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For winter storage, are urea price fluctuations really unimportant? Author/Source: China Fertilizer Network Date: 2020-09-14 Clicks: 8 As the weather cools down and the autumn atmosphere grows stronger in the north, the autumn fertilizer market is coming to an end, with the replenishment phase about to begin on a large scale. Since the autumn compound fertilizer market started in July, the overall trend has been one of stability. Even though there has been brisk activity in some markets recently, this does not indicate a significant improvement in the market conditions; most companies are still waiting for orders to arrive, and new orders are relatively scarce. This is the main reason for the delay in the market. It is expected that the demand for wheat fertilizers will fade from people’s attention after October 15th. The autumn compound fertilizer market has remained relatively calm; both the trading atmosphere and the prevailing prices have stayed stable. The expectation of price drops in the latter part of the market did not materialize, and in some areas prices even saw a slight increase. It seems that the outcome was quite satisfactory. As autumn comes to an end, the winter storage market arrives, representing another important phase of the year. When it comes to winter storage, feelings are mixed; however, concerns generally outweigh expectations. So far this year, the situation regarding winter storage of compound fertilizers remains uncertain. What exactly is uncertain? It is risky to make hasty judgments regarding the trends in raw material prices in the future, especially for urea. Recently, urea prices have fluctuated frequently, with both domestic and international factors playing a role, which adds uncertainty to its price outlook. But are these fluctuations in urea prices truly important for the winter storage of compound fertilizers? First, the costs of various raw materials are combined. During the autumn period, the prices of compound fertilizers remain relatively stable, as the costs of raw materials fluctuate only slightly; even if there are fluctuations, they do not exceed 50 yuan per ton. At present, it is possible that urea prices could see further changes, but sharp rises or falls are not likely for now ； The market for monoammonium nitrogen has been rather sluggish, remaining stable over a relatively long period of time; in the future, compound fertilizer manufacturers will gradually start to stock up, doing so in bulk and on multiple occasions ； The price of potassium chloride is on the rise, but most of this increase is forced; there is little real underlying support. Therefore, fluctuations in raw material prices are normal, and as long as there are no extreme spikes or drops, there is no need to worry too much about how the price of compound fertilizers will be affected. Secondly, the demand is certain and transparent. It is still necessary to mention downstream demand, as it plays a decisive role in driving the market. Winter storage demand is neither large nor small; markets in the northern regions, including the Northeast and North China areas, have a certain level of winter storage demand, and that amount is significant. However, in recent years, the enthusiasm for winter storage has been declining year by year, with more and more distributors choosing to stock up only in moderation or opting not to store anything at all. Dealers do not pay too much attention to the level of winter storage prices; what matters more is the future trend. If prices are expected to decline in the future, then there will be little incentive to stock up. Therefore, rather than focusing on determining winter storage prices, it is better to make accurate predictions regarding prices during the upcoming sales period and even throughout next year. Finally, the company’s own strategy portfolio. Although the prospects for the winter storage market are average and prices are difficult to determine, companies will strive to gain market share to the best of their ability based on their own circumstances. At present, it is common to calculate interest without fixing prices; as time goes by, most companies say they will hold ordering meetings for winter storage distributors in October, at which time prices and policies will be revealed. Based on past experience across different seasons, in addition to regular interest calculation and rebate policies, focusing on best-selling products or offering low prices is the approach adopted by compound fertilizer companies nowadays, with significant results. Therefore, it is better to be patient and wait for the right opportunity. In summary, winter stocking up won’t be anything mysterious, nor will it be easy; whether the price is high or low, making the payment and picking up the goods means placing a bet already. (Feng Hongyang)