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The wholesale price has dropped again – is there still a future in selling diammonium phosphate? Author/Source: China Fertilizer Network Date: April 20, 2020 Page views: 18 As we reach late April, the fertilizer market has entered a rather awkward transitional phase—where the spring market is winding down while the summer market has yet to get underway. Currently, most DAP manufacturers have very few spring orders left to fulfill. In some regions where fertilizer application takes place earlier in the season, the retail phase has already been completed. Distributors with excess inventory are now selling at reduced prices. Some compound fertilizer and blended fertilizer plants have also started offering raw fertilizers at lower prices. As a result, wholesale prices in the market are quite erratic. Taking Heilongjiang Province as an example, the wholesale price for 64% DAP is between 2,450 and 2,550 yuan per ton; meanwhile, the retail price stands at only 125–135 yuan per bag. Many local distributors have told the author that buying diammonium phosphate is not profitable at all, so they lack the enthusiasm to sell it. However, the objective needs of rural farmers always exist. Taking the Northeast market as an example alone, the total volume of phosphatic fertilizer shipped by the four major companies each year exceeds 1.5 million tons. So why do so many people complain in such a large market? Firstly, market transparency is high, and profit margins are low. As a fertilizer that can be used directly in agriculture or as a raw material for blended fertilizers, diammonium phosphate has high demand in the downstream market. Precisely because of this, the transparency of the diammonium phosphate market is much higher than that of emerging water-soluble fertilizers and special fertilizers; consequently, the profit margins differ significantly between them. Most dealers say that investing 2,000–3,000 yuan per ton in diammonium phosphate only yields a profit of around 100 yuan; sometimes, in order to mix it with other types of fertilizers, the retail price is roughly the same as or even slightly lower than the purchase price. In fact, as one of the fertilizers that enjoys high recognition among rural farmers, diammonium fertilizers are available in fewer brands; when sold at reasonable prices, they are much easier to sell than other types of fertilizers. As long as downstream distributors choose the right timing for purchasing to maintain a profit margin for themselves, it is not difficult to reap benefits from the sales process. As for how to seize the right moment, China Fertilizer Network will give you the answer. Secondly, price increases occur during off-peak seasons, while price decreases happen during peak seasons. For dealers who sell diammonium phosphate, it has become common for the pre-payment prices during the low-demand winter period to keep rising, only for the wholesale price of diammonium phosphate to drop sharply when it reaches retail markets in spring. Currently, the spring market is entering its final phase, with some wholesalers beginning to reduce prices significantly. Taking the Heilongjiang region as an example, the mainstream wholesale price of 64% diammonium phosphate has dropped to 2450–2550 yuan; in some areas, even lower prices for certain brands have been reported. The reason for this is that in major markets such as the Northeast and Northwest, diammonium phosphate is mainly used in the spring. This means that any excess stock has to be held for a year; it can only be sold by the end of the year during the winter storage period or even until next spring. Moreover, its price is usually 100-200 yuan lower than that of new stock. Therefore, reducing the price for sales is the best option in order to recover capital. In such a market, for distributors at the second tier and below, determining the right timing to enter the market becomes the most important issue. Looking back at this year’s spring market, ammonium diammonium prices declined steadily before the New Year, leading to low enthusiasm among downstream buyers for stockpiling. After the outbreak of the pandemic, there were difficulties in shipping fertilizers, which prompted everyone to rush in and make purchases, causing overall prices to rise ； Once the shipping issues were resolved, overall prices for enterprises in Hubei region resuming production began to decline again. Entering at the wrong time means incurring losses this spring. In summary, as a traditional fertilizer with a large market share, diammonium faces many difficulties in distribution; however, by choosing the right time to purchase it, its advantage of high sales volumes can be utilized, even to boost the sales of other types of fertilizers. (Rong Guangwen)