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Multiple factors drive price increases; can monoammonium phosphate outperform urea? Author/Source: China Fertilizer Network Date: 2020-07-27 Clicks: 96 There have been many developments regarding urea this week. First, major urea producers in Shandong reduced their production due to temporary issues with their manufacturing facilities; meanwhile, improved orders led to less supply pressure, which resulted in a slight increase in prices. Following this, urea prices on the futures market rose after reaching a price ceiling, and they continued to increase in recent days. Urea producers in some regions also raised their prices. On the evening of July 22, India’s MMTC issued a new round of urea tender, with the submission deadline set for July 30, and delivery scheduled for September 4. The overall market atmosphere improved, and urea producers in Shandong, the Two Rivers region, Shanxi, Anhui, and other places all raised their prices. All three of these factors contributed to this price increase, ultimately leading to a rise in urea prices during a period of weakness. So, can ammonium nitrate be as adept at manipulating prices as urea? In fact, monoammonium is not as reactive as urea, but the overall market situation remains stable. Firstly, in recent weeks the prices of monoammonium nitrate have remained relatively stable. In Hubei province, the standard ex-plant price for 55% powdered monoammonium nitrate is still between 1850 and 1900 yuan per ton; the actual price at which it is delivered is around 1800–1850 yuan. It is reported that transactions at higher prices are rare, with most deals being made at around 1830 yuan. Large manufacturers in Sichuan offer an ex-plant price of 1800 yuan for 55% powdered monoammonium nitrate, while actual prices for large orders are around 1750 yuan. In Henan, the ex-plant price for 55% powdered monoammonium nitrate is as high as 1900 yuan; this is mainly due to a larger volume of stock available compared to other varieties, though the actual delivery price is around 1850 yuan. Prices in previous periods were lower. There is little pressure on factory inventory. Recently, the orders pending fulfillment by ammonium nitrate producers have been being processed, with this process likely to continue until around mid-August; some companies may be able to complete these orders until the end of September. These companies have not faced much inventory pressure over the past six months, so shipments have proceeded smoothly. The factory operation rates have remained stable at around 40% since the end of the pandemic, with some companies still not operating at full capacity. Additionally, due to various factors, certain companies have lower production levels of agricultural ammonium nitrate. By controlling orders in phases, the company has managed to maintain a certain level of orders pending shipment in recent months, resulting in low overall inventory pressure. Demand remains in the later stage. In recent weeks, the demand from compound fertilizer manufacturers for monoammonium phosphate has slowed down slightly. According to these manufacturers, new orders for monoammonium phosphate have not been very satisfactory recently; fewer deals are being made at high prices, and compound fertilizer producers are still not willing to accept such high prices. Although compound fertilizer manufacturers in areas such as Lianghe in Shandong still have a demand for such products, it is understood that the volume of this demand is not large, and there is no urgency to make purchases. Large manufacturers in Hebei have a demand for 2,000–3,000 tons of ammonium phosphate each in August and September, and they purchase this product mainly from established firms in Hubei. Large manufacturers in Shandong also face a demand gap of 20,000 tons, but they are not in a hurry either and are choosing to wait and observe first. The support from raw material costs is weak. The sulfur market has not been performing well in the past two weeks. Port inventories of sulfur in China have increased by about 70,000 tons on a weekly basis, reaching a total of around 3 million tons; at the Yangtze River ports, the inventory increase was of about 150,000 tons, taking it to 1.77 million tons. Prices of sulfur at ports have also dropped significantly this week. Currently, the price of granular sulfur at the Yangtze River ports and Fangchenggang port is approaching 610 yuan per ton, and there is no sign of a significant improvement in the market in the short term. The supply and demand situation is relatively favorable, but attention should still be paid to the current market atmosphere. According to industry insiders, the market mood is not very optimistic at present, and new orders for monoammonium compounds are not performing well. However, in the short term, prices for monoammonium compounds should remain stable, with individual actual transaction prices possibly seeing some adjustments. (Zhao Hongye)