Thread Content
Is the demand really good behind these price hikes? Author/Source: China Fertilizer Network Date: 2020-10-19 Clicks: 3 Recently, the market for monoammonium nitrate has seen a turnaround with prices rising across the board, mainly in the Hubei region. It is reported that the ex-plant price of 55% powdered monoammonium nitrate produced by large manufacturers in Hubei has risen to 1830–1860 yuan per ton, an increase of 20–30 yuan. It is said that deals have already been made at these new prices. However, industry insiders report that recently, most major monoammonium phosphate producers have been refusing to accept orders, showing a relatively strong willingness to keep prices high. Previously concluded transactions still mostly involved prices of 1,780–1,800 yuan per ton on a cash-on-delivery basis; the upper limit was only 1,830 yuan per ton. The prices of 58% ammonium sulfate powder and 60% ammonium sulfate powder in Hubei have seen little change, with price increases mainly occurring for 55% powdered ammonium sulfate. At the Northeast Bayuquan Port, the post-holiday quote for 55% ammonium powder available for self-pickup has also seen a slight increase of 20 yuan, to 1,960 yuan. Reportedly, there are currently few transactions taking place. This week, quoted prices from monoammonium phosphate producers in Henan and other regions remained relatively stable. The actual cash-on-delivery price for 55% powdered monoammonium phosphate was between 1,800 and 1,820 yuan per ton. The increase in the price of monoammonium nitrate this time is mainly due to rising raw material costs and a tight supply of monoammonium nitrate recently. In reality, the rise in raw material prices still has some room for adjustment. Even though the price of phosphate rock has recently been intended to be increased by 30 yuan, I’ve learned that downstream players are currently unable to accept such a price hike; the actual increase for lower-end products is only between 0 and 5 yuan. Based on this, the total cost of producing 55% ammonium phosphate increases by less than 10 yuan. For companies that own their own phosphate mines, the increase is even smaller. Although phosphate rock accounts for a significant proportion of the production cost of monoammonium phosphate, the industry still needs to conduct a rational analysis of this situation. Sulfur prices also rebounded after the holiday; the price of Puguang sulfur has been raised for two consecutive weeks. However, it’s worth noting that port inventories of sulfur remain close to 3 million tons. Additionally, for every 100-yuan increase in price, the cost of 55% ammonium sulfate rises by approximately 46 yuan. The price of liquid ammonia as a raw material had risen in advance before the holiday, and has remained stable since then; it accounts for a small proportion of the cost of 55% ammonium powder. Therefore, even as raw material prices rise, it is necessary to approach the situation rationally; so, is demand really strong behind the increase in prices of monoammonium? In the short term, the answer is yes. In particular, major ammonium phosphate producers in Hubei have already received orders from large compound fertilizer manufacturers in Northeast China, Shandong, and the two river regions prior to the holiday. There are numerous pending orders. Additionally, the amount of ammonium phosphate used for their own compound fertilizer production has also increased. Most downstream orders are urgent in nature; consequently, shipments are strained, leading to restrictions on accepting new orders. With the return after the holiday and the postponement of the phosphate compound fertilizer conference, many downstream compound fertilizer manufacturers have held meetings with their distributors in advance, which has led to an increased demand for ammonium phosphate as a raw material. Several large factories in Hubei are currently refusing orders without providing quotes; for companies with limited production capacity, the production of ammonium phosphate is also under strain. However, it is reported that the actual demand after the holiday is not very high, with few new orders coming in. Orders that are pending settlement are generally priced at the previous rates, as the downstream industry has not yet accepted the new prices. However, the demand is not ideal, but this does not yet affect ammonium sulfate manufacturers. At present, most of these companies have no inventory, and there is a relatively large amount of goods ready to be shipped; as a result, there is no sales pressure at the moment, so it is reasonable for them to maintain high prices. In summary, it is expected that prices for monoammonium phosphate may see a slight increase in the short term. Some industry experts believe that the actual increase in transaction prices should not be significant (Zhao Hongye)