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Why isn’t Yian compromising this year? Author/Source: China Fertilizer Network Date: 2020-07-21 Clicks: 134 The prices of monoammonium fertilizers remain stable. In Hubei province, the standard ex-factory price for 55% powdered monoammonium fertilizer is around 1850–1900 yuan per ton; the prices for 58% and 60% powdered monoammonium fertilizers are around 2000 yuan and 2100 yuan per ton respectively. A discount of 30–50 yuan can be applied when the payment is made upon delivery. In Henan, the ex-factory price for 55% powdered monoammonium fertilizer is 1900 yuan or slightly less, with the actual price upon delivery being 1850 yuan. Large manufacturers in Sichuan offer an ex-factory price of 1800 yuan for 55% powdered monoammonium fertilizer; however, due to lower production volumes, there isn’t much room for negotiation on the actual price. Although autumn is the peak season for monoammonium, the procurement of fertilizer raw materials started a bit earlier this autumn, which led to a slowdown in new procurement plans for monoammonium in recent weeks. Yet why remain stable in terms of pricing? By the third quarter, monoammonium manufacturers have not shown any willingness to compromise this year, as they usually do in previous years; the author will briefly analyze the reasons for this. I. Enterprises are free from long-term inventory pressure. Before the Spring Festival, some ammonium nitrate producers had a certain amount of inventory, especially those located in areas with disadvantages in terms of geography. After the outbreak of the pandemic, many of these producers stopped operations. Those that were already on holiday during the Spring Festival extended their maintenance periods even further. This was particularly true for ammonium nitrate producers in Hubei Province. Downstream compound fertilizer manufacturers and traders believed that, as Hubei is a major production area for ammonium nitrate, there might be a shortage of supply and difficulty in obtaining this product in the future; therefore, they arranged their purchases in advance. Producers in other regions were also affected by the pandemic. Given the uncertainty regarding when the pandemic would end and when factories could resume operations, compound fertilizer manufacturers and traders expected prices for ammonium nitrate to rise, which led to a tight supply of this product. From March to April, as ammonium nitrate producers in Hubei gradually resumed operations, they received many orders, and there were ongoing orders waiting to be fulfilled. Since these producers accepted orders in phases and mainly supplied fixed partner compound fertilizer manufacturers, the supply of ammonium nitrate in the market remained slightly tight. Even during the off-season, when there was no inventory available due to companies not having stock to sell, there was no significant buildup of inventory. II. Downstream demand remains moderate. In recent years, compound fertilizer companies have adopted a strategy of purchasing ammonium phosphate raw materials in smaller batches as needed, rather than stockpiling large quantities at once. Although the volume of purchases was relatively higher in the early stages due to the impact of the pandemic, most companies still prefer to make purchases in batches. As a home market for monoammonium nitrogen, although it has been observed recently that purchases by compound fertilizer manufacturers have slowed down, demand will still exist in the future. For example, large manufacturers in Hebei carry out purchases on a monthly basis, with a monthly demand of around 2,000–3,000 tons; they do not make large-scale purchases all at once. Large manufacturers in Shandong still have a demand gap of about 20,000 tons before October, but purchases are being postponed as their inventory and goods awaiting shipment can cover needs for some time. From this perspective, there is still a certain level of steady demand for compound fertilizers in the future. It is a balanced approach for ammonium-based fertilizer manufacturers to accept new orders in batches, while compound fertilizer manufacturers purchase in batches as well. In the context of the impact of the pandemic this year, the relationship between supply and demand has become an even more important factor influencing the price of ammonium phosphate. At the same time, the trend in raw material prices has a relatively weaker impact on the cost of ammonium phosphate; phosphorus ore prices have remained stable in recent years, thus having little effect on the cost of ammonium phosphate. Currently, the focus is on the trend in sulfur prices. Although sulfur prices are not high at present and there have been no significant fluctuations; they have only changed by 5-10 yuan recently. A decrease of 100 yuan in sulfur prices has an impact of around 46 yuan on the price of 55% powdered ammonium nitrate, so the effect on the price of ammonium nitrate is relatively minor. In summary, the market situation for monoammonium phosphate this year is fairly good; companies keep their inventory levels low, and there are still orders pending to be fulfilled over the next month or so. Demand is expected to remain strong, so it is likely that prices for monoammonium phosphate will trend upward in the short term. (Zhao Hongye)