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Urea prices fail to drop; diammonium prices fail to rise. Author/Source: China Fertilizer Network. Date: November 23, 2020. Clicks: 4. By mid-to-late November, the first round of collections for winter storage of fertilizers was largely completed. Urea prices remained high and volatile, while demand for industrial raw materials declined. The agricultural wholesale market also saw slow progress due to high prices. In the Linyi area, the purchase prices for compound fertilizers fluctuated between 1,820 and 1,830 yuan per ton (the same unit is used throughout). The price of diammonium phosphate has risen sharply since the winter storage market began, with an average increase of around 50 yuan per ton every two weeks. However, now its upward trend has come to a halt. The ex-factory price of 64% diammonium phosphate from enterprises in Hubei remains stable at 2400 yuan, while the purchase price at destination in Heilongjiang for 64% diammonium phosphate produced by large manufacturers in the southwest also stays between 2750 and 2800 yuan. Has the rise in the price of diammonium phosphate reached its limit? Will it fall back right away? First, new order signings have slowed down. At present, many diammonium phosphate manufacturers in the market have suspended order acceptance, and downstream distributors are also less willing to make payments. So is diammonium phosphate truly at an end? In fact, we can consider this issue from two aspects: market price and the volume of deliveries. In terms of prices, taking the Heilongjiang region as an example, the current delivery price for 64% diammonium phosphate from large manufacturers in the southwest is 2,800 yuan, which represents a increase of 200 yuan compared to the end of September when winter stockpiling began. While this has encouraged downstream buyers to place orders and purchase goods, it has also exceeded current demand levels, increasing the risks for downstream distributors in acquiring such goods. In terms of delivery volumes, although exports have slowed down recently and some companies in Hubei have begun to shift their focus to domestic shipments, there is very little inventory available in the market at present. Most companies have scheduled deliveries for the end of December, and as a result, downstream distributors do not yet have all the orders they need; this leads to a slowdown in subsequent purchases, but it does not mean that there will be no demand in the future. Secondly, there is a real reduction in supply. To support market prices, diammonium producers reduce production across the industry during periods of low demand. However, the effectiveness of this approach has been diminishing over the years; the reason for this is that such production cuts merely involve reductions within each company’s total capacity, while the actual operation of the manufacturing equipment does not really decrease. At the beginning of this winter, due to insufficient supply of synthetic ammonia and technical maintenance at some production facilities, large manufacturers in the southwest region significantly reduced their production volumes in October and November. Coupled with the costs associated with failing to fulfill export orders, the volume of goods shipped domestically by these manufacturers in the southwest is currently much lower than it was during the same periods in previous years. Hubei-based companies have focused entirely on supplying the export market once the autumn market closed; although they have received orders domestically, most of these orders have not yet been shipped. According to statistics from China Fertilizer Network, the amount of fertilizer available for winter storage in China is currently less than 20%, meaning there is still a demand gap at the downstream level. Finally, the phosphorus compound fertilizer conference is about to be held. After many twists and turns, the phosphorus compound fertilizer conference is set to be held in Qingdao. As the premier event in this industry, its holding at a time when the winter storage market is gradually reaching a deadlock will undoubtedly bring significant benefits to the market. Recently, raw material prices have risen across the board; the price of granular sulfur at ports has climbed to 810 yuan, while the price of liquid ammonia upon arrival at factories has risen to 3200–3400 yuan. Additionally, due to the seasonal restriction on phosphate rock extraction during winter, the production cost per ton of diammonium phosphate has increased by around 200 yuan compared to before. It is foreseeable that at the phosphorus compound fertilizer conference, various manufacturers will introduce new policies for winter storage; sales in the domestic market are about to reach a peak, and prices for diammonium phosphate are also set to rise in the short term. In summary, the winter storage market for chemical fertilizers is about to enter a new phase. Although the market is currently in a brief stalemate, with an increase in available stock and rising demand from downstream sectors, the prospects for diammonium phosphate prices remain favorable in the short term, and company quotes are likely to continue to rise.