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Decided! Bids due at the end of autumn fertilization season – will prices drop significantly? Author/Source: China Fertilizer Network Date: 2020-06-15 Clicks: 5 In mid-June, wheat harvesting was in full swing in China’s main wheat-producing areas; in some regions such as northern Anhui and southern Henan, the harvesting was almost complete. The start of the wheat harvesting season marks the end of the summer compound fertilizer market. Although there is room for restocking in the downstream markets, the demand is rather limited. The market has been awaiting the onset of the autumn fertilizer season. It is rumored that some companies will hold meetings with autumn fertilizer distributors later this month; however, topics such as the pricing of autumn fertilizers, any preferential policies, and future trends are currently under intense discussion. Compared to the same period last year, the fertilizer market started a bit earlier this autumn, reducing the slack market atmosphere that usually prevailed at the end of summer. However, it is indeed difficult to determine prices and policies for compound fertilizers during this phase. Faced with the volatile conditions in the raw material market, companies have to proceed with caution. Additionally, as we are currently in a period of reduced demand, many companies are lowering their production levels in preparation for fertilizer production in autumn. It is expected that the prevailing prices by the end of the month will remain at the same level as those in the previous two quarters, with little possibility of significant fluctuations. Firstly, the cost of phosphate fertilizers has risen. In regions such as Shandong, the Two Rivers area, and Anhui, wheat cultivation is the main activity in autumn. Apart from diammonium fertilizer, the demand for compound fertilizers is mostly for those with high phosphorus content; therefore, the price of natural phosphate fertilizers is even more crucial. After a long period of weakness, the price of monoammonium phosphate has started to rise. As of now, the mainstream ex-factory price for 55% powdered monoammonium phosphate in Hubei’s main production areas is between 1,800 and 1,820 yuan per ton. Some companies have a few orders pending delivery. In light of the upcoming demand for fertilizers in autumn, monoammonium phosphate manufacturers are likely to maintain or slightly increase prices, with an upward trend expected in the short term ； The domestic diammonium phosphate market is also seeing growth; supply conditions in areas such as Central China have improved. With the peak demand period approaching, and the export market showing improvement compared to earlier times, although prices remain stable, there is reason for optimism. Secondly, demand is moderate. Another key factor is that the demand for compound fertilizers in the autumn also accounts for a significant proportion. Therefore, if end-demand can be fully realized, the market situation for fertilizers in autumn is likely to improve. However, there are indeed concerns regarding demand; one reason is the threat of natural disasters. During May and June of the past, the main types of natural disasters across the country were windstorms, floods, and droughts, with floods being the most severe in Hunan, Guangdong, and Guangxi provinces, having an irreversible impact on normal agricultural activities ； The second reason is the lack of confidence in stockpiling by downstream users; given the volatile trends in the fertilizer market, some of them are now delaying their stockpiling efforts and opting to purchase as needed. Finally, supply remains high. As of the end of this week, the overall operational rate of large-scale compound fertilizer manufacturers across the country was around 44%, a decrease of more than 10 percentage points compared to previous periods. Fertilizer manufacturers are voluntarily reducing their production volumes in preparation for the fertilizer production in the coming autumn. Once pre-orders start to arrive, production rates will gradually increase again, and high levels of supply will persist. The main reason for this is that the total amount of fertilizer available remains unchanged; it’s just that there are more people competing to get their share. With a constant total market demand and an increase in the number of suppliers, individual companies experience declining sales and falling profits. This leads to price wars, which is why the compound fertilizer market remains sluggish throughout all seasons these days. In summary, there are still two weeks left until the end of the month. If raw material prices remain relatively stable during this period, the prices for autumn fertilizers will be announced then; however, a delay is also possible. It is expected that these prices will follow the recent trend, with little likelihood of significant changes.