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Sudden rise in urea prices catches people off guard; ammonium nitrate prices on the verge of rising. Author/Source: China Fertilizer Network Date: 2020-09-21 Clicks: 7 Recently, urea prices have seen a slight rebound. Currently, the purchase price of urea for compound fertilizer manufacturers in Linyi, Shandong is around 1,720 yuan per ton. There are roughly four reasons for this price increase: First, restrictions on cargo loading at ports have eased； II. There are reports that India may issue another tender after its National Day ； III. The facilities of some large manufacturers have entered maintenance mode, leading to a continued decline in supply; it is expected that the reduction will last for half a month ； IV. Agricultural demand in the southern regions has seen a recovery. In the short term, urea prices are likely to continue rising slightly, but the increase is expected to be modest. In the long run, when India issues another tender in October and a conference on phosphate fertilizers takes place during that month, urea prices are likely to rise further. How is the price of monoammonium? Recently, some ammonium sulfate producers have shown an inclination to raise prices, but they have not yet increased their quotes. At present, these companies are focusing on fulfilling existing orders and are keeping their quotes stable or not providing any quotes at all. The current average ex-plant price for 55% ammonium sulfate powder in Hubei is around 1850 yuan. So, can ammonium prices really rise as well? There are a few key points to focus on. On the supply side. Recently, the overall operating rate of ammonium nitrate production has remained at a relatively high level; some large manufacturers are operating at near full capacity. There are few companies undergoing maintenance repairs at present, with only a few undertaking temporary repairs for a few days, which has little impact on the overall operating rate. As of the third week of September, the operating rate in the national ammonium nitrate industry was around 50%, while in Hubei province it was close to 60%. Recently, supply has been tight in most enterprises. The main reason for the tight supply in large companies is the approaching autumn planting season, which results in a large number of orders to be fulfilled; downstream customers are eager to receive their orders, and these companies themselves are using more ammonium nitrate in their own compound fertilizers ； Although most small and medium-sized enterprises have been handling mostly small orders recently, resulting in a low overall volume of new orders, these orders are usually shipped immediately after payment is made, which has led to supply shortages in recent times. However, the recent supply shortage does not indicate ideal demand; the industry believes that this tight supply situation is likely to be short-lived, and demand will still need to be closely monitored in the future. On the demand side. The recent tight supply situation among various ammonium sulfate producers has given some people who are paying attention to this product the illusion that demand for ammonium sulfate has seen a significant rebound In fact, demand for monoammonium nitrate has seen a slight recovery during this period, but it’s not ideal. Fertilizer manufacturers are inclined to restock at the moment, but the volume is not large; most of the orders are small and urgent in nature. At present, the production of autumn fertilizers by compound fertilizer manufacturers is coming to an end; some of these companies have reduced their operating rates. Only a few have switched to producing fertilizers for winter storage. There is still some time before full-scale production of such fertilizers begins. However, it is expected that some compound fertilizer manufacturers in the Northeast will start operating again in mid-to-late October, and purchases of raw materials are likely to increase around National Day. Additionally, the phosphorus compound fertilizer conference, which is being held one month earlier this year, should help boost demand to some extent. Nevertheless, it will be necessary to keep an eye on the actual situation. Regarding raw materials. Apart from supply and demand issues, the raw materials for monoammonium phosphate also affect its market conditions to a certain extent. In recent weeks, sulfur prices have been gradually rising. The prices of granular sulfur at the Yangtze River Port and Fangchenggang Port once exceeded 700 yuan, driven mainly by rising international sulfur prices and higher prices for sulfur produced in Puguang. There was also some demand support from downstream industries; however, factors such as high inventory levels in ports are likely to limit the extent of these price increases. Phosphorus ore and liquid ammonia have little impact on the cost of monoammonium in the near term. It can be seen that the cost support for the raw materials used in producing monoammonium phosphate will not increase significantly; a rise of 100 yuan in the price of sulfur will only result in an increase of less than 50 yuan in the cost of monoammonium phosphate. Based on rough calculations, the premium profit on 55% powdered ammonium phosphate could reach 200 yuan or even more, and this is likely why the industry is not very receptive to price increases for monoammonium phosphate. In summary, there is a possibility of an increase in the price of monoammonium, especially in terms of factory quotes; however, it may take some time for buyers and sellers to reach an agreement regarding an increase in the actual transaction price. (Zhao Hongye)