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Urea prices soar – will diammonium follow? Author/Source: China Fertilizer Network Date: 2020-08-10 Clicks: 5 As August arrived, urea overcame the challenges of July and continued to rise, driven by several price increases. Currently, the mainstream ex-factory price in Shandong is 1710–1720 yuan per ton (the same unit applies below), and given that most companies focus on exports, prices are likely to continue rising in the future. After urea signaled a price increase in August, diammonium phosphate followed suit: the standard ex-factory price of 64% diammonium phosphate in Hubei rose to 2,200 yuan, while the delivery price of this product from major manufacturers in the southwest to North China increased to 2,400–2,500 yuan. It is evident that most manufacturers raised their prices by around 50 yuan entering August. Will diammonium phosphate continue to see price increases along with urea in the future? Firstly, exports continued to increase, with prices rising steadily. Just as the price of urea has risen due to increased production costs, the export situation for diammonium phosphate is also favorable. At present, the offshore price of diammonium phosphate in China is as high as 320 dollars; when converted to the ex-factory price for companies in Hubei, where export costs are lower, this amount comes to around 2150 yuan. At this point, some people might say that urea labeling faced many challenges in July; so could there be restrictions on the export of diammonium compounds? The author believes that the possibility of such extreme circumstances occurring is very low. The first rumors about restrictions came regarding urea, but what was the outcome? Even after urea sellers in the Middle East raised prices by over ten dollars per ton, China’s urea exports continued as usual. India imports a larger proportion of diammonium phosphate from our country, and there are fewer international suppliers of this product; therefore, if restrictions are imposed, domestic prices for diammonium phosphate will inevitably rise to terrifying levels. Moreover, the export destination of diammonium phosphate in our country is not limited to India alone, and the export prospects look very promising in the future. Secondly, the remaining demand is set to be released, accelerating the downward movement of goods. We are now in August, and the traditional autumn fertilizer preparation period is approaching. Downstream distributors and rural farmers who did not prepare fertilizers or pay attention to this matter earlier are increasingly focusing on the autumn market. The spread of diammonium phosphate is accelerating, and there are fewer supplies available at low prices in the market, which reduces the obstacles to price increases by companies later on. Some factories even rush to raise prices as soon as August arrives. On the one hand, the continuous positive news regarding diammonium exports and the firm pricing from manufacturers have greatly boosted downstream buyers’ confidence in making purchases ； On the other hand, due to the continuous rise in urea prices recently, compound fertilizer manufacturers are likely to raise their prices in the future, supported both by rising costs and existing orders. Finally, let’s discuss the concerns associated with the rise in diammonium prices – cost support is weak. Recently, there has been a strong tendency for sulfur prices at ports to rise, from 625 yuan to 640 yuan. But how much of an impact can this 15-yuan increase have on the production costs of diammonium? Given these 3 million tons of inventory in the port, it is difficult to be overly optimistic about future sulfur prices. The ex-factory price of liquid ammonia remains stable at 2,460–2,500 yuan, and premium transactions often come with additional discount offers. Raw material prices have remained stable at low levels, keeping the production cost of diammonium phosphate low for an extended period. In other words, the current market for diammonium compounds is entirely supported by domestic and international demand; as long as there is demand for these products, it is inevitable that companies will lower their prices. In summary, urea prices have soared due to stimulus from printing and labeling measures, and exports of diammonium phosphate are also on the rise. The likelihood of a price drop for diammonium phosphate in the fall has been reduced to a minimum, with the downstream market about to experience another wave of purchasing activity. (Rong Guangwen)