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Urea bid prices remain unchanged; diammonium fertilizers are unlikely to see price increases after the meeting _ Author/Source: China Fertilizer Network Date: 12-07-2020 Clicks: 14. There were numerous major events in the fertilizer market at the beginning of December – the successful holding of the phosphate compound fertilizer meeting, and the announcement of the bid prices for urea in India. Normally, such events would have a significant impact on the domestic market, but this time there was little reaction to them. The winning bid price announced by India translates to just 270 US dollars per ton when converted to China’s FOB price. Taking into account port fees, exchange rates, and shipping costs, this price is 70–80 yuan lower than the current factory prices offered by enterprises in northern China; as a result, the Indian bidding process has suddenly changed from being favorable to unfavorable. Before the phosphate fertilizer conference, diammonium phosphate manufacturers were confident in their plans to raise prices; yet several days have passed since the conference ended and market prices remain unchanged. Can diammonium phosphate prices still increase? If it can’t rise, will it drop right away? First, the early orders have not arrived. In previous articles, the author has considered a large volume of goods awaiting shipment by companies as a positive factor for diammonium prices. However, everything has two sides: a large volume of goods awaiting shipment means insufficient supply in the downstream market. For most downstream distributors, the low-price orders from earlier periods have not yet arrived; continuing to purchase high-priced diammonium fertilizers would increase their operational costs. Therefore, it is inevitable for them to slow down their purchasing pace in order to avoid risks. According to a survey by China Fertilizer Network, some distributors have placed orders accounting for around 60% of the total sales volume for spring, but the actual quantity of goods delivered so far is only about 20%. There is still demand from downstream markets, but to unleash this demand, in addition to increasing the supply available in the market, companies need to show downstream clients more positive factors as well. Secondly, raw material prices have fallen, reducing cost support. On the eve of the phosphorus compound fertilizer conference, sulfur prices kept rising as if following a predetermined script. However, this good trend didn’t last long – once the conference ended, the price of granular sulfur at the Yangtze River port dropped by 10 yuan per ton. Downstream buyers tended to wait and see or try to buy at lower prices, and it is likely that sulfur prices will continue to fall in the future. The mainstream price of liquid ammonia has declined compared to previous periods, especially in Hubei, the main production area for diammonium compounds. There, the typical ex-factory price for liquid ammonia is around 2750–2830 yuan, with prices negotiable depending on the terms of the deal; in some cases, higher prices of up to 100 yuan may be achieved. The decline in raw material prices has reduced the production costs of diammonium phosphate, thereby increasing corporate profit margins; in the short term, production costs are unlikely to contribute to an increase in the price of diammonium phosphate. Finally, with rising prices of compound fertilizers, diammonium enterprises face less pressure. Although the pricing of compound fertilizers was low in the early stage, as raw material costs rose and demand from end-users increased, prices for such fertilizers have gone up in most regions, with increases of over 100 yuan on average; companies are very inclined to maintain high prices. The rising prices of competing fertilizer products will undoubtedly benefit the market performance of diammonium phosphate. As mentioned earlier, the supply in the market is insufficient, and downstream distributors are less inclined to continue purchasing goods or betting on price increases; however, this also indirectly confirms that manufacturers have a large amount of goods ready for shipment. Affected by the strong international demand in the autumn market, domestic diammonium phosphate manufacturers faced almost no inventory pressure as they entered the winter storage period. After receiving low prices for their products earlier on, most companies had enough stock to last until January of the following year; thus, there was no sales pressure on their part, and the market entered a brief state of stagnation. In summary, the urea manufacturers’ hope of stabilizing the market through labeling efforts has turned into a fantasy; the diammonium phosphate market is stuck due to various factors, yet the overall positive trend remains unchanged, and there is little possibility of a drop in prices for diammonium phosphate in the short term.