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Urea Becomes the Dominant Player; Phosphorus and Potassium Take Advantage of the Situation to Gain Attention Author/Source: China Fertilizer Network Date: 2020-08-11 Clicks: 5 In the recent fertilizer market, urea has drawn the most attention; a scenario akin to a ’third party taking over’ led to a rise in urea prices of over 100 yuan in a short period of time. Although temperatures have dropped slightly in some areas these past few days and futures prices have hit their daily limit down, the popularity of urea remains unchanged. When urea becomes popular, the enthusiasm in the market is even greater than that for urea itself; yet when the interest in urea starts to fade, the market’s enthusiasm continues to burn brightly. Why is that? Perhaps it is because of the title of this article: “Urea Becomes the Dominant Boss, while Phosphorus and Potassium Seize the Opportunity to Gain Favor.” The fertilizer market has not been very favorable in recent years. Amidst zero growth in fertilizer use and the wave of supply-side reforms, many manufacturers have been forced out of the market, and even some once-great companies are now in a precarious situation. This spring, affected by the pandemic, the fertilizer market experienced a rare sense of peak season activity, but it soon fell back into a state of sluggishness. After a dull summer, the autumn market remains rather pessimistic so far as well. At this time, urea has shown a downward trend that suddenly reverses, prices rise as expected, futures prices hit their upper limits, and the increases exceed expectations… It acts like a domineering CEO in a booming market. Urea has always been regarded as a barometer of the fertilizer market; as a result, other types of fertilizers such as low-nitrogen fertilizers, phosphate fertilizers, potassium fertilizers, and compound fertilizers all try to take advantage of this situation in order to benefit from the upward trend as well. Yi’an has tried many times to raise prices, but unfortunately without success. After all, downstream buyers tend to make purchases at low prices; given the stable production levels and low sulfur prices, it’s difficult to stimulate their interest in purchasing. Nevertheless, in recent days some manufacturers have raised their prices slightly, seemingly trying to take advantage of the current situation ； When the problems related to \"the third party\" first started to arise, there were concerns regarding the export of diammonium phosphate as well. But in fact, exports of this product have been good recently, with the offshore price rising. Hence, the idea that \"if urea has seen such a significant increase, then diammonium phosphate should also see an increase\" emerged. Recently, the price of diammonium phosphate has risen by about 50 yuan per ton, and manufacturers remain confident, though there is still a sense of reluctance to invest in this market ； Potassium chloride is similar to monoammonium; its price has been expected to rise for a long time, but it hasn’t increased yet. Fortunately, the price managed to stay above the cost level and didn’t drop any further. With the sharp rise in urea prices, some large traders were reluctant to sell, which led to a slight increase in port prices of 20-30 yuan per ton – it’s essentially a benefit that comes along with this situation ； At this point, there’s actually nothing left to do with compound fertilizers; just follow the instructions given. “Taking the opportunity to gain favor isn’t really wrong; the fertilizer market has indeed become a bit sluggish, with many fertilizer producers struggling at cost levels for a long time now. Pitiful? Not really. This world is conserved: when fertilizer companies are happy, farmers may cry; when farmers are happy, it’s the fertilizer companies who cry. It’s not absolute, but it’s more or less true. Excess is an undisputed fact. At any time, we still need to respect the facts; so it’s okay to take advantage of favorable circumstances, but you yourself must first have some determination ； Hype is okay, and you can promote whatever advantages you think exist as much as you want, but you must not invent things out of thin air. Urea is, and so is the national reserve. To forge iron, one must first be strong oneself. It’s promising; actually, there’s logic to it. Firstly, fertilizer prices are generally at low levels, with some even at historical lows ； Secondly, social inventory is at low levels, so there is a possibility that market capacity in the future could exceed normal demand ； Third, whether there is a real recovery or a possible stagflation, in any case there is a possibility of rising prices ； Fourth, the instability in the pandemic, economic, and political environments, along with the initiation of a domestic economic cycle, will lead to a temporary increase in the importance of fertilizers. However, these factors are mostly at the macro level and represent long-term influencing elements. For those in the fertilizer industry, this has both advantages and disadvantages. The advantages go without saying, while the disadvantage is that premature speculation can only cause fluctuations in the market; the earlier and more intense such speculation is, the more severe the decline may be. Urea prices have started to fall again, and the winter outlook for compound fertilizers is also not favorable. The long term might still be very long; we really don’t need to rush. As the author has been telling potassium fertilizer industry professionals these past few days, it would be best to view this slight price increase as an opportunity to clear inventory and recover funds. Let’s be prepared to patiently wait for improvements in the market! Here, right now, patience is the most important thing. (Adu)