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Half of the holiday period has passed – any changes in the fertilizer market? Author/Source: China Fertilizer Network Date: 2020-10-09 Clicks: 2 The fertilizer market remained relatively calm during the holiday period. Although RCF in India announced a new tender on the eve of National Day, with the bidding deadline set for October 9 and shipment scheduled for November 16, the port’s handling capacity this year was not ideal; delays in loading and unloading have, to some extent, reduced the positive impact that this Indian tender could have on urea prices. Some industry experts say that even if India issues another tender, the expected price increase will be minimal. The market operation rate is expected to recover in the later period; some factories have indicated that they will resume production after the holidays. It is reported that some new production capacity is scheduled to come online in October and November. Given this, there remains pressure on urea supply, and prices are likely to fall after the holidays. The demand side is even more concerning: urea prices have dropped ahead of the festival to ensure supply, and compound fertilizer manufacturers are purchasing amounts appropriate for their production needs. However, we are currently in a period when the autumn fertilization campaign is coming to an end and winter storage of fertilizers has not yet begun in full scale; therefore, demand for urea is likely to be low in the short term after the festival. It will take at least until around the time of the phosphorus-compound fertilizer meeting before there are signs of an improvement in demand. So what about compound fertilizers? As corn harvest activities take place in regions such as Henan and Anhui, the autumn fertilizer market is now coming to an end. It is expected that in some areas the autumn market will be closed after the holidays, while the winter storage market is gradually coming into focus. In the Northeast region, which is of great interest to the industry, a few companies have already set prices for winter storage; these prices are relatively low. Initially, some companies set prices for winter storage that were close to the cost level. Later on, they suspended collection of payments in anticipation of price increases, but the increase was limited. Currently, the prices for winter storage in the entire Northeast market remain low. The industry believes that prices are likely to stay low in the future, with little chance of an increase. So, to what extent is compound fertilizer dependent on the raw material ammonium sulfate? Around mid-September, there was a shortage in the shipment of ammonium nitrate, especially at the large ammonium nitrate producers in Hubei Province. These companies use a large amount of ammonium nitrate for their own compound fertilizer production, and at the same time, downstream manufacturers are eager to receive the ammonium nitrate they ordered earlier. As a result, the supply of ammonium nitrate became slightly tight. However, some in the industry believe that this shortage will only last for a while, and that demand may not be met later on. It has been learned that large compound fertilizer producers in Shandong and other regions have enough ammonium nitrate stock to cover about one month’s worth of production. Some of these large companies also stocked up on several thousand tons of ammonium nitrate before the holidays. Most companies are waiting and placing orders in moderation; in October, they tend to be cautious. It is expected that after the holidays, large companies will wait while relying on their existing stocks and pending shipments, while some small and medium-sized enterprises that haven’t stocked up will purchase enough ammonium nitrate to ensure their production can continue. It will still be necessary to watch whether the meetings related to phosphate-based compound fertilizers bring any positive developments, with hopes that demand in the Northeast region will increase significantly. Recently, the price of raw material potassium chloride has continued to rise. By the end of the month, the asking price for 62% pure potassium chloride at ports reached 2,000 yuan per ton, and importers are still cautious about taking on new orders. The price of 1,950 yuan per ton has not yet become firmly established, but low prices are gradually disappearing. Domestic potassium chloride is mainly used to fulfill orders placed at lower prices earlier on. However, the early announcement of new prices for salt lake-derived potassium chloride in October also provided some positive support against the upward trend in potassium chloride prices. The price of 62% potassium chloride supplied by agents at the port increased by another 20 yuan per ton, reaching 1,870 yuan per ton. Although the price is still rising, it is still off-season and there is a large inventory in ports; therefore, the increase in the price of potassium chloride in China is still due to artificial forced increases. Fertilizer manufacturers are not very enthusiastic about purchasing potassium fertilizers, but they have accepted the increase in the price of potassium chloride to some extent; they purchase only what they need. As for potassium sulfate, which has seen no significant changes, they adopt a more cautious attitude and currently replenish their stock in small amounts only. In summary, whether it’s potassium chloride, which continues to see price increases, or urea for which bidding processes have just been initiated, there are no signs of any significant changes in market conditions after the holiday. As for ammonium phosphate and compound fertilizers, the upcoming meeting on phosphorus-based fertilizers might lead to some improvement in the fertilizer market conditions. (Zhao Hongye)