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Fluctuations vary – could there be something fishy? Author/Source: China Fertilizer Network Date: 2020-06-12 Clicks: 4 Starting around mid-May, some large ammonium sulfate producers in Hubei Province raised their prices by 20–50 yuan per ton. Subsequently, other companies in Hubei also increased their prices. Currently, the mainstream ex-factory price for 55% powdered ammonium sulfate in Hubei is between 1800–1820 yuan; some lower-quality products are now priced at 1750 yuan. Large producers’ ex-factory price for 58% powdered ammonium sulfate has risen to 1900 yuan or slightly higher, while the price for 60% powdered ammonium sulfate has reached 2050 yuan. The quotes from ammonium sulfate manufacturers in other regions did not rise accordingly; only a few large manufacturers in Sichuan saw a slight increase in their prices for low-end products, while the quotes of most other manufacturers remained stable or there were no quotes at all. In some cases, prices even declined. So why does such a situation arise? And followed by a brief analysis by the author. First, why have the prices of monoammonium phosphate offered by Hubei-based enterprises risen? As a major producer of ammonium nitrate, Hubei experienced a long period of production shutdowns after the Spring Festival due to the pandemic. Normally, May would be the time for annual maintenance work, but this year is different – fewer companies are carrying out maintenance, and most large manufacturers continue to operate. With weak demand during the off-season, the large ammonium nitrate producers have signed orders worth tens of thousands of tons only with large compound fertilizer manufacturers in regions such as Shandong and the Two Rivers areas. Thanks to their relatively favorable price policies, the amount of ammonium nitrate that Hubei’s companies still have available for shipment has increased. These companies have begun to control or suspend new orders, raising their quotes tentatively, and other Hubei-based companies are following suit. Currently, the shipments that can be arranged are scheduled until the first half of July. In addition, Hubei-based enterprises enjoy a geographical advantage; it is convenient for them to supply compound fertilizer to large manufacturers in Shandong and the two river regions, and the prices at those factories are relatively reasonable. Currently, the price of 55% ammonium sulfate powder shipped to Shandong for storage there is around 1,850 yuan. Secondly, why have the prices of monoammonium in regions such as the southwest declined? It is understood that after the price increase in Hubei, the quotes from enterprises in Yunnan and Guizhou have actually decreased slightly. Currently, the ex-plant price for 55% ammonium sulfate in Yunnan is 1700 yuan, and the actual transaction prices have also dropped. It is said that the price of 58% ammonium sulfate produced by large factories in Yunnan when delivered to Guangxi is less than 1900 yuan. Large factories in Guizhou, facing low profits due to poor sales of monoammonium phosphate, have switched to producing diammonium phosphate instead. The main reason for the price drop is insufficient demand. For large compound fertilizer manufacturers in regions such as Shandong and the Two Rivers areas, Hubei-based ammonium nitrogen fertilizers are the preferred choice for procurement; the geographical advantages there ensure smooth transportation and relatively reasonable shipping costs. Currently, we are in the transition period between summer and autumn, and the overall production rate of compound fertilizers is low. In recent years, large manufacturers in Shandong and other areas have only stocked an appropriate amount of ammonium nitrogen fertilizers based on their needs, so purchases during the off-season are normal. Other smaller compound fertilizer companies are facing poor sales at present, and issues such as financial constraints and lack of confidence in procurement result in low and uneven purchasing volumes. Some in the industry believe that the price of ammonium nitrogen fertilizers has not yet reached its bottom; even though prices in regions such as the southwest have dropped, this has not yet stimulated interest from downstream buyers. Ammonium sulfate manufacturers in regions such as the southwest have lowered their prices; so far, no large volume of orders has been received that need to be shipped. In summary, although the prices of monoammonium phosphate have risen, its price has not yet stabilized in a real sense due to factors such as insufficient demand at present and some large manufacturers being reluctant to take on new orders. However, since autumn is the main period for demand for monoammonium phosphate, there is still a solid demand for it. It is expected that fertilizer manufacturers will gradually resume operations from mid to late autumn, and they will hold marketing meetings for high-phosphorus fertilizers during this time. Thanks to the positive market atmosphere, these manufacturers are likely to show renewed interest in purchasing more monoammonium phosphate, which could lead to further slight increases in its prices, with actual sales volumes possibly seeing a modest rise as well. (Zhao Hongye)