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A drop in urea prices is a minor issue; maintaining prices during winter storage is a major concern. Author/Source: China Fertilizer Network Date: 2020-12-07 Clicks: 4 This week, as a key event in the fertilizer market at the end of the year, the preliminary results of India’s urea import bidding were released. The bid prices for the east and west coasts were 286.50 dollars per ton (FOB) and 284.77 dollars per ton (FOB), respectively, for a total quantity of 1.273 million tons. At the current exchange rate, the ex-plant price of urea in Shandong and the Two Rivers regions of China is around 1600–1650 yuan per ton. There is a certain price difference compared to the current domestic urea prices, and it is rumored that Chinese suppliers will play a very limited role in this tender process. With low prices and limited quantities, the printing of labels not only failed to bring any benefits but instead put pressure on domestic urea prices, causing them to decline. The unexpected drop in urea prices has once again put the already strained compound fertilizer market in a difficult situation. Following recent frequent price adjustments, the overall prices of compound fertilizers have now risen to relatively high levels; however, this has also increased resistance from end-users. As a result, most companies are processing existing orders only, and are very slow to take on new orders. With weak urea prices, the cost support for compound fertilizers may weaken as a result. So, is there a risk of price cuts for compound fertilizers in the short term? Firstly, raw materials remain strong. At present, raw material prices are mainly fluctuating at high levels. Although the results of the bidding processes for urea imports from India were unsatisfactory and Chinese suppliers played a limited role in these imports, factors such as the demand for raw materials for winter storage by compound fertilizer manufacturers and localized production cuts may lead to only slight adjustments in domestic urea prices ； The price of monoammonium is stable; manufacturers are focusing on supplying orders from previous periods, while downstream buyers are cautious about placing new orders. There are also rumors that some traders are selling goods at low prices. With a large volume of goods pending shipment and high prices for sulfur, manufacturers have kept their quotes steady for now ； Potash fertilizer prices remain high, with the price of salt lake potassic chloride rising by another 70 yuan per ton in the new month. Secondly, there is still demand from downstream sectors. This year, the winter storage market for compound fertilizers started too early; activities began in some areas as early as the end of August or early September. Some companies also released preliminary quotes for winter storage, with prices that were relatively low, and the downstream sector was willing to accept them. However, even though the level of stockpiling in certain markets was decent at first, there was still strong demand from downstream users. One reason for this was that since winter storage started early, some distributors had not yet recovered their funds, and although they wanted to make purchases to stock up, they lacked the necessary resources and thus had to choose to wait and see ； The second reason is that the price of compound fertilizers during winter storage started low but gradually increased, with a significant rise in price. The price outlook for next year’s sales season remains uncertain, so dealers tend to be more cautious before the Spring Festival. Finally, the price of diammonium is at a high level. Since autumn, the price of diammonium phosphate in the domestic market has continued to rise. Currently, the buyout price for 64% diammonium phosphate in the southwest region upon arrival in Heilongjiang is between 2780 and 2800 yuan per ton. Many diammonium phosphate manufacturers have large quantities ready for shipment, which can be delivered around January; the market trend is one of price maintenance. As a substitute for compound fertilizers, the high prices of diammonium fertilizers help to stabilize the market for compound fertilizers to some extent; in fact, there is even a possibility of further price increases. Given the large number of orders expected to be placed in the near future, some compound fertilizer manufacturers have stopped accepting new orders or reporting prices, and there are indications of further price increases in the coming period, suggesting that the market will remain strong in the short term. In summary, the prices of compound fertilizers for winter storage have risen, downstream buyers are cautious in making purchases, and there is a strong sense of stagnation in the market. If the prices of raw materials continue to rise, it is expected that winter storage activities for fertilizers will increase in some areas after New Year’s Day. (Feng Hongyang)