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Urea is unlikely to see a sharp rise – what about other raw materials? Author/Source: China Fertilizer Network Date: 2021-01-11 Clicks: 8 Recently, as environmental protection warnings were lifted in some areas, the supply of urea has gradually increased. However, the impact of the pandemic continues to grow, which hinders an increase in the overall pricing by urea manufacturers. In regions such as Shandong and the Two Rivers, urea prices remain ** for now. Nevertheless, factories are confident about urea prices in the future, believing that they may rise. This is because downstream compound fertilizer manufacturers will purchase urea in advance to ensure normal production during the Spring Festival. Moreover, given the uncertainty surrounding potential recurrences of the pandemic, there could be disruptions in transportation, which could lead to shortages of urea as a raw material for these manufacturers; therefore, it’s not a bad idea to stock up in advance. Urea is unlikely to see a sharp rise – so what’s the situation with other raw materials? At present, there is little risk of a significant drop in the price of monoammonium phosphate in the short term. The ex-plant price for 55% powdered monoammonium phosphate in Hubei is around 1950 yuan per ton (the same unit applies hereafter); some large manufacturers still maintain an ex-plant price of 2100 yuan. After the holiday, only a few large manufacturers reduced their prices by 50 yuan to 2000 yuan. The prices of higher-concentration varieties such as 58% and 60% powdered monoammonium phosphate remained relatively stable. Companies are mainly fulfilling previous orders; although new orders are not coming in heavily, the pressure is not significant for now. It has been reported that some large traders have recently purchased tens of thousands of tons of monoammonium phosphate in Hubei. Although compound fertilizer manufacturers have not taken significant action for now, as the Spring Festival approaches and outbreaks of the virus resurface in various regions, some large compound fertilizer producers are likely to initiate new purchasing plans to ensure supply for spring farming. As a result, other smaller and medium-sized enterprises will also stock up accordingly based on their own circumstances, which suggests a possibility of steady or slight price increases for monoammonium phosphate. The price of potassium fertilizer is likely to remain stable, with little chance of either increase or decrease. After the new prices are set by the salt lake manufacturers, the delivery prices offered by local distributors will vary depending on the circumstances of each customer; they are generally similar to the prices set by the salt lake companies. The price for 60% crystal potassium chloride is 2,050 yuan per unit at delivery. Sales have been sluggish recently, with few transactions taking place, and port traders are largely lacking confidence, holding a somewhat pessimistic view regarding future trends. The overall situation is neither good nor bad. It is expected that the price of potassium chloride will remain stable for some time, possibly even until the Spring Festival holiday. After the festival, attention will need to be paid to the progress of large-scale contract negotiations. In the short term, compound fertilizer manufacturers will not stock up excessively; it is sufficient for them to maintain an appropriate level of inventory. The price of potassium sulfate should also remain stable; in the short term, compound fertilizer manufacturers will not pay too much attention to it and will purchase it as needed. Although the prices of raw materials such as nitrogen, phosphorus, and potassium are important for compound fertilizers, it is still necessary to take into account market conditions as well as one’s own production and sales capabilities. After the New Year’s holiday, the domestic market for compound fertilizers remained relatively stable; the winter storage market was overall stagnant. In most regions, demand for compound fertilizers was at its usual low level during this period. Fertilizer manufacturers in Shandong and other areas were mainly processing orders placed earlier, with some orders not being fulfilled until around February. New orders were few, and the overall production rate was decent, with factors such as gas restrictions and environmental regulations having little impact. Although there is a high level of attention paid to raw materials, short-term procurement plans have slowed down. However, some in the industry report that although compound fertilizer manufacturers in regions such as the Northeast do not openly admit to having a demand for raw materials, they still make purchases of such materials for various reasons in order to ensure uninterrupted production after the Spring Festival. As the Spring Festival approaches, the willingness to purchase raw materials for compound fertilizers is likely to increase. In summary, demand is expected to slow down in the short term, but in the long run, fertilizer manufacturers are likely to increase their purchases of raw materials.