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High Pricing for Winter Stockpiling of Diammonium Phosphate – Author/Source: China Fertilizer Network, Date: 10-23-2020, Clicks: 15. Despite the impact of the pandemic, the phosphorus compound fertilizer conference originally scheduled for October was postponed to November. Nevertheless, most diammonium phosphate manufacturers have already started setting prices for winter stockpiling. Currently, the average price of 64% diammonium phosphate in Heilongjiang Province is between 2,700 and 2,750 yuan per ton, which is about 200 yuan higher than the same period last year. As is well known, the total production capacity of diammonium phosphate exceeds domestic consumption by 100%. Following the usual pattern over the past few years, after autumn sales come to an end, the export market enters a slack season, resulting in increased sales pressure on manufacturers. To ensure cash inflows, these companies often reduce prices when selling their products, which means that the prices at the factory level are slightly lower than those in the autumn market. However, this year, since the start of the autumn market, the overall price of diammonium phosphate has continued to rise. The main reasons for this are as follows: First, demand in the Indian market remains strong. Affected by the pandemic, major importing countries such as India and Pakistan began to purchase large quantities of fertilizers such as diammonium phosphate starting from the third quarter, which led to a continuous rise in international prices for this fertilizer. This increased companies’ enthusiasm for exporting, and the domestic market also saw prices rise starting from the end of July. It is reported that the premium offshore price for 64% diammonium phosphate has risen to $360 recently. At present, most companies still have a significant number of export orders pending fulfillment. Based on these upcoming orders, the supply available in the domestic market will be relatively limited until mid-November, resulting in relatively less sales pressure on companies, allowing for a slight price increase. Secondly, overall production levels across enterprises have declined slightly recently. Although some enterprises in Hubei introduced new production facilities this year, the overall performance of the existing equipment was fairly average. Additionally, some enterprises began maintenance work on their facilities in October; in fact, 64% of the diammonium phosphate production lines at certain large factories had to be shut down temporarily due to equipment failures. As a result, the overall supply pressure in the market decreased slightly. Meanwhile, demand in the market has been relatively strong recently, which suggests a possibility of price increases. Finally, the carried-over inventory level is relatively low. This year, due to the impact of the pandemic, transportation conditions have been relatively poor. Coupled with dealers’ cautious purchasing behavior, inventory levels of diammonium phosphate in the Northeast region remained low after the spring sales period ended. In the autumn, driven by the export market, most enterprises in Hubei had relatively limited domestic supply, which also resulted in low inventory levels of diammonium phosphate in regions such as North China after the autumn sales period. This year, the Northeast region was not affected by the low-priced goods from North China; demand from downstream markets remained strong. Although some dealers purchased some goods at low prices in advance, their willingness to hold such stocks was high, so the likelihood of selling at low prices was low. Supported by demand from downstream markets, there are no signs of a decline in the price of diammonium phosphate at present. In summary, the winter storage market for diammonium phosphate started the year with rising prices. Most companies still have a large number of export orders pending. Given the current market conditions, although the overall price of compound fertilizers remains low, there is still a tendency for prices to rise. The prices of competing fertilizer types may also increase. It is expected that the price of diammonium phosphate will remain high in the short term, with further increases possible.