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Who has the power to decide on autumn fertilizer prices? Author/Source: China Fertilizer Network Date: 2020-06-19 Clicks: 143 As the wheat harvesting activities across various regions come to an end, summer corn planting is underway on a wide scale from south to north; in some areas where the season progresses earlier, corn seedlings have already appeared. During the transitional period between summer and autumn, the fertilizer market finds itself in a somewhat awkward situation, especially when it comes to compound fertilizers – the type of fertilizer used in the largest quantities during autumn. The trend in their prices has become a point of focus. At present, although most companies are willing to offer prices, they lack the determination to take action; overall, the market is in a phase of consolidation during this off-season period. The prices for autumn fertilizers and the related pre-payment policies have not been finalized yet, which prevents downstream manufacturers from becoming more active in entering the market. As a result, some companies plan to hold a meeting with their distributors at the end of this month, with a high likelihood that they will announce provisional prices for autumn fertilizers in order to boost the confidence of downstream partners. As for the trend in wheat fertilizer prices this autumn, most experts believe there will be a steady decline; given the current various influencing factors, that is indeed likely to be the case. First, the raw material market situation. The cost of raw materials is an important factor for compound fertilizer manufacturers when determining their selling prices. Based on recent prices of nitrogen, phosphorus, and potassium raw materials, the pure material cost for 45% chloride-based compound fertilizers with formulas 25-14-6 and 18-22-5 is 1,568 yuan per ton and 1,538 yuan per ton respectively, representing a decrease of over 200 yuan per ton compared to the same period last year. Such a decline indicates the likely trend in the prices of wheat fertilizers in the future. After a wave of price increases, the urea market has once again weakened. With the end of agricultural demand and reduced industrial usage, coupled with the negative impact of India’s new round of urea tenders, prices are likely to continue falling in the coming period ； The market prospects for phosphate fertilizers such as monoammonium phosphate and diammonium phosphate are positive; indeed, the transaction prices in the main production areas have risen. As the peak season for demand arrives in autumn, prices are likely to remain strong in the coming period ； The price of potassium chloride is already relatively at a bottom level; as for when it will rebound and by how much, that remains to be seen. Secondly, actual demand. The main factors driving the start of the compound fertilizer market in autumn are not solely prices and policy measures; the emergence of demand from end-users is actually even more important. Even if prices remain stable, if demand fails to improve, the market will continue to stagnate. The level of demand is also crucial. However, the actual demand for compound fertilizers this autumn seems a bit concerning. Firstly, although wheat production has increased compared to the previous year in some areas, the market conditions are not ideal, and there is little enthusiasm among farmers to plant crops in the next quarter ； Secondly, recent rainy weather in the southern regions has led to frequent flooding disasters, which not only result in reduced crop yields but also cause shortages in some areas, having many adverse effects on future agricultural production plans. Finally, the supply side. As of now, according to data from Zhongfei Net, the overall operational rate of large-scale compound fertilizer manufacturers across the country is only around 44%. Although this seems low, it is actually a normal phenomenon as these companies take time for maintenance in order to prepare for the production of autumn fertilizers. Moreover, some companies have already stocked up on materials needed for autumn fertilizers in advance; the day when the prices for autumn fertilizers are determined will also be the day when these companies resume production. In other words, after July, the overall operational rate is likely to increase rapidly ； Furthermore, considering costs and demand, the prices of compound fertilizers remain low in the autumn; such low prices mean that the market will once again see a situation where volume is prioritized over price. In order to gain market share, most companies will try to minimize their profit margins as much as possible. In summary, the price of compound fertilizers in autumn may already be determined; what influences its trend are raw material costs, demand, and supply conditions. The price is likely to remain low, but there’s no need to be overly pessimistic – further clarity will emerge by the end of the month. (Feng Hongyang)