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Compound fertilizer: Day has broken – price increase? Author/Source: China Fertilizer Network Date: 2020-08-24 Clicks: 6 Before we know it, late August has arrived, and the autumn fertilizer market has officially begun. Compared to the end of July, the compound fertilizer market is indeed showing signs of activity; in some areas, shipments are even quite brisk. This might be due to the approaching autumn season, which has prompted downstream buyers to become more eager to place orders. However, there won’t be much remaining demand, as the emergence of low-priced products at the start of this market trend caught everyone’s attention, and dealers have stocked up to some extent. What is more important at this stage is the future trend in compound fertilizer prices, with various opinions circulating in the market. This week, the fertilizer market has continued to be a topic of significant interest. The wait for urea with specified specifications, concerns regarding the future outlook for phosphate fertilizers, and the impact of international potassium fertilizer prices are all having a decisive influence on the prices of compound fertilizers. As of the end of this week, the prices of fertilizers for autumn wheat have risen slightly compared to last week; these increases are largely due to adjustments based on earlier lower pricing levels. The market has shifted from a state of lukewarm activity to one where there is still some hope. Price increases can certainly boost market enthusiasm, but will prices really rise in the second half of the autumn fertilization period? In the editor’s opinion, there can be no talk of a sharp increase; a slight rise isn’t useful either. Taking into account the conditions in the upstream market and consumer sentiment, wheat fertilizer prices are likely to remain stable in the final stage, with prices usually being determined on a case-by-case basis. Firstly, there are few expectations regarding raw material prices. If India did not issue tenders one after another, urea prices would likely drop significantly at this stage. With domestic demand being low during this off-season, compound fertilizer manufacturers hardly make any large-scale purchases. Urea plants continue to produce at high levels, with no outlet for their output, resulting in an oversupply. The results of the latest Indian tenders may still meet expectations. However, since autumn is the main period for high-phosphorus fertilizers, the price of phosphorus fertilizer raw materials is what truly matters. On the other hand, the price of monoammonium phosphate has never been particularly high; in fact, recent transaction prices have seen a slight decline. As the peak season is coming to an end, there is little desire for price increases, and no such expectations exist. Therefore, a cautious approach is necessary when considering the price of high-phosphorus wheat fertilizers. Secondly, there isn’t much demand left in the future. Compared to other seasons, the autumn market is usually relatively short in duration; coupled with the fact that this year the market started earlier, its end date may also come sooner. Currently, preparations for the final phase of the autumn market are underway in various regions, and some companies can fulfill orders until mid-September. A few companies even claim that the autumn market has already ended, with only the delivery stage remaining – indicating that there is very little actual demand for restocking. As mentioned earlier, low-priced goods entered the market at the beginning of this period, and many distributors took advantage of this \"opportunity\" to place multiple bulk orders for restocking. There were also some distributors who did not wait until the final stage to purchase goods ； The second reason is the significant impact of natural disasters; droughts and floods reduce enthusiasm for planting in downstream areas, potentially leading to a reduction in the area devoted to cultivation there. Finally, the prices of alternatives are rising. When it comes to alternatives to compound fertilizers in autumn, diammonium phosphate is undoubtedly a good choice; in many regions, its use in autumn is more common. The demand for diammonium phosphate remains high, with both domestic demand staying strong and export markets performing well. Recently, the price of diammonium phosphate has risen, and companies are keen to maintain these prices. Although its price has remained stable, it is still significantly higher compared to the same period last year, and this is precisely why it is more popular this year – its cost-effectiveness far exceeds that of compound fertilizers. If compound fertilizers decide to raise their prices at the last moment, it is likely that diammonium phosphate will have the upper hand in the autumn market, leaving no chance for compound fertilizers. Therefore, the reasons for raising the price of compound fertilizers seem rather flimsy. In summary, a slight increase in the price of wheat fertilizers in the final stage is actually a good thing for the market. It not only accelerates market activity but also lays a solid foundation for winter storage, ensuring that the price of compound fertilizers isn’t abnormally low when winter storage begins. (Feng Hongyang)