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Urea prices keep rising; is monoammonium phosphate heading downward? Author/Source: China Fertilizer Network Date: 2020-08-03 Clicks: 36 Urea has experienced several minor price fluctuations recently, and prices are currently on the rise. This is mainly because manufacturers may use Chinese-supplied urea at this stage, giving them the confidence to raise prices. Currently, the average ex-factory price of urea in Shandong Province has risen to 1600–1620 yuan per ton (the same unit applies elsewhere). However, it is reported that actual demand in the downstream market has not improved significantly; compound fertilizer manufacturers and traders are becoming more cautious, preferring to wait unless there is a strong demand. For now, urea production remains stable, but starting next week, there will be an increase in urea supply, leading to greater pressure. As a result, there are limited positive factors supporting urea prices. However, based on the bidding prices in India released on Thursday, they are roughly on par with domestic prices. If the order volume is large, there is a possibility of an increase in urea prices as well; although this isn’t considered a major positive factor, it’s also not seen as a negative one either. The situation for monoammonium phosphate has not been favorable recently; the atmosphere in the downstream market has been pessimistic since the beginning of the week. The prices of monoammonium phosphate held by traders have declined. Although most factories still maintain firm pricing, a few have already reduced their quotes. Currently, the export price for 55% powdered monoammonium phosphate from large factories in Sichuan is 1750 yuan per ton (the same unit applies elsewhere). Previously, the price was 1800 yuan, while larger orders were priced at 1750 yuan, representing a reduction of 50 yuan. Although the prices offered by monoammonium phosphate manufacturers in Hubei remain stable at 1850–1900 yuan for now, these companies say that new orders have not been as good recently; in particular, there are few sales at the higher price of 1850 yuan. It is said that the actual price at which large factories accept orders for delivery is around 1820–1830 yuan. From this perspective, is Yian really set to enter a full-scale downward trend? The author believes this possibility exists, but there are still some positive factors at play; therefore, in the short term, the degree of decline and slowdown is likely to be limited. On the demand side. Although there is still a certain level of rigid demand, industry experts predict that there will be a wave of purchasing activity in early August. A ammonium phosphate manufacturer in Henan also said that there has been an increase in inquiries from downstream clients recently, but the overall demand is likely to be low; each compound fertilizer manufacturer may only replenish stock by a few thousand tons. For example, a compound fertilizer company in Hebei plans to purchase 2,000–3,000 tons of ammonium phosphate for use in August around the beginning of the month, and more ammonium phosphate for September around the end of August. In recent years, ammonium phosphate manufacturers have shifted away from the practice of making large-scale purchases in bulk, as they did in previous years, and instead opt to make purchases in smaller batches according to their needs. Therefore, even when there is a favorable time for purchasing, they do not make large orders but prefer to proceed cautiously; large companies typically purchase no more than 10,000 tons at a time. Most compound fertilizer manufacturers are unwilling to accept relatively high prices; at present, they are also reluctant to accept a price of 1,850 yuan per ton for Hubei 55% ammonium sulfate, unless it is for small orders. On the supply side. The overall operating rate of ammonium sulfate manufacturers is around 40-50%, with most orders to be fulfilled by mid-to-late August, with only a few orders scheduled to be completed by the end of September. Given this situation, the pressure on these manufacturers is not high at present. However, the signing of new orders has been slow in recent weeks, especially for products at relatively higher prices. It has also been reported that some large manufacturers in certain areas have increased their daily production volumes, which inadvertently increases the supply pressure for ammonium sulfate. A few manufacturers say that they currently have a small amount of inventory of 55% ammonium sulfate powder; if new demand does not keep up, the inventory pressure related to ammonium sulfate is likely to increase over time. Regarding raw materials. Recently, sulfur has not brought any positive effects to monoammonium sulfate. For most of this month, the sulfur market has been sluggish, with insufficient confidence among downstream users. It was only toward the end of the month that demand for sulfur emerged, which led to a slight improvement in the atmosphere in the port markets and a modest rise in prices. However, at present, the price of granular sulfur at the Yangtze River Port and Fangchenggang Port is 625 yuan, down 25 yuan from the end of last month. The prices at the Puguang Wanzhou Port and Dazhou manufacturing sites are 670 yuan and 600 yuan respectively. Although this does not represent any positive factor, its impact on monoammonium sulfate remains limited for now. In summary, the remaining rigid demand for ammonium nitrate is releasing slowly; moreover, since it is still early in the period when this fertilizer will actually be used, some of the ammonium nitrate purchased by compound fertilizer manufacturers is yet to be delivered. As a result, there is no urgency to make new purchases at the moment. However, in regions such as Hubei, some ammonium nitrate is still pending delivery, so inventory pressure is not high for now. Confidence in the ammonium nitrate market remains low at present, and it is expected that prices held steady or may see a slight decline in the short term, with prices for high-end products also possibly dropping slightly. (Zhao Hongye)