Thread Content
Why can’t the price of compound fertilizers be changed? Author/Source: China Fertilizer Network Date: 2021-05-08 Clicks: 25 Upon the end of the May Day holiday, there were no significant changes in the fertilizer market trends. Following the conclusion of the spring market period, demand began to increase in the summer months. The compound fertilizer market remained relatively stagnant, with downstream distributors continuing to rely on supplies at low prices from earlier periods. Although there was some demand for restocking recently, it fell far short of expectations, and a cautious attitude persisted overall. Compared to the spring period, the summer market for compound fertilizers is similar in nature: due to the costs of raw materials, companies generally set high prices, yet sales and purchases in this market remain sluggish, with some areas even experiencing stagnation. As of now, the prices of summer-season compound fertilizers remain relatively stable. According to Zhongfei Net, the mainstream ex-factory prices across the country for 40% chlorine-based high-nitrogen fertilizers (such as 28-6-6/30-5-5) range between 2,070 and 2,150 yuan per ton, with no significant fluctuations over the past few weeks. Regardless of the acceptance level among end-users, compound fertilizer manufacturers maintain a strong commitment to keeping prices stable. Since May, most companies have not changed their ex-factory prices, with only a few offering slight adjustments as part of promotional measures. It is expected that until demand for compound fertilizers declines significantly during the summer, prices will remain mostly stable with only minor changes. Firstly, raw material prices remain high. The bidding process for urea in India was held as scheduled, with bid prices being significantly lower than domestic levels. The urea market showed little reaction initially; driven by seasonal demand, prices remained at relatively high levels. As agricultural fertilization needs and industrial purchases continue to increase, along with the expectation that exports from India will help alleviate domestic demand pressures, the market is likely to remain volatile in the short term ； The market for monoammonium phosphate remains stable; companies tend to wait before taking action. If downstream purchasing activity increases in the future, prices might rise again ； Supply of potassium chloride at ports is tight, international prices are on the rise, and the market outlook for the future is optimistic. With raw material costs remaining high and prices for compound fertilizers still providing support, it is unlikely that companies will raise prices significantly. Secondly, seasonal demand serves as a link between the past and the future. It is reported that in some areas, such as those in the Northeast, the demand for compound fertilizers persists until around mid-May; the actual amount of fertilizer replenished is very limited. At present, the fertilizer demand in the Two Rivers region as well as in Jiangsu and Anhui provinces is also in a transitional phase. Although the spring demand has basically ended, summer demand is set to increase significantly. Generally speaking, winter wheat harvesting will gradually begin in early June, followed by the sowing of summer corn. Demand for high-nitrogen fertilizers is expected to increase around mid-May; therefore, even though local markets are relatively stagnant at present, fertilizer manufacturers tend to maintain high prices as the season of increased demand approaches. Finally, the autumn market follows shortly after. Compared to other seasons, the market for compound fertilizers is shorter in summer; the actual demand for these fertilizers lasts around half a month. In other words, the market tends to reach its end around the end of June or early July, after which the autumn fertilizer market takes over. As is well known, during autumn, winter wheat requires high-phosphorus compound fertilizers. At present, the price of phosphorus-based fertilizers remains strong. In addition to ammonium phosphate mentioned earlier, the price of diammonium phosphate also remains high. In Hubei province, the standard export price for 64% diammonium phosphate is between 3,000 and 3,100 yuan, while the export FOB price is between 533 and 535 dollars. Given the large number of export orders, companies are likely to maintain high prices in the near future – this will not only prepare the market for autumn but also help keep the prices of compound fertilizers at a high level. In summary, taking into account factors such as the support provided by raw material costs and the arrival of the peak demand period, the price of compound fertilizers is likely to fluctuate within a narrow range in the coming time, with little possibility of significant increases or decreases. (Feng Hongyang)