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Urea prices fall while monoammonium and potassium prices rise sharply; composite fertilizer producers face challenges. Author/Source: China Fertilizer Network Date: 2021-03-11 Clicks: 3 Since the weekend, urea prices have dropped significantly in many areas. Monoammonium manufacturers are holding their prices steady, while potassium chloride prices have been artificially increased. All these factors have led to a cautious purchasing attitude among end-users of composite fertilizers, putting pressure on those producers. Since early March, when the prices quoted by compound fertilizer manufacturers rose by 100 yuan per ton, the compound fertilizer market has remained relatively calm recently, with little trading activity. Dealers across the country still have in stock the compound fertilizers they purchased before the Spring Festival, which will be available for sale for some time. There are few new plans to purchase compound fertilizers. Additionally, due to the recent decline in urea prices, compound fertilizer manufacturers lack confidence and have little interest in purchasing raw materials such as nitrogen, phosphorus, and potassium at the moment. In some areas, the market for corn fertilizers in the summer has faced difficulties in getting off the ground; compound fertilizer manufacturers are still working on setting prices for high-nitrogen fertilizers, and there is also little enthusiasm among end-users to purchase such fertilizers. It can be seen that in this situation, although compound fertilizer manufacturers still pay attention to raw materials, they have not made many purchasing activities recently. So what’s the current market situation for various raw materials these days? The author provides a brief analysis as follows. Urea prices have fallen. Last weekend, urea prices dropped significantly, but this did not prompt the downstream markets to place large-scale purchases. This week, urea prices continued to fall, though the rate of decline has slowed down. Demand for urea in agricultural applications is moderate; the fertilization phase for winter wheat has largely come to an end. The daily production volume of urea remains high, at around 160,000 tons. Starting from March 1st, state-owned fertilizer reserves will begin to be released into the market, with another batch coming onto the market on April 1st. As these state-owned reserves are gradually put into use, the overall supply of urea will increase, while demand remains weak. It is expected that urea prices will continue to drop. The industry is watching to see when India will issue the tender calls; urea prices are expected to rise at that time. However, it remains to be seen when that will happen. The main reason for the frustration among compound fertilizer manufacturers is the decline in urea prices, so they are likely to be less eager to purchase urea at present and will continue to make purchases in batches as needed, with no large-scale purchases expected for now. Although the price of ammonium chloride is fairly good, with increases in previous periods and some calls for further price hikes in recent days, fertilizer manufacturers have gradually stopped purchasing it. Ammonium chloride producers are currently focusing on fulfilling existing orders while limiting new ones. Monoammonium remains strong. Recently, the falling prices of urea, sulfur, and other materials have reduced confidence in monoammonium fertilizers within the industry, leading to a slight slowdown in orders and purchases. This is also due to some monoammonium fertilizer manufacturers limiting the number of orders they accept at present, as well as a reduction in new purchasing plans on the part of compound fertilizer manufacturers and traders. However, recently, high production levels by phosphorus chemical enterprises in certain areas have led to a tight supply of smelting acid, resulting in price increases. Recently, there were also reports that phosphate rock prices would rise by 100–150 yuan, but acceptance among downstream users remains low for now. These factors have led to further increases in the pricing offered by some ammonium phosphate manufacturers in regions such as Yunnan and Guizhou this week, while prices remain stable in other areas. Some large manufacturers in Hubei plan to announce new pricing rates in the near future, allowing them to take on new orders; some large producers of compound fertilizers will increase their stock levels accordingly. Manufacturers that did not purchase sufficient quantities earlier will still have a certain demand for purchases. Potash fertilizer prices have soared. For port-based 62% white potassium and 60% bright red granular potassium chloride, prices have risen to around 2300 yuan yet this level is still not sufficient; recently there has been another trend of price increases. The volume of transactions at 2300 yuan has increased, while quotes at 2350 yuan are starting to appear. Although demand at the grassroots level in regions such as the Northeast has emerged sooner than predicted, overall, the rise in potassium chloride prices is indeed driven by significant artificial factors. However, prices may continue to rise in the future. Potassium sulfate was intended to see a price increase initially, but later it was forced to rise due to factors such as the increase in potassium chloride prices. Fertilizer manufacturers do not have a high demand for potash fertilizer, and therefore they lack the inclination to stock up large quantities of potassium chloride in light of such price increases; it is expected that they will continue to make purchases according to their original plans. In summary, it is difficult for compound fertilizers that deal directly with retail distributors and farmers to see price increases. However, given the rising costs of raw materials, an increase in the prices of compound fertilizers is somewhat inevitable. The recent sharp drop in urea prices has led downstream users to lack confidence in asking for higher prices for compound fertilizers, resulting in cautious purchasing behavior. As a result, compound fertilizer manufacturers are facing sales difficulties at present; yet they tend to maintain their current prices in the short term and have been hesitant to make purchases of nitrogen, phosphorus, and potassium raw materials for now. (Zhao Hongye)