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A bountiful harvest is approaching – is a fierce winter stockpiling battle about to begin? Author/Source: China Fertilizer Network Date: 2020-09-27 Clicks: 11 More than half of the \"Golden September and Silver October\" period has passed, and a sense of harvest fills the country. The winter wheat planting areas have also entered the stage of preparing supplies; overall, over 80% of the required supplies have arrived, and demand for further replenishments is set to increase in the near future. Although demand at the grassroots level is slightly delayed, driven by the overall rise in grain prices, there is little change in the demand for wheat fertilizers at that level. More and more industry professionals are turning their attention to the winter storage market. As the final battle of the annual fertilizer market, manufacturers are gearing up actively for it. Unlike in previous years, this year’s winter stockpiling faces a more complex situation amid the global pandemic. Regarding nitrogen fertilizers, demand for urea in the domestic market is weak; new pricing guidelines have not yet been confirmed, and market trends remain uncertain ； In terms of phosphate fertilizers, large manufacturers in the Northeast have begun to stock up heavily on monoammonium phosphate, while there is a shortage of diammonium phosphate due to strong demand both domestically and internationally ； Regarding potassium fertilizers, prices have seen a strong decline driven by the two major traders, Sinograin and Sinochem; with supplies available at ports and those from domestic factories both in play, the possibility of price drops in the short term is limited ； Regarding compound fertilizers, several rounds of policies have been introduced successively, and low-end prices have gradually disappeared. Firstly, demand for winter storage is on the rise. The outbreak of the pandemic at the beginning of the year caused migrant workers to delay their return home, leading to the shutdown of some fertilizer factories and a reduction in the overall supply of fertilizers in spring. As far as the author knows, most distributors in the Northeast region no longer have any inventory left, and some large traders say that the fertilizer stocks accumulated in previous years have also been sold out. This is a stark contrast to the situation in the Northeast region at the start of winter storage in 2019, when there was a surplus of 1 million tons of fertilizer. The autumn harvest has begun in various regions, and grain prices in the three eastern provinces have risen significantly compared to last year. Taking corn as an example, based on recent pricing trends, the increase is around 300–400 yuan per ton. It is foreseeable that farmers’ enthusiasm for planting will increase greatly, making it no problem to stock up on fertilizer for winter use. Secondly, raw material costs have changed. Compared to the start of winter storage in 2019, the prices of raw materials for diammonium phosphate and compound fertilizers are generally on the rise. Driven by the international market, domestic sulfur prices have risen to around 700 yuan, and due to strong demand from downstream industries, there is a high likelihood of further price increases in the future. The prices of compound fertilizer raw materials such as urea and potassium fertilizers have also risen recently, driven by the international market and domestic giants. The raw material costs for diammonium and compound fertilizers are on the rise, which is also the main reason why low-priced compound fertilizers were no longer available in the Northeast region some time ago. Therefore, changes in raw material costs will directly affect the winter storage strategies of diammonium and compound fertilizer manufacturers in the future. Finally, there are differing views between upstream and downstream parties. As mentioned earlier, there are two positive factors. Now let me talk about the difficulties faced by winter storage. With the development of China’s logistics industry, the transportation time for fertilizers has been **reduced**. In recent years, there have been frequent situations where prices soar during winter storage periods and then drop sharply when fertilizers are sold in spring. As a result, downstream distributors earn little profit from winter storage, which reduces their enthusiasm for stocking up on fertilizers. Taking diammonium as an example, due to strong export and domestic sales in autumn, some manufacturers have high expectations for the winter storage market; as a result, the first round of quotes was roughly on par with last year’s retail prices, and there were very few buyers who responded. In summary, there is a high demand for winter storage in 2020, and raw material costs are expected to rise in the short term. For some products, domestic supply pressure is low due to strong export performance; however, factors such as intense market competition also exist. The overall trend regarding winter storage will become clearer by October. (Rong Guangwen)