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This post was last edited by sdwfsgyykai on 2020-8-2 at 16:13. Title: Prices of diammonium phosphate remain high; it performs exceptionally well. Author/Source: China Fertilizer Network. Date: 2020-07-28. Clicks: 82. By the end of July, once the autumn market started operating, it reached a stalemate – urea prices kept falling, while potassium chloride prices at ports struggled to stay above cost levels. The compound fertilizer market progressed slowly. It seems that only diammonium phosphate did well this summer. Some companies that had initially set low prices raised them twice since the beginning of the month. Even though the downstream market is not willing to accept high prices, diammonium phosphate manufacturers, unlike in previous summers, are quite determined to maintain high prices. Why do these diammonium phosphate factories have such confidence? Firstly, there is a large supply waiting to be sent, while the available stock for sale is relatively limited. After the application of fertilizers for summer corn planting, due to low prices of raw materials, the price of diammonium phosphate remained relatively low. Some downstream distributors took advantage of this situation to enter the market at lower prices. Coupled with purchases by large traders such as Sinochem and Sinograin, some companies were able to meet domestic orders until mid-to-late August; in some cases, there were no more quotes available in the domestic market, and they stopped accepting new orders. At present, most diammonium fertilizer manufacturers have limited inventory available for sale in July and August, and they are quite determined to maintain high prices. Following this increase in prices, although downstream customers are not very receptive in the short term, the likelihood of companies reducing their prices is low due to less pressure from domestic sales and the approaching autumn market. Secondly, the favorable export situation has temporarily reduced domestic supply pressure. First, in terms of volume, autumn is the peak season for phosphate fertilizer exports. Markets in South and Southeast Asia, which are also located in the Northern Hemisphere like China, will also experience a peak period for DAP sales. Previously, Indian domestic companies focused their production efforts on NPK fertilizers; thus, there remains a demand for DAP imports going forward. Secondly, in terms of price, the export price of diammonium phosphate in China is currently at 311–315 US dollars per ton. Although the recent appreciation of the RMB has reduced the willingness of some companies to export, thanks to the currently low prices of raw materials, diammonium phosphate manufacturers are still able to export at a level above their total cost. It can be seen that this year’s export trends will provide support for the domestic market. For those companies with large production capacities, the cost of maintaining higher prices in the domestic market is lower, which reduces the risk of price cuts in the future. Finally, there is still demand in the autumn market. Although it was mentioned earlier that most manufacturers have limited stock available in July and August, this does not mean that the diammonium phosphate market will be saturated in the fall. For most companies, export orders account for a large proportion of their production during these two months; only a few factories in Hubei handle solely domestic orders. According to the author’s investigations, due to concerns about a price drop for diammonium in September, traders who bought goods in advance have purchased amounts that account for around 60% of their sales volume for the autumn market; this does not even include those traders who acted too late to take advantage of the extremely low prices. Therefore, in September, there is still demand for diammonium phosphate in the domestic market; if export conditions remain favorable, the risk of price drops for diammonium phosphate will **decrease**. In summary, the relatively limited availability of goods for sale in July and August has led factories to be reluctant to lower their prices. Should the export situation remain stable and positive in September, there will be little chance of a significant price drop for DAP. For downstream distributors who missed the opportunity to purchase at lower prices earlier on, it is crucial to stay patient at this time; they should not rush into the market blindly. Instead, they must carefully analyze each manufacturer’s policies and future order trends before making any purchases. (Rong Guangwen)