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Urea prices drop while potassium fertilizer prices rise – What a chaotic autumn. Author/Source: China Fertilizer Network. Date: 2020-09-24. Clicks: 5. As National Day approaches, the fertilizer market seems to be in line with the festive atmosphere, bustling with activity. The production of autumn-based compound fertilizers is reaching its final stage, with the retail markets starting to become active again, and downstream distributors are also making plans for final stock replenishments. With the end of autumn approaching and winter storage on the horizon, compound fertilizer manufacturers are quite busy. Moreover, the situation regarding raw materials is further complicating matters, as prices fluctuate frequently. The recent slight decline in urea prices, coupled with the strong upward trend in potassium chloride prices, has indeed created more uncertainty in the market ahead. As the only factor influencing the current domestic urea market, there are rumors that tenders from India have not been issued yet. Although there are indications that India is likely to release new urea tender requests before China’s National Day holiday, rumors cannot replace reality. With relatively weak demand in both industrial and agricultural sectors within the country, urea manufacturers can only adjust prices prudently in preparation for any future Indian tenders. Any decline in urea prices, no matter how significant, will have a negative impact on the composite fertilizer market ； In contrast, the price of potassium chloride has seen a strong decline; ports led this drop, with domestic factories following suit. The increase in prices has become irreversible, and there is little possibility of a decline in the short term. Urea prices are falling while potassium fertilizer prices are rising; what a season of contrasts it is. There will be no significant changes in the market for compound fertilizers in autumn, which makes it very difficult to predict trends in the winter storage market. As a result, compound fertilizer manufacturers must proceed with caution. Firstly, the changes in raw material costs compared to the autumn market. Since spring, the prices of compound fertilizers have remained low compared to various periods last year. The main reason for this is cost factors; in other words, if there are no significant changes in the costs of raw materials at the start of the winter storage period, the prices of compound fertilizers for winter storage are likely to remain low, just as they were in the previous quarters. So-called products with low prices will once again drive the market trends at the beginning of this period ； Another possibility exists: if the pricing information is released promptly, with favorable conditions in terms of price, quantity, and even shipping dates, domestic urea prices are likely to rise. Coupled with the high prices of potassium chloride, raw material costs will increase, which could lead to an improvement in the market situation for winter storage of compound fertilizers. However, it is necessary to approach the future market with caution and a cautiously optimistic attitude. Secondly, is it true that the demand for winter storage is decreasing year by year? When it comes to winter stockpiling, many market participants hold a pessimistic view; they say that not only are the risks increasing, but demand is also declining, making it little difference whether to stock up or not, with purchasing as needed being an acceptable option. Considering the actual situation in recent years, this is indeed the case regarding winter storage trends. As the autumn market progresses, most companies have already determined their sales volumes; some companies report that their overall sales volume has increased rather than decreased this year. Although this is not a widespread phenomenon, it may indicate one thing: when grain prices reach high levels, agriculture becomes more attractive, which in turn increases the demand for fertilizers to some extent. With the autumn grain harvest approaching, it is believed that farmers’ enthusiasm for preparing for the next planting season will improve significantly this year. Finally, supply exceeds demand, leading to price chaos. The fertilizer market is suffering from overcapacity, with an especially large supply of compound fertilizers. It is reported that production capacity has increased in some areas this year, further exacerbating the already weak demand in the winter storage market. Supply exceeds demand, and in order to secure a share of the winter inventory, companies are forced to cut their profits as much as possible, which results in uneven prices for the winter inventory with low prices appearing frequently. At present, the winter storage market in the Northeast region is in its initial stage, and prices have not yet become fully clear; only a few companies have released their winter storage quotes, and these prices are relatively low. This sets a certain tone for the future development of prices. In summary, the trend in raw material prices will serve as an important indicator for the winter storage market for compound fertilizers. It is expected that the situation regarding winter storage will become clear only after the national phosphorus compound fertilizer conference is held in mid-to-late October. (Feng Hongyang) http://www.nmtech.com.cn/sys/sec_zxwz.jpg