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Diammonium prices remain stable; is now the time to purchase fertilizer? Author/Source: China Fertilizer Network Date: 2020-06-15 Clicks: 5 As wheat harvesting is complete in many areas, sales of base fertilizers for summer corn are gradually coming to an end. The demand for diammonium phosphate in both industrial and agricultural sectors is declining, yet its price has not continued to fall as it did last year. Currently, the ex-factory price of 64% diammonium phosphate in Hubei remains stable at 2100 yuan per ton. In the southwestern region, the pre-payment price for 64% diammonium phosphate upon arrival in North China remains high, at 2350–2380 yuan per ton. Although market sales have been modest recently, a few distributors are confident about the autumn market and intend to enter the market at a low price – is now the right time to buy? The domestic market is currently in the transition period from summer to autumn, with frequent price fluctuations. After a series of increases, urea prices have begun to show signs of stability; will prices decline in the future? The summer compound fertilizer market is gradually winding down from south to north as the wheat harvest progresses; trading in local markets is weak, and there are already signs of a decline in overall production activity. Regarding monoammonium, prices remain high due to a large number of orders received recently, and there is still a possibility of further price increases in the future. The potash fertilizer market has continued to decline following the signing of large-scale contracts, with growing attention from the market. In the entire fertilizer market, only diammonium phosphate has remained stagnant; some companies have not changed their prices for nearly half a month now. The downstream market is largely in a state of wait-and-see – what will be the trend in the autumn market? On the demand side, this summer, due to relatively high international prices, most companies shifted their focus to export markets, with enterprises in Hubei being the most evident in this regard; as a result, some factories faced shortages of supply in the domestic market for a time. Affected by the lower volume of domestic shipments during the summer, most industry experts believe that demand for diammonium phosphate this fall will be significantly higher than last year, with overall sales expected to increase. However, the application of fertilizers at the grassroots level in autumn has to wait until the November holiday; entering the market now to take advantage of low prices means a longer timeline overall, which increases operational risks. Raw material prices remain low, resulting in insufficient cost support. Recently, the price of granular sulfur at ports has remained stable at 660 yuan, while the prices at Puguang Wanzhou Port and the Dazhou plant have stayed at 690 yuan and 590 yuan respectively. China’s total sulfur inventory remains above 2.7 million tons, and given the poor market conditions for commodities due to the impact of the pandemic, it is unlikely that sulfur prices will see significant increases in the future. Regarding liquid ammonia, although there has been a slight improvement in some areas recently, the price is still far below the average level of around 3,000 yuan from the same period last year. Apart from the stable prices of phosphate rock, the prices of sulfur and liquid ammonia are well below those of the same period last year, and there is little chance of price increases in the future; therefore, raw material costs will not be able to support the autumn ammonium diammonium phosphate market. There is still demand from exports, but overall prices are unlikely to rise significantly. The main reason why the price of diammonium phosphate in the domestic market has not fallen is that most companies are seeing good export sales, which has helped to alleviate the situation of supply exceeding demand in the domestic market to some extent. However, the FOB price of diammonium phosphate in our country remains stable at only 304–308 dollars, which is far lower than the 350 dollars seen during the same period last year. At this price point, the cost for enterprises in Hubei region at the time of production is around 2100 yuan. Even taking into account favorable factors such as the fact that most exported goods are shipped in bulk and payments are made in cash, it is difficult for this to provide significant support for the price of diammonium phosphate in the autumn. Although there is still demand in the international market, overall supply has not declined, so prices are unlikely to rise significantly in the future. In summary, the autumn market is still some time away; the overall production costs of diammonium fertilizers remain low, so it is unlikely that export prices will rise. Although demand in the future looks promising, a significant increase in prices is unlikely, so caution is still needed when stocking up in advance. (Rong Guangwen)