Thread Content
Fertilizer markets in decline – where can diammonium phosphate find a way forward? Author/Source: China Fertilizer Network Date: 2020-05-06 Clicks: 39 As the spring gives way to summer, a gentle breeze blows across most regions, and those areas have emerged from the shadow of the pandemic. Yet the fertilizer market is facing a downturn, with urea prices falling significantly. There are rumors that the purchase price in Linyi has dropped below 1700 yuan per ton (the same unit is used throughout)； Monoammonium and diammonium compounds are in a similar situation; since production resumed in Hubei, the market has been bearish on them. Now, with the end of the sales period in spring, their prices have plummeted even further ； Large-scale potassium fertilizer contracts are about to be signed at low prices, putting pressure on the prices of imported potassium chloride ； The price of compound fertilizers is subject to the fluctuations in the raw material market, increasing the risk of price drops. The entire fertilizer market appears so weak after shedding the demand driven by spring planting; is there still room for a further drop in the price of diammonium phosphate? How to survive in a challenging market? First, domestic demand has slowed down, and the categories have changed. Compared to the recently concluded spring market, the summer fertilizer market has never been dominated by diammonium phosphate over the years; a decline in demand for this product is something that can be expected. At present, there are very few new orders in the diammonium phosphate market – a few factories in Hubei have only about a thousand tons ready for shipment domestically, with no clear plans for where these goods will go next. One reason is that in the North China region, summer top-dressing for corn mainly relies on urea and high-nitrogen compound fertilizers, resulting in a relatively low amount of diammonium phosphate being used directly in agriculture ； The second reason is that in summer, most diammonium phosphate is sold for industrial use; with urea and compound fertilizers hitting new lows in price, manufacturers naturally prefer to purchase diammonium phosphate with lower concentrations at lower prices, as competition in the market for diammonium phosphate with higher concentrations is more intense. Secondly, production levels remain high, while export prices stay low. By May, full summer is just around the corner. As has been the case in previous years, domestic diammonium phosphate manufacturers will enter a period of extensive shutdowns for maintenance or rotational repairs. However, according to the author’s understanding, only a few factories in the southwest and a small number of enterprises in the north plan to carry out maintenance work in May. Most diammonium phosphate producers say that the outbreak of the pandemic in spring has caused delays in their annual production plans, and coupled with low inventory levels in the factories after spring, they have no plans for maintenance in the short term. In the international market, India has made efforts to restore its domestic production capacity following the outbreak of the pandemic, while supply from key exporting countries such as Morocco has remained steady. As Chinese diammonium phosphate manufacturers shifted from domestic sales to exports, international supply has increased significantly. In April, India issued several small-scale tenders for diammonium phosphate, pushing the CIF price down to 315 dollars; as a result, the FOB price of diammonium phosphate in our country dropped to 304–308 dollars, with no increase expected in the short term. Finally, pay attention to the raw material market trends. Compared to the stability of phosphate rock and the slight fluctuations in liquid ammonia, the price of sulfur has always been a focus of our attention. The main issue with sulfur is the inventory levels, which are far higher than in previous years. Currently, there is over 2.8 million tons of sulfur in China’s ports. As demand from downstream industries declines, the price of granular sulfur at the Yangtze River ports has dropped to 575 yuan per ton. However, since this price is below the cost of importing sulfur, some industry insiders suggest that sulfur prices might rise. If such rumors prove true, it is unlikely that the diammonium market will see any improvement. In summary, demand for diammonium phosphate in the domestic market is low, but low inventory levels give manufacturers more room for maneuver; sulfur at cost levels, along with the upcoming tenders in Bangladesh, may just help to reverse the situation regarding diammonium phosphate. (Rong Guangwen)