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Compound fertilizers are seeing price increases – and there are good reasons for that! Author/Source: China Fertilizer Network Date: 2021-05-24 Clicks: 11 As the end of the month approaches, the summer fertilizer market is entering its final phase. Unusually, the fertilizer market has not been affected at all by the usual decline in demand at the end of the season; instead, prices have risen across the board. The demand for certain types of fertilizers has even exceeded expectations. Even compound fertilizers, which usually see relatively cautious price increases, are now being forced to raise their prices as well. According to China Fertilizer Network, as of this weekend, the mainstream factory prices for 45% chlorine-based/sulfur-based compound fertilizers nationwide range from 2110–2200 yuan and 2410–2500 yuan per ton, representing an increase of around 50 yuan compared to the beginning of the month. Since the return from the May Day holiday, prices of compound fertilizers have remained relatively stable; companies have generally chosen to maintain these prices. In an effort to encourage purchases from downstream clients, a few companies offered special prices on their products. However, since this week, more and more companies have shown a tendency to raise prices. In addition to reducing or eliminating previous preferential policies, some companies have increased their ex-factory prices. Although the increase is modest, the combination of various positive factors in recent times has strengthened these companies’ confidence in raising prices. First, raw material costs have risen further at high levels. By the end of this weekend, the costs of the high-quality raw materials used in 40% chlorinated, high-nitrogen compound fertilizers of the type 28-6-6/30-5-5 across the country have reached around 1,950 yuan and 1,960 yuan respectively, with further increases likely in the future. Domestic urea prices are rising sharply. Recently, there has been an increasing demand from certain agricultural sectors, and coupled with import tenders from India, urea prices are likely to continue to rise in the short term ； The prices of raw materials such as sulfur and phosphate rock have both risen, keeping the cost of ammonium phosphate at high levels. With the autumn season bringing the start of the high-phosphorus fertilizer market, compound fertilizer manufacturers are gradually beginning to purchase raw materials, which helps to maintain stability in the price of ammonium phosphate ； Rumors suggest that the price of potassium chloride in salt lakes will rise next month, and prices for potassium chloride at ports are also increasing; the average increase for 60% red granules is around 100 yuan. Secondly, the remaining demand is either above expectations. Affected by raw material costs, the price of compound fertilizers has been significantly higher since this spring compared to the same period last year. The trading atmosphere in the end-market is quite mediocre; similar to the situation in the spring market, most of the goods in circulation come from futures sources. Since their prices are much lower than the current factory prices, both wholesale and retail prices remain low, which results in very slow replenishment activities by distributors. While first-level agents in some areas have stocked around 70% of their needs, grassroots outlets have only reached about 50% coverage. It can be seen that the remaining demand may exceed expectations. As the season approaches, it is expected that certain markets may start to see activity increase around the end of May. Finally, subsequent demands follow closely. The summer compound fertilizer market has a relatively short duration, with local demand lasting until around early July at the latest. By that time, both the demand for fertilizer for autumn wheat cultivation in the Central Plains and the activities related to winter storage in the Northeast will be on the rise. The demand for fertilizer in the autumn period is even greater than in previous years. As is well known, during the autumn period, the fertilizer requirements for wheat in the Central Plains region are mainly high-nitrogen and high-phosphorus fertilizers. Indeed, there is a risk of price drops for urea later on, but it is still difficult for its prices to fall to extremely low levels ； With the peak season for phosphorus fertilizer demand arriving, manufacturers will certainly not miss the opportunity to raise prices. As a result, the price of compound fertilizers in the autumn may be higher than it was during the same period last year, and market activity is also expected to increase. In summary, there are solid reasons for the increase in prices of compound fertilizers; companies simply raise their quotes, not only due to increasing cost pressures but also as a way to set the stage for future market prices. (Feng Hongyang)