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Urea prices have risen again; will diammonium follow? Author/Source: China Fertilizer Network Date: 2020-11-16 Clicks: 6 Last weekend, urea prices began to drop in some areas, which seemed to indicate that urea prices would reach a low point. However, in the new week, prices of urea rose again due to a decrease in production, lower purchases by downstream compound fertilizer manufacturers, and news of upcoming tenders in India. I’m not mistaken – the Indians are calling for another tender. Whatever the outcome, an increase in prices is inevitable this time. The overall positive trend in the fertilizer market is set to continue; will the prices of diammonium phosphate for winter storage keep rising? Supply will remain tight or continue to be so. As the export shipments from some factories in Hubei are completed, the situation of tight supply seems set to improve. However, the shortage of synthetic ammonia in the southwestern region has resulted in insufficient production at some large factories. Coupled with the fact that some companies are deliberately slowing down the pace of order acceptance and shipment, this has led to a shortage of goods available on the market. Some people might say that the use of fertilizers in the agricultural market will not start until April or May, and distributors will not be able to supply them in bulk until March or April at the earliest. With the increase in production capacity for compound fertilizers in the Northeast, the demand for raw materials used in blended fertilizers is set to decline. By then, companies that produce diammonium phosphate at full capacity will manufacture nearly 6 million tons of this fertilizer, resulting in an oversupply of diammonium phosphate in the future. However, according to historical data from China Fertilizer Network, although November to March of the following year is the off-season for diammonium phosphate exports in China, the export volume of this compound remains around 1.3 to 1.5 million tons during that period, which will bring China’s diammonium phosphate supply back to a balanced state or slightly tight. International demand is likely to continue. Similar to urea, the domestic market for diammonium fertilizers is largely influenced by the conditions in the export market. Although international buyers such as those in India have slowed down their purchasing activities recently, this is not mainly due to a decline in demand, but rather because there was less supply available in the international market in November. Major exporting countries such as China, Saudi Arabia, and Morocco sold out their stock early on, and therefore buyers are reluctant to place orders in order to avoid price increases. This is evident from India’s inventory, which stood at only 4.1 million tons by the end of October. Some may argue that India still has nearly 1.5 million tons of goods under contracts that have not yet arrived. However, due to the impact of the pandemic, domestic production of diammonium phosphate in India has declined, while the demand for fertilizers has increased. This combination of factors has created a shortage in the Indian market. In addition, there is an increase in fertilizer demand in regions such as South America and Australia, so the market will not be so calm in the fourth quarter of this year. The price of compound fertilizers is set to rise. Recently, the prices of raw materials used in compound fertilizers such as urea, monoammonium phosphate, and potassium chloride have been rising steadily, and they are expected to remain high in the short term. The cost of these raw materials for compound fertilizers has increased significantly; as a result, some companies that previously offered products at low prices are now suffering losses. Factories are inclined to raise prices. Considering that the phosphorus compound fertilizer conference is approaching, this will undoubtedly provide an opportunity for many manufacturers that have not yet established policies for winter stockpiling to sit down and discuss matters. As a result, there is a **higher likelihood of an overall increase in the prices of compound fertilizers, and the price gap between them and diammonium fertilizers will narrow, which will help to stabilize the prices of diammonium fertilizers. In summary, the winter storage market has only been in operation for about a month, and yet the price of diammonium phosphate has continued to rise due to export orders and tight domestic supply. It is still seen as having good prospects in the short term. Although some distributors lack confidence in the market after the New Year, by that time factory sales will be nearing their end, and the diammonium phosphate market will have shifted to the wholesale and retail level handled by distributors. In order to gain an advantage in competition, these downstream distributors need to carry out appropriate winter storage strategies based on their own circumstances. (Rong Guangwen)