Fertilizer trends: Let’s listen and analyze

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Trends in Fertilizers: Analysis and Insights Author/Source: China Fertilizer Network Date: 2016-01-22 Clicks: 7 It is the height of winter, the coldest time of the year; for the fertilizer industry, it represents the most difficult period since 2015-2016. At the current stage, the arrival volume of compound fertilizers for winter storage in the Northeast has increased slightly, but the end-market has yet to come online, resulting in insufficient demand for raw materials. It has been learned that the price of urea supplied to companies in Shandong for use in compound fertilizers has dropped to 1260–1270 yuan per ton (the same unit applies below); the price of 55% powdered ammonium sulfate in Shandong is 1950–2000 yuan per ton (on credit), while for some high-quality products this price is 2050 yuan per ton (on credit). After these price adjustments, the price of 60% crystalline potash supplied by salt lake sources is 2080 yuan per ton, and the delivery price of 51% powdered potassium sulfate from Lop Nur is 2500 yuan per ton. Guarantees are provided for all products supplied to agents. 　　 　　 　　 　　As can be seen from the chart above, aside from the increase in potassium fertilizer prices at the beginning of September due to value-added tax, the rapid and significant price drops for most major types of fertilizers were truly beyond what the industry expected ； What do they have to say about the market around the Spring Festival? A purchasing manager at a large compound fertilizer company says that currently, compound fertilizer manufacturers are operating at a low level; large companies have inventory levels of around 30,000 to 50,000 tons, while daily shipments amount to only a few hundred tons. Sales are not good, so demand for urea before the Spring Festival is limited. There is still some ammonium nitrate awaiting shipment, along with over 10,000 tons of inventory, which is sufficient to maintain production during the Spring Festival. Potash fertilizers are produced in direct cooperation with Sinochem; if the market situation worsens further, compound fertilizer production will be restricted or halted again to alleviate the pressure. Expectations are not high after the Spring Festival; logistics will only begin to return to normal by the 15th day of the first lunar month. Therefore, it is best to wait and observe until before the 10th day, focusing on selling existing inventory. A demand peak is expected later on, but it will be short-lived, so the market situation is not promising. 　　Manager of a large trading company: Recently, some small compound fertilizer manufacturers plan to resume production and purchase around 1,000–3,000 tons of urea. It is expected that demand for ammonium chloride and urea will improve before the Spring Festival. However, next week, as urea producers are eager to sell their products, prices may continue to drop, or some form of price stabilization policy might be introduced. The market for monoammonium nitrate has remained lukewarm recently. Although companies in this sector have introduced temporary price guarantees and other measures, downstream compound fertilizer manufacturers and traders remain indifferent, purchasing only as needed; the situation is not expected to improve until after the Spring Festival. Regarding potassium fertilizers, there are reports that large-scale contracts for these fertilizers are not expected to be signed until after May; as a result, there may be a shortage of supply before May, and the current prices for potassium fertilizers remain high. 　　Prediction by this website: The author believes that although urea prices have not yet reached their lowest point, there is limited room for further decline. Some compound fertilizer manufacturers and traders have taken action recently, but in limited quantities. There is still no support from international markets or the agricultural sector. It is expected that urea prices will continue to drop slightly in the near term. Once shipments resume normally between the 10th and 15th day of the first lunar month, compound fertilizer manufacturers and traders will purchase urea as needed, but the volumes will remain low. 　　For monoammonium, there are no positive factors to support prices before the Spring Festival, so the market trend will continue to decline. The focus of transactions at the lower price levels is shifting downward. Many downstream compound fertilizer manufacturers and traders still have stock purchased earlier; therefore, before the Spring Festival they will only make purchases as needed or temporarily stop buying. From the 10th to the 15th day of the first lunar month after the Spring Festival, the downstream sector will continue to wait and see. There will be a short-term peak in demand later on, but prices will not improve. Once this peak passes, it is expected that the market situation will return to normal. 　　Regarding potash fertilizers, although new prices have been set by Salt Lake and Luoyang Potash, downstream users still consider these prices to be too high. Additionally, the signing of large-scale contracts in 2016 is likely to occur later than usual; therefore, the market situation for potash fertilizers remains uncertain until then. As a result, downstream companies will not purchase large quantities at present, but there may be a shortage of supply during this period. It is thus recommended that downstream companies stock up on some potash fertilizers to meet their production needs.