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Diammonium prices rise again at the turn of the year – Should you stock up in 2021? Author/Source: China Fertilizer Network Date: 2021-01-06 Clicks: 2 During the end of the year and the beginning of the new year, what was most in demand in the fertilizer market were not the finished fertilizers that usually attract attention, but rather raw materials such as sulfur and synthetic ammonia. Currently, sulfur prices remain high; the pickup price for granular sulfur at ports is 940 yuan per ton (the same unit applies below) ； The shortage of gas for ammonia production has led to tight local supply conditions; the price of ammonia at factories in the southwest region has risen to over 4,000 yuan, an increase of nearly 1,000 yuan compared to before the gas shortage. The production costs of diammonium nitrate have also increased significantly, which has prompted some companies to raise their prices again at the end of the year. So what will be the impact on downstream industries? Should we stock up in advance for 2021? Firstly, supply is tight and costs have risen, giving diammonium fertilizer manufacturers strong confidence to raise prices. By early January, the winter storage market had been in operation for over two months, but due to a high volume of export orders, the supply level in the market remained low. Taking the Northeast region as an example, some large manufacturers received only half as much supply as last year; most factories had a large number of orders pending fulfillment, and some smaller factories had already scheduled their production tasks until March. Overall, the supply situation was tight. At the beginning of the article, the author mentions that the prices of raw materials such as sulfur and synthetic ammonia remain high; according to calculations by Chinese fertilizer manufacturers, the production cost of diammonium phosphate has increased by about 300 yuan compared to earlier periods. The overall supply shortage and rising costs give ammonium diammonium fertilizer manufacturers the confidence to raise prices this time. Secondly, risks increase, willingness to purchase declines, and the market stalemate will continue. The manufacturers are confident in raising prices, but will the downstream distributors agree to pay more? As the price of diammonium nitrate rises, the price gap compared to competing compound fertilizers grows larger, increasing the risks for downstream distributors who store goods for winter use. With this price increase, the premium price for 64% diammonium nitrate in Heilongjiang will reach 2,850 yuan. If such a price were to apply in March, the market would likely react more strongly; but it’s still early January at present, and on top of that, customers have to pay so much money without being able to get the goods immediately. As a result, the market for winter storage of diammonium nitrate has reached a deadlock. Finally, is there export support in place, and is there a risk of a decline in raw material prices? In 2020, thanks to strong demand from the international market, diammonium nitrate performed well in the domestic market with prices rising steadily. But will this upward trend continue into next spring’s market? Will the international market be able to play a supporting role again at that time? International market performance was weak in the fourth quarter, with major buyers such as India and Pakistan slowing down their purchasing activities. However, this also means that inventory levels domestically will be lower than in the same period in previous years. It is foreseeable that international market demand will be strong next spring, and our country’s diammonium phosphate production will benefit from this. The high price of synthetic ammonia is one of the main factors behind the increase in the prices of diammonium phosphate. However, the gas supply restrictions will eventually end, and the risk of price drops looms like a sharp sword over diammonium phosphate producers. In fact, that’s not the case; this time, the price increase for diammonium nitrate was only 50 yuan, while the rise in the price of synthetic ammonia had an impact of nearly 200 yuan on the increase in diammonium nitrate prices. In other words, even if the price of synthetic ammonia drops later on, its impact on the price of diammonium nitrate will still be limited. In summary, diammonium phosphate is likely to maintain its strong performance in 2021; however, with prices already at high levels, it is not the best time for downstream distributors to purchase it. As for the price trend of diammonium phosphate after the New Year, attention will still need to be paid to international demand and the supply pressures from manufacturers. (Rong Guangwen)