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Shy urea vs. domineering diammonium – Author/Source: China Fertilizer Network, Date: 2020-10-19, Clicks: 3. After the holiday period, the domestic market for fertilizers for autumn wheat is entering its final stage; retail sales in some areas have already ceased, and the season for winter storage has begun. Even before the holidays, there were continuous rumors about bids for urea. As soon as the holidays ended, news emerged that India had received bids amounting to nearly 4 million tons, and this caused a lot of excitement. However, the actual winning bid prices and quantities were revealed only after several days, as if they were shy young girls who were reluctant to disclose them. On the contrary, diammonium phosphate in the winter storage market behaves like a domineering boss – at present, the pre-paid price for 64% diammonium phosphate arriving at factories in the southwest region from Heilongjiang is between 2700 and 2750 yuan per ton (the same unit is used throughout). Although downstream distributors complain about these high prices, the companies continue to maintain stable pricing. Will the price of winter storage diammonium phosphate decrease in the future? Positive factors from exports provide support, resulting in little sales pressure on enterprises. It is well known that there is an overcapacity of diammonium fertilizers in our country; for domestic prices to rise, exports must provide sufficient support. Affected by the outbreak of the pandemic, major international buyers such as India and Pakistan began to purchase large quantities of fertilizers like diammonium phosphate starting from the third quarter, which led to a steady rise in international prices for this fertilizer. Chinese companies took advantage of this situation to increase their exports, and the domestic market also saw prices rise starting from the end of July. According to Zhongfei Net, some companies still have many export orders pending, so they face little pressure in terms of sales. As a result, some of these companies have offered the winter storage prices mentioned earlier, with a strong willingness to maintain high prices. Domestic diammonium phosphate inventory levels are low, resulting in a tight supply situation. The reasons for the limited remaining stock in regions such as the northeast and northwest during spring have been explained by the author on numerous occasions in previous articles, so no further discussion is needed here. Due to strong export performance, some companies have shifted their sales focus to international markets, which has put the domestic second-hand market in a state of tight balance. In certain areas, some brands even faced stock shortages at times; as a result, it became impossible to dump excess inventory in regions such as the Northeast as was done in previous years. Although enterprises in Hubei region also provide quotes for the winter storage market, the delivery dates are generally at the end of November. Additionally, some large manufacturers plan to reduce production by 200,000 tons in the fourth quarter. If export conditions remain similar to those in previous years, there is a high likelihood of a supply shortage in the domestic winter storage market. Competitors offer lower prices, which may lead to a decrease in demand for winter storage. As early as August, quotes for compound fertilizers began to appear in the Northeast region. Although these prices have continued to rise due to increasing raw material costs, according to China Fertilizer Network, the current price of 45% sulfur-based compound fertilizers upon arrival in Heilongjiang is around 2100 yuan, which is far lower than the 2700 yuan price of 64% diammonium fertilizers. The price difference between the two is too large, and coupled with some distributors stating that the profit margin on compound fertilizers is higher than that on diammonium fertilizers, downstream distributors are reluctant to accept diammonium fertilizers at high prices. Furthermore, with the addition of 6 more high-tower units in the Northeast region this year, competition in the compound fertilizer market has intensified; as a result, price increases are not expected to be very significant. This will, to some extent, erode the market share belonging to diammonium fertilizers. In summary, diammonium phosphate is off to a strong start in the winter storage market. From the perspective of supply and demand for this specific product, there is still potential for price increases in the future. However, due to the lower pricing of competing products, this could dampen the price trends for diammonium phosphate. It is expected that prices will remain stable in the short term, awaiting new positive factors that could support price increases. (Rong Guangwen)