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To be honest, compound fertilizers really are going to get more expensive! Author/Source: China Fertilizer Network Date: 2020-10-16 Clicks: 7 At the beginning of the week, the National Phosphorus Compound Fertilizer Production and Sales Conference, which was originally scheduled to take place from October 18-20, was postponed to November 27-29, 2020. This change disrupted the timeline for winter stockpiling of compound fertilizers, leading to increased caution and hesitation in the market. By October 20, the autumn compound fertilizer market will gradually come to an end; even if demand in some areas persists for a short while longer, sales at the retail level have essentially ceased. Winter storage becomes the focus of attention going forward. The meeting regarding phosphorus-based compound fertilizers has been postponed, and most compound fertilizer manufacturers say they will announce winter storage prices and related pre-payment policies around the end of this month. Of course, as the market progresses, a few companies have already started collecting payments in advance for winter storage this week. A company in Hubei is selling its 45% (12-18-15) compound fertilizer product at a fixed price of 1,920 yuan per ton for winter storage in the Northeast region; this price is slightly higher compared to the previous winter storage prices in that area ； Additionally, the new winter storage prices for some local enterprises in the Northeast region have also increased slightly compared to earlier levels. Although demand from downstream buyers remained moderate after these price increases, they still contributed to a positive outlook for future market trends. With multiple favorable factors at play, the prices of compound fertilizers have indeed seen a slight rise recently. Firstly, raw material costs have risen. At present, the prices of fertilizers are rising across the board; following the sharp increase in the price of potassium chloride at ports, the prices of nitrogen and phosphorus fertilizers have also begun to rise. The successive tenders for urea in India have been regarded as one of the positive factors for the domestic urea market. The latest tender in India is no exception; amid a weak season for agricultural demand and slow industrial purchases in China, the presence of these Indian tenders has boosted the enthusiasm of domestic suppliers to supply urea. As a result, there has been an increase in the number of bids, along with bid prices that are within expectations, leading to a steady rise in domestic urea prices ； The price of monoammonium phosphate rose after the holiday; it is reported that the ex-factory price of 55% powdered monoammonium phosphate from a major factory in Hubei has increased to 1830–1860 yuan per ton. This increase is mainly due to higher prices for raw materials such as phosphate rock, sulfur, and liquid ammonia. It is expected that the price of monoammonium phosphate will continue to rise slightly in the short term. Secondly, demand is favorable in spring. The northern regions have large winter stockpiles, and purchases and sales usually take place next spring. Although the atmosphere in the winter stockpiling market has become increasingly subdued in recent years, most dealers still need to stock up on goods, especially those in the northeastern region. As the highly sought-after product in the winter storage efforts of most companies, the Northeast region saw an early start to its winter storage market this year, with low prices and fierce competition; suppliers from various provinces rushed to bring their products to this region. This indicates that demand for compound fertilizers in the Northeast market this winter might increase. The main reason for this is the high prices of grains – the prices of crops such as corn and rice are at historically high levels for this time of year. As we are currently in the autumn harvest season, the higher the price at which farmers can sell their grain, the more motivated they will be to prepare for planting next spring. Finally, the advance receipts are acceptable. As early as the beginning of August, fluctuations appeared in the local winter storage market. In order to gain an advantage earlier, some compound fertilizer manufacturers first set prices for winter storage purposes in order to collect payments. Due to their relatively low prices, these prices were acceptable to downstream customers, allowing the manufacturers to collect a sufficient amount of payments; however, after offering these low prices for a short time, they either raised the prices or stopped accepting payments. At present, the prices for winter storage are largely uncertain; a few companies that charge for such storage have raised their prices slightly compared to before. The reason for this is the improvement in the prices of raw materials mentioned earlier – as costs increase, the prices of compound fertilizers also rise ； The second reason is that some companies have a large number of orders pending fulfillment for winter storage, and they are not in a hurry to accept new orders. Moreover, raw material prices have been rising recently, which may provide further support for compound fertilizer prices in the future. In summary, driven by favorable raw material prices and seasonal demand, the prices of compound fertilizers for winter storage are likely to remain above previous levels, but there is little possibility of a significant price increase; rather, adjustments will be on a narrow scale. If there is any part of our analysis and market data that you would like to know more about, you can call the consultation hotline at 0451-88001128. To learn more about fertilizer market trends, please keep an eye on the official website of China Fertilizer Network (www.fert.cn), its mobile app (www.fert.cn/app) and WeChat official account (fert-cn). You can also visit the Kuaishou and Douyin accounts of Jinnongwang Nongqing She to communicate one-on-one with analysts – don’t miss out on all the interesting content! (Feng Hongyang)