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Urea prices have been rising for so many days – has there still been no change in the price of compound fertilizers? Author/Source: China Fertilizer Network Date: 2020-08-13 Clicks: 9 In the blink of an eye, it’s mid-August, and fertilizer markets across the country are seeing varying degrees of activity, with buying and selling becoming more intense than before. With the approach of autumn, the wheat fertilizer market has gradually come into focus. Since its inception, it has followed the same trend as in the previous two seasons, characterized by a moderate level of activity. Although fertilizer manufacturers tried their best to offer discounts, not many buyers were willing to purchase these fertilizers. Just when people had little hope for the future of the autumn fertilizer market, a turning point emerged. Recently, the market conditions for raw materials have improved; urea in particular has performed well, with price increases exceeding most expectations. The situation regarding phosphate fertilizers is also satisfactory – during the peak demand period, ammonium phosphate manufacturers are inclined to maintain high prices. In the short term, price fluctuations are likely to be minimal. It seems that the costs of raw materials used in compound fertilizers continue to rise. Could prices, which have been low for a long time, now be on the verge of an increase? The answer is actually quite clear: given the current situation, it’s more likely that prices of wheat in the second half of the autumn planting season will remain stable, as there aren’t many positive factors to support an increase in prices. Firstly, the actual costs do not fluctuate much. According to Zhongfei Net, as of last weekend, the pure raw material cost of 45% chlorinated high-nitrogen/high-phosphorus series compound fertilizers (such as 25-14-6/18-22-5) across the country was 1,638/1,625 yuan per ton, representing an increase of 30–50 yuan per ton compared to the level at the end of July. With urea prices rising so sharply, there is little room for adjustments in the costs of compound fertilizers. Moreover, the prices of raw materials remain uncertain. Domestic agricultural demand has basically ceased, and it’s unclear whether the factor of export orders can sustain high urea prices in the long term ； Since the prices of phosphorus and potassium fertilizers have not managed to increase at this stage, there are also few chances for price increases in the future. Therefore, it is likely that raising the prices of wheat fertilizers in autumn by relying on cost factors will not work. Secondly, there is still a remaining amount available for pre-order. Fertilizer compound manufacturers have not made any significant price adjustments; aside from the low cost pressures, the fact that there is still a surplus of products available for delivery in the near future is also a key reason. Starting from the end of the summer fertilizer sales period, advance orders for autumn fertilizers have begun in some markets, and certain companies have taken advantage of popular products or generous promotional offers to collect payments in advance for certain types of fertilizers. During the summer, many areas experience high temperatures and heavy rainfall; the humid weather hinders normal factory operations, resulting in a slow recovery in production rates ； Additionally, flooding was severe in some areas, and dealers were concerned about poor storage conditions, so they were reluctant to pick up goods. Shipments from the factory were poor throughout July, resulting in a backlog of orders that needed to be processed; it is expected that these will be resolved around mid-August. Finally, a pessimistic atmosphere pervades the market. The weaker the fertilizer market is in autumn, the more pessimistic the atmosphere becomes later on. At present, there has been no significant improvement in the overall situation of the fertilizer market compared to before; only the price of urea experiences frequent fluctuations. But can it single-handedly reverse the sluggishness in the market? The editor believes there are some difficulties: the price of compound fertilizers has remained relatively low this year, which is generally in line with the expectations of distributors. However, amid a pessimistic atmosphere, those at the grassroots level are cautious about future market trends, and as a result, the pace of purchasing slows down. There is poor connectivity in the market, leading to delays; as a result, companies cannot raise prices and can only try to minimize their profit margins in order to ensure sales. In summary, even though urea prices have risen by over 100 yuan per ton recently, there has been no significant change in the prices of compound fertilizers for now, which reflects the weakness of the overall market. If urea prices remain at their current level or continue to rise, wheat fertilizer prices are likely to stay stable or even increase during the second half of autumn. (Feng Hongyang)