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Run out of inspiration? Can lowering prices still save face? Author/Source: China Fertilizer Network Date: 2020-08-17 Clicks: 8 Recently, the price of monoammonium nitrate has indeed declined. Although some companies maintain stable prices for this product, actual transaction prices have softened, ranging from 10 to 50 yuan per ton. The actual selling price at factories in Hubei for 55% powdered monoammonium nitrate is between 1820 and 1850 yuan per ton. It is reported that smaller factories are already selling this product at prices below 1800 yuan per ton. The actual selling price for 58% powdered monoammonium nitrate at larger factories has also dropped to around 1930–1950 yuan per ton; it is said that prices for lower-quality products are already below 1900 yuan per ton, while those of higher-quality products, which used to cost over 2000 yuan per ton, have now dropped to 1970 yuan per ton. As the overall prices of monoammonium phosphate in Hubei dropped, regions such as Henan followed suit. However, there were also some cases where prices increased, mainly due to a high volume of orders pending fulfillment which led to a refusal to take on new orders; actual transaction volumes remained at previous levels. So, will this price cut lead to an improvement in Yiam’s order volume? Recently, there has been no significant improvement in demand for ammonium nitrate. It is reported that the compound fertilizer manufacturers in North China are not operating at full capacity. Although there is inventory of ammonium nitrate that was stocked earlier and is ready to be shipped, its consumption rate is slow. As we are in the period of autumn fertilizer production, sales are not very strong, and the flow of compound fertilizers is poor; as a result, inventory levels are already low. There is likely to be little interest in purchasing more ammonium nitrate as raw material in the short term. Moreover, since the autumn market has not yet ended, there is no urgency to start preparing reserves of raw materials for winter use. Sales of compound fertilizers in the autumn were not very satisfactory, and compound fertilizer manufacturers across the country have turned their attention to the winter storage market in the Northeast in an attempt to secure a share of that market in advance. A few companies offered lower prices for winter storage compounds, but this did not attract many orders. Most distributors believe it is still too early to make purchases for winter storage, and they lack confidence in the future trend of the fertilizer market; as a result, they tend to adopt a wait-and-see attitude. Similarly, the compound fertilizer manufacturers and traders in the Northeast are cautious about monoammonium phosphate. They have heard that the price of 55% powdered ammonium phosphate arriving in the Northeast from regions such as Yunnan and Sichuan is around 1,960 yuan, but this is still about 50 yuan higher than the price target in the minds of large-scale traders. Sales of compound fertilizers in North China are poor, and winter storage of fertilizers in the Northeast started early but is not going well. These factors pose certain obstacles to monoammonium, and the supply pressure for it has also increased recently. The pending orders of ammonium nitrate producers can generally be fulfilled by mid-to-late August or at the end of the month; only a few can be completed around mid-September. Recently, these companies have been focusing on fulfilling existing orders, and new orders are not being closed as well as expected, which means that the amount of pending orders is being reduced quickly. Although there is no significant inventory pressure for these companies in the short term, as demand fails to keep up, their inventory pressure will gradually increase. The situation regarding raw material sulfur is also not favorable; it cannot provide any positive support for monoammonium sulfate. In recent months, the price of sulfur at ports has remained around 600–650 yuan per ton, with stock levels staying high at nearly 3 million tons. Stock levels at the Yangtze River ports are also in the range of 1.7–1.8 million tons, and new shipments continue to arrive on a monthly basis. Domestic consumption of sulfur is slow, so there is little possibility of a significant increase in sulfur prices in the short term. This means that sulfur does not provide much support in terms of cost for monoammonium sulfate. The industry generally believes that the cost of monoammonium sulfate is low, and given the current selling prices, profits are relatively high; therefore, the outlook for monoammonium sulfate markets is not very positive. Overall, the overall situation for monoammonium is not too bad, but it’s also not optimistic. The compromise on price by monoammonium producers this time is unlikely to yield any significant benefits, and prices are likely to continue to fall. (Zhao Hongye)