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Will urea prices continue to fall after the holiday? Can monoammonium reverse the downturn? Author/Source: China Fertilizer Network Date: 2020-05-06 Clicks: 48 At the end of May, the prices offered by urea manufacturers in Shandong and other regions continued to drop. By the end of the month, compound fertilizer producers in Linyi, Shandong, were offering to purchase urea at prices as low as 1,700 yuan per ton, or slightly less. Due to the competitive pricing of urea from Inner Mongolia, local urea manufacturers in Shandong faced increased pressure, leading to further declines in prices. The production rate of urea in these areas remained stable for now, but supply pressures were evident. Although downstream compound fertilizer manufacturers stocked up on supplies before the holiday, the amount purchased was not large and the purchases were not concentrated, so urea manufacturers continued to face significant pressure. There is a risk of further price drops after the holiday as well. So what about monoammonium? Currently, the acceptance and storage price of 55% ammonium sulfate in Shandong region has dropped to around 1,850 yuan per ton. The industry generally believes that market conditions for ammonium sulfate will remain unfavorable in the short term after the holiday, although most players still have confidence in the market during the autumn period. As of early May, not many ammonium nitrate-producing enterprises had decided on maintenance work. Most enterprises in Henan planned to carry out maintenance in the first or second half of the month, with the maintenance period expected to last around 20 days. A few enterprises that had been shut down for a long time had not resumed operations either; however, this had little impact on the overall operational rate of ammonium nitrate production. Enterprises in Hubei, the main production region, had not clearly indicated whether they had any maintenance plans for May. In previous years, enterprises usually did not announce such plans, but after returning from holidays and around mid-May, some of them saw varying degrees of changes in their operational levels. This year’s situation is somewhat special: the impact of the pandemic has resulted in a low overall operating rate for ammonium nitrate production facilities after the Spring Festival. In order to meet their annual production targets, some of these facilities may not plan any maintenance activities for the time being. Additionally, many companies currently do not have any inventory, with some goods still pending shipment. As a result, the overall operating rate for ammonium nitrate production in May is likely to remain relatively high. However, it is still necessary to pay attention to the demand for ammonium nitrate. Demand remains the key factor, but there is not much new demand for monoammonium phosphate in April. Due to the pandemic, compound fertilizer manufacturers purchased large quantities of this substance earlier on, so there is little need for replenishments in April. By May, although compound fertilizer companies do have a certain need for replenishments, the demand is still not very high and it is not concentrated. It is said that large compound fertilizer manufacturers in Henan only require more than 20,000 tons of monoammonium phosphate as raw material before July. With so many competitors and limited supply, monoammonium phosphate manufacturers might engage in price competition in order to secure orders. Recently, some low-priced products on the market have been \"disturbing\" the market dynamics; T-ammonium manufacturers are in a relatively passive position, while compound fertilizer producers hold a certain degree of control. In the short term, purchasing in appropriate amounts based on demand should remain the main procurement strategy. In terms of raw materials, the support for the cost of monoammonium remains insufficient. The inventory in Sulfur Port remains around 2.8 million tons. The prices at Puguang Wanzhou Port and the Dazhou plant have gradually dropped to 580 yuan and 550 yuan respectively. The prices of granular sulfur at Yangtze River Port, Fangcheng Port, and other locations have seen only slight fluctuations recently, staying at 575 yuan; a significant increase is unlikely in the short term. Phosphorus ore prices have also seen a slight decline recently. In summary, there are few positive factors for monoammonium, with negative factors playing a dominant role. Although the industry has considerable confidence in the autumn market in the longer term, it will be difficult for monoammonium to reverse its downward trend in the short term; further declines are likely. (Zhao Hongye)