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Compound fertilizer: Price increase at this time – could it be in line with winter stockpiling? Author/Source: China Fertilizer Network Date: 2020-09-04 Clicks: 5 At the beginning of September, the autumn compound fertilizer market entered its final phase. The wheat fertilizer market in regions such as Shandong, the Two Rivers area, and Anhui was in a peak period for shipments; existing orders were being fulfilled one after another, while new orders were also placed. However, compared to previous years, there may be limited room for additional orders this autumn. For some compound fertilizer manufacturers, once the pre-orders for this period have been fulfilled, it means that the autumn market is essentially over, and they will then start preparing for winter storage pre-orders. However, just as the autumn wheat fertilization period is coming to an end, the prices of compound fertilizers have seen a slight upward trend. Generally speaking, price adjustments during the final stages of the market cycle are not very significant, unless there are clear positive factors. At present, the main driving force behind the rise in compound fertilizer prices is the increase in the prices of raw materials; the actual support for such rises is limited. So why do compound fertilizer manufacturers take the risk of keeping prices high? The editor believes there are two specific reasons: first, using price increases to promote stability and stimulate the release of remaining demand for autumn fertilizers ； Second, it caters to winter storage needs, helping to set the tone for market prices during that period. Firstly, there are short-term positives for the raw materials. As of last weekend, the pure raw material cost for 45% chlorinated high-nitrogen/high-phosphorus series compound fertilizer products (such as 25-14-6/18-22-5) across the country was 1,590 yuan per ton, up by about 30 yuan per ton compared to early August. The rise in raw material costs is due to an increase in the prices of nitrogen, phosphorus, and potassium. Currently, the domestic urea market is under the influence of pricing decisions; factory prices remain stable with slight fluctuations. Once the impact of these pricing decisions subsides and domestic demand enters a low season, pessimistic sentiment regarding prices is likely to prevail in the future ； The phosphate fertilizer market shows uneven trends: the price of monoammonium phosphate remains moderate, and it is likely to see a decline in price in the future, while the market for diammonium phosphate is booming; prices are likely to remain stable during the autumn period ； The price of potassium chloride has also risen, but the reasons given are flimsy; it is advisable to approach the market with caution. Secondly, the demand for restocking is widely anticipated. Recently, most compound fertilizer manufacturers have been waiting for orders as before; shipments this year are somewhat delayed. In addition to weak demand from end-users, frequent rainy weather has also reduced their willingness to purchase such products to some extent. It is expected that the overall market for wheat fertilizers in the autumn will come to an end around mid-October. At present, the overall delivery volume of autumn fertilizers in some areas downstream is around 60%; the remaining demand will be met gradually around September 20. As for the amount of stock that can still be acquired, opinions in the market vary. Considering the market sentiment in most areas, the quantity of fertilizers purchased in the future may not be as large as expected. This is mainly due to the abundance of fertilizers available at low prices earlier on, as well as the impact of new products introduced during conferences; many dealers took action early on. Finally, the winter storage market is hesitant to make a decision. When it comes to winter storage, its impact is no less significant than that in other seasons; in fact, this year winter storage has attracted considerable attention from market participants. As early as the late July period, a few compound fertilizer manufacturers began to set preliminary prices for winter storage, mainly in the Northeast region. The prices were said to be close to the cost level. After about 20 days of collecting payments, due to cost pressures, the lower-priced offers for winter storage gradually disappeared, with most transactions being conducted on an interest-based basis. As a result, downstream buyers also began to wait and see. To date, there are no clear pricing levels in the winter storage market in most regions. Although the situation regarding winter storage at present is not clear, based on the previous quotes, overall prices this year are likely to remain low. The recent slight increase in the prices of compound fertilizers will help create a favorable market atmosphere at the beginning of the winter storage period. In summary, there won’t be significant changes in the autumn compound fertilizer market in the latter part of this period; in some areas, it is even said that this phase will come to an end soon. As a result, winter storage has become a focus of attention at present. Some market reports indicate that winter storage will gradually begin after the end of September, and it is expected that the mainstream prices will not be excessively high. (Feng Hongyang)