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Radish, crouch down! Radish, crouch down! Have raw material costs risen, and so has the price of ammonium? Author/Source: China Fertilizer Network Date: 2020-10-15 Clicks: 18 After the National Day holiday, prices of monoammonium phosphate rose across the board. Although some companies still did not provide pricing information, feedback from downstream suppliers indicated that the ex-plant price of 55% powdered monoammonium phosphate produced by large factories in Hubei had increased to 1830–1860 yuan per ton, an increase of 20–30 yuan. Actual transactions did take place. Fertilizer manufacturers in Shandong reported that it has become difficult to purchase monoammonium phosphate recently, mainly because the amount of product ready for shipment by these factories in Hubei has increased, resulting in many companies being unwilling to take on new orders. So why does this happen? The industry believes that the rising price of ammonium sulfate raw materials is one of the main reasons for this increase in ammonium sulfate prices. Recently, the long-stable prices of phosphate rock have finally seen some changes. It is reported that the price of phosphate rock is expected to rise by 30 yuan. However, it is understood that downstream manufacturers are not able to accept an immediate increase in the cost of raw phosphate rock; the actual increase is likely to be between 0 and 20 yuan. The price of phosphate rock with a purity of 28% at a factory in Hubei has risen slightly to 380 yuan. Taking 55% phosphatic ammonium fertilizer as an example, if the price of phosphate rock increases by 20 yuan, the total cost of this fertilizer will rise by around 35 yuan. For companies that own their own phosphate rock mines, the increase is not as significant, and it will take some time before downstream manufacturers can accept such an increase. Nevertheless, given the proportion of phosphate rock in the cost of phosphatic ammonium fertilizer, it is only logical for its price to rise due to the increase in the cost of raw materials. The price of sulfur also rose after the holiday; the price of Puguang sulfur increased by 20 yuan for two consecutive weeks. Currently, the prices at Wanzhou Port and the Dazhou plant are 760 yuan and 750 yuan respectively. The price of imported sulfur has also increased, with the price of granular sulfur at the Yangtze River Port and Fangchenggang Port rising to 735 yuan. Driven by the price increases in Puguang sulfur, there is a possibility of further slight price rises at ports in the short term. Although an increase of 100 yuan in price only results in an increase of about 46 yuan in the cost of 55% ammonium sulfate, such price increases still have some effect on raising the price of ammonium sulfate as well. The price of liquid ammonia as a raw material had already risen before the holiday, mainly due to supply shortages in regions such as Hubei, which led to a significant increase in prices. Although these prices have stabilized after a recent decline, they are still about 300 yuan higher than their lowest level at the end of August. This price increase results in an increase of around 39 yuan in the cost of 55% ammonium powder. Based on the above, it can be roughly estimated that the total cost of 55% powdered monoammonium fertilizer in Hubei Province is around 1,700 yuan; companies that possess their own phosphate mines and other raw material facilities will have costs that are slightly lower than these higher levels. Companies have a strong tendency to maintain high prices, and coupled with rising raw material costs, they have raised the price of monoammonium phosphate by 20–50 yuan. It is reported that actual transaction prices have also increased by 20–30 yuan. Thus, compared to the rise in costs, the increase in the selling price of monoammonium phosphate is not significant. Why is that? On the one hand, the industry generally knows what the profit margin for monoammonium is; as a result, downstream compound fertilizer manufacturers and traders are not likely to accept higher price increases in the short term. On the one hand, the demand for monoammonium is not very high. Although companies in regions such as Hubei have an increasing amount of products ready to be shipped and no inventory available, shipping remains challenging; therefore, the focus is on controlling new orders. However, since some large manufacturers of compound fertilizers have already stocked up in advance of the National Day holiday, there is no significant intention to make large purchases at the moment. Other purchasing intentions are mainly focused on small and medium-sized compound fertilizer manufacturers, and ammonium sulfate producers tend to control the orders; those who wish to purchase such products cannot obtain large quantities at the moment. However, most ammonium sulfate manufacturers do not have any inventory, and the amount of product ready for shipment is increasing; as a result, these manufacturers are not under any sales pressure at the moment, so price increases are understandable. In summary, it is expected that prices for monoammonium phosphate may see a slight increase in the short term, with actual transaction prices also likely to remain stable or rise modestly. (Zhao Hongye)