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Conservative estimate: The increase in price for compound fertilizers could be as much as 50 yuan per ton. Author/Source: China Fertilizer Network. Date: 2020-10-26. Clicks: 17. Compared to the off-season in the market, the recent overall rise in fertilizer prices is truly surprising; it seems as though nitrogen, phosphorus, and potassium-based raw materials have all seen price increases, and these increases are quite significant. Currently, the fertilizer market is in a period of low demand as autumn comes to an end and winter stockpiling begins. Yet, the louder the calls for price increases, the greater the confidence among downstream users, which to some extent boosts the momentum for winter stockpiling – a positive development indeed. With rising raw material prices, compound fertilizers are set to see price increases as well. In the coming period, some compound fertilizer manufacturers will hold meetings regarding winter stockpiling, and it is expected that prices will rise compared to previous levels. A price increase is now inevitable; however, the extent of that increase is what matters. At present, the low prices associated with the winter stockpiling of compound fertilizers in the early stages have gradually disappeared. The prices for most companies remain unclear; only a few companies offer limited-time, limited-quantity sales at higher prices. For example, in the Northeast region, the price of 45% sulfur-based fertilizers (12-18-15) was around 2,050 yuan per ton earlier on, but it has now risen to over 2,100 yuan per ton, representing an increase of nearly 100 yuan per ton at the factory level. It’s easy to raise prices, but difficult to set them; an excessive increase will surely affect the willingness of downstream buyers to purchase products. Companies are hesitant to finalize prices rashly. In my opinion, a conservative estimate is that the increase in the price of compound fertilizers should not exceed 50 yuan per ton. First, raw material costs. As of this weekend, the pure raw material costs for 45% chloro/sulfur-based general-purpose compound fertilizers across the country were 1,575 yuan per ton and 1,865 yuan per ton respectively, representing an increase of 30–40 yuan per ton compared to the end of September. Rising raw material costs will drive up prices. The market for nitrogen, phosphorus, and potassium remains strong at present; orders have been placed, and India has confirmed its purchase of all 2.2 million tons of goods offered in the bids, of which nearly 1 million tons will come from Chinese suppliers. Coupled with the frequent production restrictions imposed by domestic factories, prices are likely to remain firm in the short term ； The price of monoammonium has risen sharply; rising raw material costs, as well as factors such as compound fertilizer manufacturers’ purchases of raw materials for winter storage, have all contributed to an upward trend in prices ； Potassium chloride is in a phase of consolidation at high levels following earlier price increases. Secondly, the market situation for diammonium. The diammonium winter storage market seems even more active; prices were already high at the start, and companies have a strong willingness to maintain high prices. Since the start of the autumn market, the price of diammonium nitrate has remained on an upward trend, with prices rising steadily. The main factor supporting this trend is the low inventory levels at factories. Demand for diammonium phosphate in foreign markets has surged, with export prices often being higher than domestic levels. Domestic factories are receiving a large volume of orders, some of which need to be fulfilled by November, which results in a slight shortage of supply in the domestic market, and even localized shortages in certain areas ； Additionally, the production rate in the southwest region has dropped significantly; with major traders preparing to start their winter storage activities, ammonium diammonium prices are likely to keep rising in the coming period. Finally, downstream demand. If compared based on raw material costs and the market conditions for diammonium compounds, the price of compound fertilizers might see a significant increase, but downstream demand still needs to be taken into account. During the winter storage period, the demand for compound fertilizers is already lower than in the previous quarters, as it is a period of off-season stockpiling and there is no urgent demand from end-users. Moreover, due to the higher risks associated with winter storage in the past two years, distributors’ confidence in stocking up has significantly declined ； Furthermore, the start of winter storage in some areas this year was particularly early, and coupled with relatively low advance pricing, most distributors have already made their payments. Any remaining demand may have to be addressed closer to the fertilizer usage season; as a result, winter storage demand in areas such as the Northeast before the Spring Festival might be lower than usual. In summary, an increase in the price of compound fertilizers is inevitable, but the increase will not be excessive. Considering raw material costs and supply and demand conditions, the increase will not exceed 50 yuan per ton. Of course, the prevailing market trends will prevail, and prices that were too low and deviated from market levels in the early stage will not be taken into account. (Feng Hongyang)