Phosphate prices due to supply or demand or rebound

Phosphate prices due to supply or demand or rebound

Since entering the third quarter, due to strong market demand in India and Pakistan, the international diammonium market has been consolidating at a high level. In the domestic market, the use of fertilizers started in the fall, and the grassroots shipments have gradually increased. The prices are basically the same as exports. Recently, at the Fourth Session of the Fourth Session of the China Agricultural Assets Circulation Association and Fertilizer Market Situation Analysis Conference in autumn and winter of 2014, a number of high-level agribusiness companies agreed that the current price of phosphate fertilizers is already in excess of domestic phosphate fertilizer production capacity. Relatively high, the prosperity of the export market has provided strong support for the domestic market. Before the window period ends, the domestic diammonium market is expected to continue to pick up.

Tariff Policy Adjustments Successful "Firefighting"

The further relaxation of the fertilizer export policy is an important boost to the export of phosphate fertilizer this year. With the sharp reduction in export tariffs during the peak season, domestic urea, monoammonium phosphate, diammonium phosphate and other varieties of significant growth in exports. From January to June 2014, China's total exports of DAP were 1.272 million tons, an increase of 145.66% year-on-year. On this basis, the urea market has risen temporarily, and the phosphate fertilizer market has always maintained a rising trend. According to the statistics, as of July 24, 2014, the domestic wholesale price of 64% diammonium phosphate was 2800.5 yuan/ton, which was 1.4 yuan/ton higher than the price on January 2 of the beginning of the year, compared with domestic small granular urea and potassium chloride. Contrast to the continued decline in the prices of compound fertilizers.

In this regard, Jiang Bi, Marketing Manager of Qifu (Group) Co., Ltd., said that the bottoming out of the phosphate fertilizer market was mainly driven by the industry and policies. "Finally, the warming of the phosphate fertilizer market this year is primarily due to the tariff policy. The reduction in tariffs has promoted exports to effectively alleviate the excess domestic situation, but it cannot be overlooked that, although the sharp increase in diammonium exports since July has increased market expectations, for a phosphate fertilizer production company, the cost inversion for a period of time also allows Corporate profits are greatly reduced."

International market provides support

Regarding future market development, Jiang Bi emphasized that the main influencing factors at present are changes in supply and demand and policies. First, the relationship between supply and demand cannot be limited to only ***. In India, the demand for diammonium phosphate in 2013 and 2014 is small, and it will increase in 2015 and 2016. Before India's demand did not start, the international market was mainly supported by the demand of South America. Secondly, from the perspective of cost, the phosphate fertilizer industry as a whole is still losing money, but the total amount has rigid support. The purchase of core raw materials for diammonium production is relatively decentralized and has a positive correlation with the market price of diammonium, which limits the profits of the company. The only good news is that India, the main importer of domestic diammonium, has a higher production cost. Because the main raw materials need to be imported, the Indian diammonium production cost is about 537 US dollars, so it still needs to rely on international procurement to meet demand. Finally, taking into account the general trend of gradual liberalization of fertilizer export policies, comprehensive analysis of the domestic phosphate fertilizer market is expected to maintain a modest surplus in 2015.

Better market expectations and the arrival of the autumn season will bring double benefits to the domestic market. Wan Zhongcheng, chairman of Chongqing Agricultural Production (Group) Co., Ltd., said that since September, the price of urea in the region has risen by 50-60 yuan. / Ton, the price of phosphate fertilizer increased by RMB 20/ton, and sales volume increased slightly year-on-year. Stimulated by the overall increase in fertilizer prices, the market supply and demand situation has significantly improved.

Light-save topics become hot spots

With the start of preparation of fall fertilizer in the autumn, there are more and more voices from circulation companies on the market. The topic is mainly on the impact of diammonium prices on the grass-roots market and the future light storage. Kong Jie, chairman of the Gansu Provincial Agricultural Chemical Fertilizer Co., Ltd., said: “At present, there are not many phosphate fertilizer products in circulation, and wholesale market prices continue to rise. If the prices of exporters decline after the closure of the export window, the operating risks of the distribution companies will increase. At present, there is no sound phosphorus reserves, state subsidies are not in place, resulting in a relatively large number of corporate operations affected by credit, accounting for more than 50% of the liquidity of the storage enterprises, which is a very large risk and difficulties faced by circulation companies.

Yan Zhiren, general manager of Yantai City Agricultural Production Co., Ltd., also believes that the arrival price of diammonium 3000 yuan/ton is more than the market expectation. In accordance with this development, the domestic diammonium Huabei station price in the fall is expected to reach 3,100-3,200 yuan/ton. The high price of diammonium has a great impact on winter storage, and the storage enterprises must pay close attention to the price of winter storage.

In response, Chen Zhonghua, general manager of Guizhou Kaifeng Chemical Fertilizer Co., Ltd., said: “The fall fertilizer of the diammonium market will end in about 10 days, taking into account the winter storage market. The domestic phosphate fertilizer companies will gradually start winter after the window is closed at 10.15. Although the supply of domestic phosphate fertilizer exceeds demand in terms of production capacity, in the current domestic phosphate fertilizer market, there is no inventory at the factory and the social inventory is low. Theoretically, the supply and demand of phosphate fertilizer is basically balanced, and the price of diammonium is generally stable.

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