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Strong momentum continues: diammonium prices rise another 50 yuan/ton! ! ! Author/Source: China Fertilizer Network Date: 2020-11-02 Clicks: 3 As we approach the end of October, the fertilizer market transitions from the autumn phase to the winter storage period. During this time, urea is the most eye-catching fertilizer, but if we’re talking about the strongest-performing type of fertilizer, it’s definitely diammonium phosphate. Since the onset of the autumn market at the end of July, the prices quoted by diammonium phosphate manufacturers have been rising steadily. Taking Hubei region as an example, the price of 64% diammonium phosphate increased from 2,050 yuan per ton at the end of summer to 2,300–2,400 yuan per ton at present. The purchase price for 64% diammonium phosphate delivered to factories in Heilongjiang by large manufacturers in the southwest region is even as high as 2,750 yuan per ton. Faced with this situation, some people may find it confusing: since there is a shortage of buyers, why do prices continue to rise? The export variable is undetermined. I believe those who pay attention to the market trends for diammonium compounds are familiar with this reason. What I want to discuss today is what impact, if any, these favorable conditions for exports have on the domestic market First, the high export prices help to support domestic prices. Currently, the FOB price of 64% diammonium phosphate in China remains around $360; when converted to the price at which Hubei-based companies sell their product, it is around 2,300 yuan. This figure does not take into account the losses incurred due to the recent appreciation of the RMB affecting exports. Relatively low domestic prices mean that there is room for price increases in the future. II. The off-season is not necessarily truly slow; recently, exports of diammonium phosphate have slowed down, with almost no new orders coming in from manufacturers. This seems to indicate the arrival of an export off-season in the fourth quarter. However, the reason for this situation is not a lack of demand, but rather the fact that there is less diammonium phosphate available for export in China in November. As for future international demand, who can guarantee that it will remain weak amid the global pandemic? III. Factory inventory is low, and inventory at the port is also low. Low inventory levels in factories have not been a new issue since autumn; the modest stock levels at ports have always been considered a negative factor in the winter storage market. We have been on high alert regarding the return of goods to ports, but thanks to favorable export conditions, domestic stock levels of diammonium phosphate have remained low this year. This gives diammonium phosphate manufacturers more room to maneuver in the winter storage market, and thus gives them the confidence to raise prices. Large-scale traders have started to purchase goods, and there are relatively few supplies available at low prices in the early stage. It has been nearly a month since quotes for winter storage of diammonium phosphate were first issued; throughout this time we have been saying that the price of diammonium phosphate is high and that downstream buyers are not willing to accept it. Yet recently, there have been continuous reports of large traders placing orders. The signing of these large orders means that the number of orders awaiting shipment at factories is increasing again, and some factories even say that supplies will be tight even before the New Year. This further strengthens the confidence of diammonium phosphate manufacturers to raise prices. The high prices of diammonium compounds are not entirely a bad thing for downstream distributors, as it at least indicates that there will be relatively few supplies available at low prices in this winter’s storage market, which means less pressure when selling them in the spring. Compound fertilizers are on the rise. As the main competitor in the winter storage market for diammonium fertilizers, compound fertilizers enjoy a price advantage, and their sales progress is satisfactory. However, with the recent sharp rise in prices of urea, potassium chloride, and monoammonium phosphate, compound fertilizer manufacturers are facing increased cost pressures; as a result, their prices keep rising, and the price gap between them and diammonium fertilizers is narrowing. The rise in the pricing of compound fertilizers for winter storage will support the increase in demand for diammonium phosphate used for winter storage and further rises in its prices. In summary, positive factors are in the dominant position; the rise in winter storage diammonium phosphate is a certainty, and it will remain stable in the short term. (Rong Guangwen)