China Phosphate Compound Fertilizer Industry Association held a seminar to study and judge the market trend: next year's fertilizer market has an overall downward forecast

"According to the research and judgment of a number of institutional analysts on the fertilizer market in 2023, the fertilizer market as a whole may show a downward trend next year
.
" This is the news
of the fertilizer market seminar held online by the China Phosphate Compound Fertilizer Industry Association on December 8.
Industry insiders predict that the high point of urea prices in the first half of next year will be lower than the highest point of urea prices this year; The price of phosphate fertilizer was at a normal fluctuation level, the price of monoammonium phosphate remained at 3150 yuan (ton price, the same below), and the price of diammonium phosphate remained at 3900 yuan; The contract price for potash is around
$425.

Nitrogen fertilizer: the high point in the first half of the year or lower than this year

"This year's urea price is at a high level in nearly a decade, and the highest point of the year occurred in early June, and the factory price was about 3210 yuan, up 30 yuan from last year's high, and hit a record high
.
" Wu Yuanli, senior urea analyst at Shandong Longzhong Information Technology Co.
, Ltd.
, said
.

Will the urea market be able to continue this year's high operation trend in 2023? Wu Yuanli believes that in 2023, China's urea market will be affected by factors such as the release of new production capacity and a slight decrease in demand, and it is expected that the highest point of urea prices in the first half of the year will be lower than the highest point
this year.

From the perspective of supply, in 2023, China's urea market will have 4.
58 million tons of new capacity released, less than 3 million tons of eliminated innovative production capacity, and the total production capacity of urea is expected to reach 75 million tons
in 2023.
However, the commissioning of these new capacities is expected to be in the late first quarter of 2023, which coincides with the period when the urea market is not well supplied, so it will hollow out the urea market
.
In terms of output, it is expected that urea production in 2023 may reach 57 million tons, an increase of 800,000~1 million tons
compared with 2022.

From the perspective of demand, urea downstream applications are mainly divided into agriculture and industry
.
First of all, the overall grain planting area of China's agriculture is relatively stable, but affected by food policies, the corn planting area will decrease in the next two years, due to the large demand for urea in corn planting, which will lead to a decrease
in the direct application of urea.
Therefore, in the next two years, China's urea demand will be slightly reduced
.
Secondly, in terms of industry, urea-formaldehyde resin industry accounts for a relatively large demand for urea, accounting for about 20%.

Urea-formaldehyde resin is mainly used in the field of adhesives, and is closely related
to wood-based panels, real estate and other industries.
The liberalization of China's epidemic control policies will drive the rapid recovery of the real estate industry in the short term, which will be transmitted to the urea-formaldehyde resin industry and indirectly increase its demand
.
Therefore, it is expected that the demand for urea in the urea-formaldehyde resin industry will increase
slightly next year.
Third, the urea downstream melamine industry will have new capacity release next year, and although the demand for urea has increased compared with this year, the support is limited
.
Finally, from the perspective of off-season reserves, there will be phased procurement demand in the urea market in the next few months, which will support the urea market in the first quarter of next year
.

"From the perspective of the future market, the situation of urea oversupply in 2023 is more severe, and it is expected that the high point of urea prices in the first half of the year may be lower than the highest level this year, which is due to the concentrated release of downstream demand leading to a phased upward trend in the market, and at the same time based on the expectation of loose supply and the impact of fertilizer desalination release nodes; Affected by the loose supply in the third quarter, urea prices are likely to be at the lowest point
of the year.
Wu Yuanli analyzed
.

Phosphate fertilizer: The price fluctuates in the normal range

"There has been polarization in the phosphate market this year
.
Due to the decline in raw material prices in the second half of the year, the phosphate fertilizer market turned from a bull market in the first half of the year to a bear market
in the second half of the year.
Xiao Li, senior analyst of Shandong Zhuochuang Information Co.
, Ltd.
, said
.

"This year, the price of phosphate fertilizer raw materials has increased far more than the ex-factory price of phosphate fertilizer
.
" Xiao Li pointed out that the profits of the entire phosphate fertilizer industry this year are quite low, and even some phosphodiamine companies have negative profit growth
.
From the perspective of raw material prices, as of the end of November 2022, the average factory price of 55% powdered monoammonium phosphate in Hubei was 3,467 yuan, and the average production cost was about 3,391 yuan, an increase of 1,078 yuan over the same period last year; The average gross margin was about 0.
9%, down about 18.
4 percentage points
from the same period last year.
The average factory price of 64% diamine phosphate is 3880 yuan, the average production cost is about 3850 yuan, an increase of 1017 yuan over the same period last year, and the average gross profit margin is only 0.
1%.

From this point of view, the gross profit margin of monoammonium phosphate and diammonium phosphate enterprises is at a low level
.

The long-term low profits and losses of phosphate fertilizer enterprises are very unfavorable to the development of the industry, and by judging the supply and demand factors of the market in 2023, Xiao Li expects that the price of phosphate fertilizer in 2023 may be at a normal fluctuation level
.
The price of monoammonium phosphate will remain at 3150 yuan, and the price of diammonium phosphate will remain at 3900 yuan
.

Potash: C.
i.
F.
$425 for large contracts

"At present, the price of potassium chloride in China's ports and the price of domestic potassium chloride are significantly lower than the contract price
of $590 this year.
Importers have lost money significantly in the fourth quarter of this year, and the current price of potassium chloride at the port is $100 lower than the contract price, equivalent to $
440.
Ju Hao, chief analyst of the British CRU company, introduced
.

Since the second half of this year, with the weakening of China's downstream demand, the reduction of enthusiasm for raw material procurement and the overall stability of supply, China's port potassium chloride inventory has returned to a high level
.
From the perspective of supply, in the first 10 months, China imported a total of 3.
2 million tons of potassium chloride from Russia and Belarus, accounting for 48% of the total imports, and the import share remained at about 50%, and the import volume of potash fertilizer was relatively stable
.
From the perspective of demand, the sharp rise in potassium chloride prices in 2021 and 2022 has suppressed the demand for potash fertilizers, and it is expected that the net domestic demand for potassium chloride this year will fall below 14 million tons
for the first time since 2014.

In summary, Ju Hao expects that the potassium chloride inventory will be at a high level of 5.
7 million ~ 6 million tons at the end of this year, and the high inventory is conducive to the stable supply of potash fertilizer for spring plowing next year, and also increases the bargaining chips
for the contract negotiations of China's potash fertilizer enterprises next year.

Ju Hao believes that in the short term, the global price of potassium chloride may continue to fall
.
At the same time, given that China has sufficient potash stocks, Chinese potash importers are advised not to rush into contracts for potash fertilizer in 2023
.
It is expected that China's potash contract will be signed around April next year, and the price may be about
$425.