Urea prices rise again; when will diammonium prices be adjusted?

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Urea prices rise again; when will diammonium prices be adjusted? Author/Source: China Fertilizer Network Date: July 20, 2021 Click-through rate: 2. In mid-July, the autumn fertilizer market was in full swing. Urea prices, after a brief period of stagnation, rose once again. In Shandong Province, the prevailing ex-factory prices for urea were 2,740–2,770 yuan per ton (the same unit applies hereafter). What is the current situation in the urea market? Inventory levels at manufacturing enterprises remain low. Domestic distributors hesitate to stock up in large quantities due to high prices. International prices are also staying at elevated levels. The widening price gap between domestic and international markets has led some factories to start shipping goods to ports. As a result, domestic demand has become even tighter. Does this situation seem familiar? Indeed, the current market situation for diammonium phosphate is almost identical to that of urea: there is a limited supply available in the domestic market, and export prices remain high. So what should be the path forward for diammonium phosphate? First, domestic supply is given priority. By giving priority to meeting the demands of the domestic market, urea plants still have the capacity to supply the international market. The underlying reason for this is their large scale of production; after all, a daily output of around 160,000 tons is no small amount at all. In contrast, although there is also overcapacity in the case of DAP, under normal conditions, the average monthly physical output of China’s DAP producers is around 1.2 million tons. It is vastly different from urea, and the supply capacity in the short term also differs greatly. This means that in order to ensure supply for the domestic autumn market, diammonium phosphate producers are unable to attend to both aspects simultaneously, and their positive export trends are bound to be disrupted. Secondly, fertilizer prices remained high overall, with the price of monoammonium phosphate reaching new highs. Amid the scorching summer heat, the fertilizer market is also booming. Nitrogen, phosphorus, potassium, and compound fertilizers are all in high demand, creating a very competitive atmosphere. Urea has seen a resurgence after a brief period of decline, while potassium fertilizers lead the market by a large margin. As for compound fertilizers, high prices are common, and there are also reports of deals being canceled due to low prices. If the price increases of the aforementioned types of fertilizers have little impact on diammonium phosphate manufacturers, then the sharp rise in the price of monoammonium phosphate, which is also a type of phosphatic fertilizer, can indeed have an effect on diammonium phosphate plants. Due to a large number of pending orders from earlier periods, there is currently a shortage of available supply from monoammonium phosphate plants. In Hubei Province, the prevailing ex-factory prices for 55% powdered monoammonium phosphate range from 3,300 to 3,400 yuan per ton. Although very few transactions occur at the higher end of this price range, it’s worth noting that the typical ex-factory price for 64% diammonium phosphate in Hubei is 3,400 yuan per ton. Compared to this, doesn’t diammonium phosphate seem cheaper? Finally, it is difficult to reduce costs. Recently, sulfur prices have remained at high levels. The quote for granular sulfur at the Yangtze River Port is 1,570 yuan; the price of sulfur at the Puguang Wanzhou Port remains stable at 1,590 yuan. Meanwhile, the quote for granular sulfur at the Dazhou plant has risen by 20 yuan to 1,530 yuan. Phosphate rock prices remain at high levels**. In Hubei Province, the delivered price of phosphate rock with a 28% grade is around 520 yuan. The price of liquid ammonia in Hubei region has risen, mainly due to the shutdowns for maintenance by some local enterprises, which has led to a slight shortage in supply. Enterprises that are still operating have taken this opportunity to raise their prices; currently, the standard selling price of liquid ammonia in that region is again around 4,000 yuan per unit. Raw material prices have remained at high levels, keeping the production costs of DAP persistently high; consequently, factory quotes will only continue to rise. In summary, urea has managed to turn things around again thanks to the labeling measures, but the situation is different for diammonium fertilizers. Once exports are allowed again, there will be problems with domestic supply in the autumn. However, the overall environment in the fertilizer market remains favorable, and production costs remain high; as a result, diammonium fertilizer manufacturers still have room to raise their prices further. (Rong Guangwen)