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Stop talking! Urea Also Doesn’t Want to Bear the Blame Author/Source: China Fertilizer Network Date: 2020-06-17 Clicks: 8 In mid-June, the fertilizer market was in a \"difficult\" situation: summer demand had ended, and the autumn market had not yet started to develop; both suppliers and buyers waited, observing the situation to see how it would evolve. After the rush to replenish supplies of high-nitrogen corn fertilizers for the summer season came to an end, discussions about the launch of the autumn market began to emerge one after another. Not only is there talk about the prospects for the compound fertilizer market, but similar rumors exist regarding the water-soluble fertilizer market as well. However, during the transitional period between the summer and autumn markets, urea prices may once again drop. After a period of rapid growth, the domestic urea market has settled down; recently, prices have shown a slow downward trend. Demand has decreased during the summer fertilization season, and companies that were undergoing maintenance have gradually resumed operations, resulting in an oversupply once again. Although India has issued a new round of tenders for urea, there is currently a discrepancy between domestic urea prices and international prices, so it is not yet clear whether exports to India will take place at lower prices. Apart from urea, the phosphatic fertilizer market is of particular concern in autumn. At present, the prices of monoammonium phosphate and diammonium phosphate are on the rise, while the price of potassium chloride has almost reached its lowest level. In other words, the weak performance of the urea market is the \"only\" negative factor during this autumn period, and the future for the water-soluble fertilizer market may be uncertain. First, the discount margin for transactions has been increased. Unlike other types of fertilizers, the market for water-soluble fertilizers does not experience significant fluctuations; it generally remains stable. The peak seasons for their use are in the summer and autumn in regions such as the northwest and north China. Logically, prices should remain steady during these periods. However, recently there has been some relaxation in pricing discounts in certain areas. One reason for this is the decline in raw material costs – the prices of key raw materials used in their production, such as potassium dihydrogen phosphate and potassium nitrate, have all decreased to varying degrees, which in turn reduces production costs ； The second reason is the intensifying market competition; different brands at the same price level are forced to use their own promotional offers to stimulate market activity. Therefore, it is not surprising that the discounts offered for transactions have been relaxed recently. Secondly, the downstream demand space is shrinking. As the most crucial element in the market chain, demand from end-users can be considered the best driving force for market development. The mediocre performance of the compound fertilizer market during spring and summer is mainly due to weak demand from end-users. There are currently some concerns regarding future demand for water-soluble fertilizers; one reason for this is that, similar to traditional fertilizers, demand from end-users is decreasing year by year. Although the overall fertilizer market remains stable, farmers’ enthusiasm for using fertilizers is declining ； The second reason is that, as mentioned above, there is an abundance of brands, and the supply in certain markets far exceeds actual demand; as a result, a positive cycle turns into fierce competition, companies face continuous difficulties in selling their products, and the demand from downstream sectors keeps shrinking. Finally, market sentiment changes frequently. The overall trend in the fertilizer market clearly has an impact on the markets for individual fertilizer varieties. This year’s situation is somewhat special, as there is a noticeable lag in the fertilizer market. During the spring and summer seasons, both companies and distributors saw reductions in sales to varying degrees. The outlook for autumn is also pessimistic; firstly, there is still pressure to boost prices, as neither the cost of raw materials nor downstream demand is sufficient to support price increases ； Secondly, price disorders are quite common, manifested mainly by uneven prices and an increasing gap between high and low prices. Especially in the case of water-soluble fertilizers, the prices vary greatly, which creates difficulties in making choices during the procurement process for downstream users. In summary, the recent drop in urea prices seems to have had a negative impact on the market ahead, and it does appear that urea might be held responsible for this. However, considering the trends in prices of other raw materials as well as the expected developments in supply and demand, the fertilizer market will also face significant challenges this autumn; therefore, caution is advised. (Feng Hongyang)