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Rising raw material prices stir concern – Can compound fertilizers remain indifferent? Author/Source: China Fertilizer Network Date: 2020-07-28 Clicks: 83 In late July, as the autumn fertilizer market progressed to its midpoint, the fertilizer sector was experiencing significant fluctuations. Although there was no widespread surge in demand for purchases, the prices of raw materials saw considerable volatility. In addition to the decline in urea prices, fluctuations in the prices of phosphatic and potassic fertilizers also had an impact on the fertilizer market. What are the implications of these raw material fluctuations at this stage of the autumn fertilizer season? Firstly, urea prices have dropped sharply, and the market for high-nitrogen wheat fertilizers is in a poor state. Recently, urea prices have shown a sharp downward trend. Following the low prices of urea in Inner Mongolia earlier on, prices of urea in Shandong and the Two Rivers regions have also dropped. Currently, the mainstream ex-factory price for small-grain urea in these regions is around 1,550–1,590 yuan per ton. Since high-nitrogen fertilizers are the predominant type of fertilizer used in autumn in some areas, the decline in urea prices significantly affects the prices of high-nitrogen compound fertilizers. The downstream market is not willing to accept the current high prices of such compound fertilizers. However, recent increases in urea futures prices have pushed up spot prices; it remains to be seen how long this trend will continue, as it also influences the development of autumn fertilizers in the future. Secondly, the price of diammonium remains strong, providing some support for high-phosphorus wheat fertilizers. Over the past one or two months, the price of diammonium phosphate has remained high, with continued upward trends. This situation is related to the significant export advantages of diammonium phosphate; many orders are scheduled for delivery after mid-August. Companies in Hubei that produce diammonium phosphate have a large number of orders pending fulfillment, and some of them have even started to raise their prices and stop accepting new orders. As a result, the price of alternative products also continues to rise. Additionally, the price of monoammonium phosphate has been favorable recently, which provides some support for the cost of high-phosphorus wheat fertilizers. Therefore, despite ongoing changes in the prices of other raw materials, the price of compound fertilizers remains stable, with only minor adjustments to preferential policies in certain areas. Once again, inventory levels in Lop Nur are low, while the prices of general-purpose compound fertilizers remain relatively stable. Recently, Zhongfei Net learned from its agents that as of July 20, Luokeli Company has raised the price of potassium sulfate by 50 yuan per ton. It is understood that there is now little inventory left in the factories and storage facilities of Luokeli Company. Recent shipping volumes have been high, and the summer maintenance work will continue until September, so the supply of goods is becoming increasingly tight. In fact, agents in various regions have recently started to raise prices slightly, and the market has accepted these increases fairly well. After all, the price of potassium sulfate produced by Mannheim is also on the rise; the average factory price for 52% fully water-soluble powder is around 2600 yuan per ton. Moreover, supply is tight in some areas, so it will become increasingly difficult to find products at low prices. The rise in the price of potassium sulfate has, to some extent, provided cost support for sulfur-based compound fertilizers, which already have relatively low prices. As a result, the current average ex-plant price for 45% sulfur-containing general-purpose compound fertilizers is around 2,000 yuan per ton. Finally, every fluctuation in raw material prices affects the price trend of compound fertilizers. Especially this year, with such frequent fluctuations in raw material prices, it is even more difficult to predict trends. However, taking multiple factors into consideration and conducting thorough analysis can provide some guidance for future developments. Therefore, in the short term, compound fertilizers cannot be ignored; it is necessary to closely monitor the price trends of raw materials to understand what will happen in the future.