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Fall fertilization policy clarified: Is there still a shortage of raw materials? Author/Source: China Fertilizer Network Date: 2020-07-13 Clicks: 7 Recently, most compound fertilizer manufacturers have introduced policies related to autumn fertilizers; in addition, various incentives such as prize draws are offered to encourage dealers from different regions to make payments. At present, the factory price of 45% chlorinated high-nitrogen/high-phosphorus wheat fertilizers (such as 25-14-6/18-22-5) is generally between 1,850 and 1,900 yuan per ton. In addition to these prices, there are policy-related interest benefits of up to 1 percent per month for two months, or storage subsidies of 20–30 yuan, with price guarantees typically in effect until the end of September. According to local dealers, the prices of autumn fertilizers are lower by 100–200 yuan compared to the previous season. Nevertheless, the pre-orders for autumn fertilizers remain modest; only a few companies offer attractive incentives for their best-selling products. As a result, the overall production level of compound fertilizers is still recovering slowly. Moreover, the unstable prices of raw materials such as urea and potash introduce further uncertainties, leading to relatively weak purchasing activity for nitrogen, phosphorus, and potassium-based raw materials at present. Local urea prices have seen a slight increase. Urea, which should have entered a downward trend, has seen a slight rise recently, mainly driven by the need for top-dressing in rice cultivation. However, most in the industry believe that this period of increased demand will be short-lived, and overall, urea prices will remain on a downward trajectory in the future. At present, demand from the urea industry is moderate. Although compound fertilizer manufacturers do have some purchasing needs at the moment, they lack confidence in urea prices and are waiting for lower prices to emerge. Currently, compound fertilizer companies in Linyi, Shandong, are purchasing urea at prices ranging from 1640 to 1670 yuan per ton. In the short term, these companies will continue to make purchases in batches based on their actual needs. It is reported that urea manufacturers in certain areas are planning to form joint ventures with downstream compound fertilizer companies. Currently, the market for ammonium chloride is stable with relatively decent prices. However, the production rate has increased recently, leading to an increase in supply in the market. Downstream compound fertilizer manufacturers show little interest in it and have no strong desire to purchase it. Quotation for monoammonium is **. Recently, the demand for monoammonium phosphate has slowed down slightly, but prices remain ** stable. In Hubei province, the standard ex-factory price for 55% powdered monoammonium phosphate is between 1850 and 1900 yuan, while the actual price at the time of delivery is around 1800-1850 yuan. Many companies have orders pending execution, with delivery expected to continue until mid-August or even the end of August; therefore, there is little pressure on inventory levels. Recently, demand has slowed down slightly. The inventory of monoammonium phosphate held by compound fertilizer manufacturers, along with the amount of monoammonium phosphate ready for shipment, is sufficient to sustain production for some time. For now, most compound fertilizer companies have adopted a wait-and-see attitude. Additionally, since it is still early in the period when fertilizers will be used by end-users, these companies have not yet formulated any new purchasing plans. Potash fertilizer prices are currently on an upward trend while remaining stable. The price of potassium chloride is close to its minimum cost. While downstream buyers can accept the current price, they are not in a hurry to make purchases. At present, the price of 60% crystalline potassium chloride sourced from salt lakes at the delivery point is around 1780–1800 yuan. The supply and demand in the potassium chloride market are relatively balanced; stability will prevail in the short term, with a trend of gradual price increases continuing. Potassium sulfate manufacturers generally do not face inventory pressures; some of them have orders scheduled until August. There are no major issues expected in the short term. Although supply is slightly tight, demand is not very strong either, so there is willingness for price increases but a lack of motivation to do so. Fertilizer manufacturers are relatively cautious when purchasing potassium fertilizers; they are not in a hurry to do so and only purchase them as needed and according to a plan. In summary, although the policies regarding autumn fertilizers are gradually becoming clearer, it seems that their impact is minimal for now. Only those companies that produce high-demand products are able to collect payments smoothly. As a result, compound fertilizer manufacturers have slowed down their purchases of raw materials in the short term; in particular, purchases of monoammonium phosphate have decreased slightly, and purchases of urea are being approached with caution. There is no urgency to purchase potassium fertilizers either. Since it is still early before the time when these fertilizers will be used in autumn, the cautious attitude of end-users has also led compound fertilizer manufacturers to adopt a wait-and-see approach. In the short term, it is unlikely that these manufacturers will make significant purchases of raw materials. (Zhao Hongye)