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Strange things happen with fertilizers in autumn; the price of phosphatic ammonium faces many challenges. Author/Source: China Fertilizer Network. Date: 2020-09-04. Clicks: 5. A few days have passed since India’s fourth bidding round, and unlike previous rounds, there was no sharp rise in urea prices this time. The increase in urea prices across China was relatively slow; in some areas, prices even dropped. Currently, compound fertilizer manufacturers in Linyi, Shandong, are offering to purchase urea at around 1,680 yuan per ton. In places like Shanxi and Sichuan, urea prices have even fallen further. So why has this “difficult situation” arisen? Primarily due to ongoing restrictions on cargo volume at ports, which hinder companies’ ability to ship goods, and coupled with limited demand in the domestic industrial and agricultural sectors at present, it is difficult for urea prices to see a significant increase. However, once the port handling capacity improves in the near future, even if domestic demand for urea remains weak, there is a high likelihood of an increase in domestic urea prices. The situation for monoammonium is not so favorable. Recently, the quotes offered by companies producing monoammonium have decreased, and prices have remained relatively stable for now. The actual transaction prices are as follows: in Hubei, the actual price at which 55% powdered ammonium is delivered from the factory ranges from 1780 to 1840 yuan; in the southwest, the actual export price for 55% powdered ammonium is between 1650 and 1750 yuan; in Henan, the actual price at delivery from the factory is around 1780 to 1820 yuan. It is reported that the price of 55% powdered ammonium at the Bayuquan Port in Liaoning is around 1950 to 1970 yuan. The industry believes that prices of monoammonium could continue to fall, with the main reasons falling into three categories. Firstly, inventory pressure in the later period is likely to become more apparent. At present, ammonium phosphate manufacturers are not under much inventory pressure; most companies across the country have no inventory left, and there is still a certain amount of orders pending fulfillment. However, it is worth noting that the price cuts implemented by companies in Hubei and other regions to attract orders did not result in a large number of new orders. The pending orders will only last until mid-to-late September or at the end of the month. Moreover, the compound fertilizer manufacturers with a production capacity of around 300,000 tons received less than 10,000 tons of additional orders this time, with the rest of the orders being relatively small in size. With the overall operating rate of monoammonium remaining relatively stable, the pressure on companies producing monoammonium is increasing. If new demand fails to keep up, inventory levels of monoammonium will gradually build up, further increasing the pressure. Secondly, when it comes to supply, there must be a demand side; with few new orders for ammonium sulfate companies, this indicates weak demand. Currently, it is the period for the production and shipment of autumn fertilizers. Sales for compound fertilizer companies are not satisfactory, and the consumption of their existing inventory is slow. Additionally, there is still a certain amount of ammonium nitrate in stock as well as those ready for shipment, which means that these companies have limited storage capacity and few new procurement plans. Moreover, compound fertilizer manufacturers lack confidence in monoammonium phosphate, believing that its future prospects are poor. Finally, the cost support for monoammonium raw materials is relatively weak. One of the reasons for the lack of confidence in ammonium monoammonium nitrate in the downstream market is its relatively low cost and high profits; many believe that there is a risk of further price declines for this product. According to rough calculations by China Fertilizer Network, the total cost of high-quality 55% powdered ammonium monoammonium nitrate in Hubei is around 1600 yuan, indicating relatively substantial profits. In recent years, the main raw material of concern in this industry has been sulfur. Indeed, sulfur prices have risen recently, but not by much – by 5-10 yuan each time. The prices of sulfur at ports and at Puguang remain between 600-700 yuan. So why is there no possibility of a significant increase in sulfur prices? The main reasons are weak demand and high inventory levels in ports; sulfur inventory has remained around 3 million tons in recent months with no significant decline. In the short term, it is unlikely that sulfur prices will see a substantial increase. In summary, negative factors related to monoammonium prevail, and further declines are still possible in the future. (Zhao Hongye)