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Ammonium prices rise on paper – is more growth expected in the future? Author/Source: China Fertilizer Network Date: 2020-11-23 Clicks: 4 Recently, the prices of monoammonium fertilizers have been rising steadily. Currently, the average ex-factory price for 55% powdered monoammonium fertilizers in Hubei is around 2100 yuan per ton. The average ex-factory price for 64% diammonium fertilizers in the same region is 2400 yuan. At these prices, the nutrient content per unit weight of monoammonium fertilizers is slightly higher than that of diammonium fertilizers. It is reported that large manufacturers in Guizhou offer 64% diammonium fertilizers at prices between 2350 and 2400 yuan, while the ex-factory price for 60% powdered monoammonium fertilizers has risen to 2350 yuan; it is said that the actual ex-factory price for high-quality products can even reach 2310 yuan. In the near term, there is still a possibility of further increases in the price of monoammonium. So what is driving this upward trend in its price? 1. The company itself has no inventory, with most items pending shipment. Recently, most ammonium phosphate producers have been focusing on fulfilling existing orders. It is reported that some large factories in Hubei have nearly 200,000 tons of orders pending fulfillment. Although these companies have suspended taking on new orders for some time now, they still allocate a certain amount of high-priced orders to their regular clients; it is clear that their priority is to control the number of orders accepted. While carrying out orders with lower prices, these companies also sell an appropriate amount of high-priced ammonium phosphate as it is produced. Most of these companies do not keep any inventory, and many compound fertilizer manufacturers keep stockpiles of ammonium phosphate at their plants for use in advance purchases. At present, companies with a large backlog of orders can continue production until late December or the end of the month; some companies have not taken on many new orders for now and are focusing on completing the orders that were placed earlier. It is evident that the supply of monoammonium remains tight, and it is unlikely to see significant improvement in the short term. II. Downstream demand is tight. Although the ammonium sulfate purchased in advance by some large compound fertilizer manufacturers will be sufficient to maintain production until mid-to-late December, there will still be no reduction in attention paid to ammonium sulfate for now. The revenue generated by compound fertilizer companies from winter stockpiling in recent times has not been very good, but the amount of stockpiled fertilizer remains constant, so there won’t be significant changes. In order to secure a share of the market, these companies will accelerate the production of compound fertilizer to ensure fast delivery in the future. Although some compound fertilizer manufacturers purchased ammonium phosphate at low prices in the early stage and the quantity received was not large, they will purchase an appropriate amount when suitable sources of ammonium phosphate become available. As long as the average overall cost remains within a controllable range and does not affect the profitability from the sale of compound fertilizers, it is also possible to consider purchasing ammonium phosphate at higher prices. III. The holding of the phosphorus compound fertilizer conference is expected to create a positive atmosphere for the upstream and downstream markets. In previous years, the price of sulfur, the upstream raw material used in phosphate fertilizers, would rise before such conferences; recently, its price on electronic trading platforms has increased again while stock levels in ports have continued to decline. As of the third week of November, sulfur stock levels in Chinese ports had decreased by about 175,000 tons, reaching around 2.54 million tons – the lowest level since December 2019. Sulfur stock levels at the Yangtze River ports have dropped further, to around 123 tons, with a decrease of about 475,000 tons since early September this year. Currently, the price of granular sulfur at the Yangtze River ports and Fangchenggang port is 810 yuan per ton, which is the same as the price at Puguang Wanzhou port. Apart from sulfur, the compound fertilizer companies, which are the key players in this industry, are likely to introduce certain winter storage policies after the meeting; this could lead to a new wave of investments, or at least it will help improve the atmosphere in the market. By then, the confidence of ammonium producers will increase, and prices are expected to keep rising as well. In summary, in the short term, positive factors for monoammonium still prevail, and further price increases are possible. Although current demand pressures may somewhat reduce future demand, factors such as the companies’ own supply capabilities and raw material availability also need to be taken into consideration. If there is any part of our analysis and market data that you would like to know more about, you can call the consultation hotline at 0451-88001128. To learn more about fertilizer market trends, please keep an eye on the official website of China Fertilizer Network (www.fert.cn), its mobile app (www.fert.cn/app) and WeChat official account (fert-cn). You can also visit the Jinnongwang Agricultural Information Community on Kuaishou and Douyin to communicate one-on-one with analysts; there’s truly great content not to be missed! (Zhao Hongye)