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Compound fertilizers have finally started to perform well! Author/Source: China Fertilizer Network Date: 2020-11-09 Clicks: 8 In early November, the weather turns colder as winter approaches. Although the fertilizer market is in a off-season period at present, its activity level is actually high; several types of fertilizers have seen a wave of price increases that has persisted for quite some time. The off-season is not slow-paced; the winter storage market is in an important phase of development. Rising prices of fertilizers are likely to contribute positively to the situation in this market, and even the prices of compound fertilizers, which have been low for a long time, have seen some increase. After several rounds of adjustments, the winter storage prices for compound fertilizers are now higher than before; although some companies provide vague quotes, there is a strong willingness to raise prices. As of now, the prevailing ex-factory prices for 48% chlorine-based (26-10-12) compound fertilizer in the Northeast region have all exceeded 2,100 yuan per ton, representing a rise of 200 yuan per ton compared to the price levels in August and September. The winter stockpiling of compound fertilizers, which were initially labeled as low-cost products, took an unexpected turn. However, the increase in their prices was not smooth; compared to nitrogen and phosphorus fertilizers that have been in high demand recently, the price rise for compound fertilizers was rather weak. Firstly, raw material costs provide support. To date, the pure raw material costs for 45% chloro/sulfur-based balanced fertilizers across the country are around 1,620 yuan per ton and 1,880 yuan per ton respectively, an increase of nearly 100 yuan compared to early October. Factors such as Indian export restrictions, domestic production cuts, and rising natural gas prices have led to continuous increases in domestic urea prices; even when there are declines from these high levels, it is difficult for prices to drop to very low levels ； Ammonium monophosphate is the focus of all attention; shortages in the past led to sharp price increases, and there is a high likelihood of further rises. Companies are hesitant to take on large orders for fear of facing similar shortages ； The price of potassium chloride is currently in a phase of steady high levels, with no expectations of price drops. It is evident that the increase in the price of compound fertilizers is mainly driven by the costs of raw materials. Secondly, the actual downstream demand. Although the price of compound fertilizers is gradually rising, demand from downstream users remains quite weak. Generally speaking, the market is currently in a off-season period; dealers are stocking up goods in preparation for sales next spring. Additionally, some fertilization for winter wheat also needs to be carried out around the Spring Festival, resulting in a long time span. The rise in the price of compound fertilizers is not well accepted by distributors, who are mainly concerned that prices may remain unstable or even decline next spring, which could easily lead to a situation where the selling price is lower than the cost price, unless the price range remains within a relatively safe level ； Additionally, there was an abundance of low-priced sources of compound fertilizers in the early stage, which was quite attractive; some distributors have already made appropriate stockpiles and do not plan to purchase them at high prices in the future. Finally, upstream supply pressure. As of now in the autumn fertilizer market, the overall operational rate of large-scale compound fertilizer manufacturers across the country has remained between 40% and 50%, with no significant fluctuations. With the start of winter storage pre-payments in various regions, it is expected that this rate will gradually increase in the future. Part of the reason for the increase in urea prices this time is severe localized production restrictions; some compound fertilizer manufacturers are also under environmental pressure. However, supply pressures have not increased significantly. One reason for this is that at present, compound fertilizer manufacturers are producing in order to build up inventory, as end-users are not in a hurry to place orders ； The second reason is that, as a result of environmental inspections carried out in recent years, most enterprises have met the required standards, and there is no need for a one-size-fits-all approach; therefore, the supply of compound fertilizers during the winter storage period is likely to be sufficient. In summary, favorable raw material costs are contributing to rising prices of compound fertilizers; the short-term market trend is strong, but in the long term, attention must still be paid to the trends in raw material prices.