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Urea prices at two key levels, ready to change; could ammonium prices rise after the holiday? Author/Source: China Fertilizer Network Date: 2020-10-09 Clicks: 22 As we approach the third day of the Mid-Autumn Festival and other related holidays, the market conditions in the fertilizer sector remain relatively stable for now. Before the holidays, urea manufacturers across the country saw their prices decline as they tried to ensure there was enough urea available for shipment during the National Day period. Companies that had sufficient quantities of urea ready for shipment saw their prices remain stable or rise slightly, while most companies experienced price drops. After the holidays, urea prices are likely to continue falling, mainly due to a lack of demand and insufficient new orders. However, in October, the industry will be watching to see if India issues new tenders, and whether meetings related to phosphate fertilizers can bring about positive developments. Urea is in high demand before these holidays, with potential for price increases after them. Similarly, ammonium sulfate is also in high demand during the holidays – could its prices rise as well after that? The author’s analysis of the specific situation is as follows: First, ammonium is pending shipment, with no inventory available; will there be many maintenance tasks in the future? It is understood that ammonium nitrate manufacturers across the country have some orders pending shipment, with delivery likely to take place around mid-October in most cases, and up to the end of October in some cases. Several large ammonium nitrate producers in Hubei use a significant amount of this compound for their own fertilizer production; coupled with the existing pending orders, overall shipment volumes are under pressure. Other companies also lack inventory and are mainly dealing with pending orders, while downstream customers demand deliveries urgently, which further contributes to the tight shipping situation. It is understood that several companies in Hubei and other regions have plans to carry out maintenance work in October, mainly because the impact of the pandemic this year has prevented them from carrying out regular maintenance. However, the specific dates for these maintenance tasks are not yet determined. It is unlikely that some of the large factories in Hubei will undertake maintenance work at this time; instead, they will focus on production to fulfill existing orders. Before the holiday, some ammonium phosphate manufacturers in Sichuan and Henan carried out temporary maintenance for certain unavoidable reasons; once production resumed, they would continue to process the orders placed earlier. At present, there are not many enterprises scheduled for maintenance in October; at least, the number of such enterprises is low until mid-October, so the overall operating rate of ammonium nitrate production is unlikely to change in the short term. Can downstream demand be matched? The author has learned that large fertilizer manufacturers in Shandong, the Two Rivers region and other places have enough ammonium phosphate inventory to cover about one month of production. Some of these large manufacturers have already placed orders for several thousand tons or even tens of thousands of tons of additional stock. Most companies are waiting before placing additional orders in moderate quantities, while some smaller manufacturers are also inquiring about prices and placing orders to varying degrees. However, at present there is not much demand for large-scale new orders of ammonium phosphate; most requests are for small orders, replenishment orders, or urgent orders. In October, companies are generally cautious and prefer to wait. It is expected that after the holidays, large manufacturers will remain cautious while relying on their existing inventory and pending shipments. Some small and medium-sized enterprises that have not stocked up will purchase appropriate amounts of goods to ensure their production. The key turning point will depend on when demand starts to rise significantly in the Northeast region and whether the phosphorus-based fertilizer conference will bring any positive developments. Is there a possibility of significant changes in the affordability of raw material costs? Given the several price increases that sulfur has experienced in recent months, it is unlikely to see a significant rise in its price. At present, the prices of sulfur imported through ports and at the Puguang Wanzhou Port remain around 700 yuan per ton; it is difficult for these prices to rise significantly and exceed 1000 yuan per ton for now. The total stock of sulfur in ports is around 3 million tons. Although the stock of sulfur at the Yangtze River ports has decreased somewhat in recent times, it remains high, with continuous shipments arriving. In previous years, sulfur prices would see tentative increases around the time of phosphorus compound fertilizer conferences. However, even if there is an increase, it ultimately depends on the overall market situation for ammonium phosphate; if demand is weak, price increases still cannot avoid the risk of declines. Although liquid ammonia prices in regions such as Hubei have risen sharply recently, this has had little impact on the operation of ammonium sulfate production plants as a whole. Moreover, as supply issues ease, liquid ammonia prices will return to relatively reasonable levels. Based on the above analysis, it is still uncertain whether the price of monoammonium phosphate will rise after the holiday, but there is a possibility of an increase in prices. It will be necessary to continue monitoring changes in the supply and demand situation for monoammonium phosphate in the future. (Zhao Hongye)