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Raw material prices soar – will diammonium phosphate rise or not? Author/Source: China Fertilizer Network Date: 2020-12-28 Clicks: 4 After dominating the market for a year, diammonium phosphate has faced a downturn during winter storage; downstream distributors are unwilling to purchase goods at high prices. Currently, markets across the country are in a stalemate with few new deals being concluded. Just when it seemed that the diammonium phosphate market had reached an end, sulfur and synthetic ammonia have stepped in and added further complexity to the situation. At present, the price of sulfur particles at ports has reached 940 yuan per ton, thanks to the strong support from the US dollar market (prices are given per ton as well) ； Liquid ammonia has seen a significant price increase due to gas supply restrictions and environmental regulations; the price of liquid ammonia delivered to enterprises in the southwest region has risen to 3,700–4,000 yuan per ton. As a result, some factories have stopped production or reduced their output significantly, leading to a slight decline in overall production activity. Given that the price of diammonium nitrate is already high and there are additional positive factors supporting it, can its price really rise any further? According to Zhongfei Net, currently the prevailing ex-plant price for 64% diammonium phosphate in Hubei is stable at 2400–2450 yuan. The delivery price of 64% diammonium phosphate from major manufacturers in the southwest to Heilongjiang is 2780–2800 yuan, while the ex-plant price for this product in areas that are not major producers is 2550–2580 yuan. The prevailing prices in the market seem to have remained unchanged since the phosphorus compound fertilizer conference, and they have not been affected by the rise in raw material costs. Could it be that the previous increases in sulfur and synthetic ammonia were just my imagination? Is the rise in raw material costs also a result of sellers topping up their accounts? Actually, that’s not the case; some manufacturers have stopped accepting payments or reduced the flexibility in pricing. As for whether the price of diammonium fertilizers will continue to rise, let’s wait and see what the author has to say. On the demand side. Currently, the price of diammonium phosphate remains high, while demand from downstream industries stays moderate. Although orders placed earlier have begun to arrive, yellow diammonium phosphate, which is used as a raw material for fertilizers, has also started to circulate in the market. However, the decline in prices of diammonium phosphate in some areas remains slow; some distributors even say that they will not place large orders again before the New Year in order to avoid business risks. So what will happen to future demand? Is the market for diammonium compounds doomed to fail like this? In fact, this is not the case; most diammonium phosphate factories have orders that will be fulfilled until the end of January next year, with some manufacturers indicating that their production orders are scheduled until March. This shows that a lack of new orders in the short term will not pose too much pressure on these diammonium phosphate companies. According to a survey on fertilizers in China, the current supply level in the domestic winter storage market is around 40%, and there is still significant demand that can be met going forward. On the supply side. After discussing the demands, let’s look at the supply. As winter sets in, in order to ensure heating and gas supply for residents in the northern regions, the southwest region has begun to restrict natural gas supplies, and coal prices have also started to rise. The impact of this on the fertilizer market is not only reflected in high urea prices, but also in reduced production of synthetic ammonia and rising prices for it. The operation rate of synthetic ammonia production facilities owned by some companies has dropped significantly, which has led to a reduction of about 60% in the operation rate of diammonium production. The price of synthetic ammonia purchased from external suppliers has also risen to over 4,000 yuan per unit. The overall production level of enterprises in the southwest has seen a slight decline. Given the recent improvement in the international market, a tight supply of diammonium fertilizer is expected to persist for some time, so there is little pressure for price drops. In summary, there is still demand in the future and supply pressure is not high; favorable factors continue to dominate the diammonium market. The rising prices of raw materials further enhance these positive conditions, suggesting that prices for diammonium will remain stable or rise in the coming period. (Rong Guangwen)