demand” has become a topic of much discussion. Currently, it is anticipated that the overall demand for high-nitrogen fertilizers this summer may decline. One reason for this is the relatively low prices of agricultural products, which have significantly reduced farmers’ willingness to plant. Along with this shift in farming mindset, many farmers are opting for alternative crops, resulting in a decrease in the total planting area ； The second reason is that after the pandemic eased, the operating rate of compound fertilizer manufacturers gradually rose; currently it stands at around 63%. This has not only ensured the timely delivery of fertilizers for spring planting, but also, to a certain extent, guaranteed an adequate supply during the summer fertilizer stockpiling period. With sufficient inventory available, there is no chance of shortages or price hikes. Given weak end-market demand and excessive upstream supply, the outlook remains bearish 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 considerable attention; even if a company claims its price to be low, the lack of corresponding discounts at the time of transaction 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 reduction in profits, the level of such discounts is of great importance ； The second reason is that companies have a strong competitive mentality; apart from the ex-factory price contributing to downstream demand, corresponding preferential policies will also be crucial. In summary, in the initial stage of the high-nitrogen fertilizer market, market conditions will remain relatively stable. Meanwhile, companies will gradually introduce preferential policies to stimulate downstream demand. In the long run, however, developments will still depend on the aforementioned factors. (Feng Hongyang)