Fertilizer Off-season, Why Does Compound Fertilizer Companies Contrary to Price Rise?

In recent months, an unusual trend has emerged in the fertilizer market: as soon as the peak selling season ends, sales of domestic compound fertilizers have surged to record levels. Some companies have even raised their prices by around RMB 100 per ton compared to during the sales period, with some products now priced over RMB 200 per ton higher. Many firms are still planning to increase prices further in the near future. This seems counterintuitive—why would a compound fertilizer company raise prices when demand should be declining? Henan Xinlianxin Fertilizer Co., Ltd., the first domestic fertilizer company listed in Singapore, shared its perspective. Zhu Cuiping, the deputy general manager, admitted that the price hike was not a choice but a necessity. The urea market has changed significantly from previous years, and the rising costs of phosphate and potash fertilizers have been unavoidable. If the ex-factory price of compound fertilizers didn’t rise, companies would have to absorb the increased costs themselves. As a result, Xinlianxin raised its compound fertilizer prices by an average of RMB 80 per ton over two months. A medium-sized compound fertilizer company in Jiangsu described the situation as "crying without tears." In Russia, red-potassium is being quoted at over RMB 2,100 per ton in many ports, while white potassium exceeds RMB 2,200 per ton. Within just six months, prices have risen nearly RMB 300 per ton, with actual transaction prices increasing by more than RMB 200 per ton. This dramatic rise in raw material costs has left many companies in a difficult position. Starting June 1 this year, the Chinese government imposed export taxes on diammonium phosphate (DAP). Over the past two months, DAP prices have steadily climbed. Wang Xiyi, vice president of Anhui Six Kingdoms Chemicals, explained that this tax has pushed some companies to shift toward monoammonium phosphate (MAP) as a substitute. Since MAP is not taxed for export, its demand has grown, leading to a price increase. This shift has also contributed to higher prices across the board. Meanwhile, the domestic sulfur market has become increasingly tight, causing sharp price hikes. Several large compound fertilizer plants have seen sulfur prices jump by hundreds of yuan per ton. Yang Huafeng, deputy general manager of Hubei Yangfeng Co., Ltd., noted that sulfur purchases under letters of credit are still subject to significant price increases, with suppliers raising prices multiple times. He predicted that sulfur prices for August and September could exceed RMB 1,800 per ton. A large compound fertilizer company in Shandong joked that the sulfur they purchased had already reached over RMB 1,900 per ton. If this continues, he said, "I will lose my family." Due to rising costs, many companies have had to reluctantly increase their compound fertilizer prices. One factory in Hubei reported that the cost of sulfur-based compound fertilizers has risen by RMB 250 per ton. Without a price increase, the factory might have to shut down. Another CEO admitted that if they don’t raise prices, they’ll go out of business. A sales manager from a fertilizer manufacturer said it’s a tough situation: if they don’t increase prices, they lose money; if they do, they risk losing customers and having to slow production to wait for market changes. The reaction from downstream distributors has been mixed. Many are worried about the price hikes. Transactions that used to involve hundreds or thousands of tons are now rare. Tong Fuhua, CEO of Jiangsu Hai'an Agricultural Materials Fort Lee Branch, mentioned that farmers are now applying half a bag instead of one per mu of land due to high costs. Grassroots distributors are also anxious. Some are reluctant to prepay for orders, as the repayment period can stretch up to six months, limiting liquidity. Others fear that if they don’t buy now, prices may rise further, making it harder to sell later. Industry experts warn that if the price increases exceed what farmers and dealers can afford, the balance of the compound fertilizer market could be disrupted, leading to supply-demand imbalances. With rising input costs and uncertain market conditions, the fertilizer sector is facing a challenging period ahead.

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