In recent months, Zuo Wu, a fertilizer dealer from Lede Township in Yicheng County, Linyi City, Shanxi Province, has once again received a price cut notice from Shanxi Fengxi Fertilizer Industry. “Another 20 yuan drop!†This year alone, he’s received at least eight such calls from manufacturers, and the fertilizer market has been fluctuating constantly. After each call, his mind feels paralyzed because the price changes are immediately reflected in the retail market, pushing retailers to ask for more discounts.
Since spring this year, the fertilizer industry has struggled with a downturn that hasn’t improved. The pressure on urea sales remains high, and there's little optimism for the summer market. Domestic coal prices have continued to fall, further pressuring urea prices. The overall urea market is weak, with ex-factory prices now at 1,600 to 1,650 yuan per ton—its lowest level since 2008. Compound fertilizers have also dropped by 200 to 300 yuan per ton compared to previous years.
Shi Zuowu, who has been in the fertilizer business for many years, says this year’s market has been unusually sluggish. “This year’s market is too slow,†he said while organizing papers on his desk, his voice laced with concern. Recently, the market price of urea in Shanxi has stabilized around 1,670 to 1,700 yuan per ton. However, due to weak domestic demand, export sales have not been strong, and factory prices remain stable.
Industry analysts point to overcapacity as the main reason for the sluggish single fertilizer market this year. According to data from the National Bureau of Statistics, cumulative urea production in China from January to April reached 24 million tons, a 14% increase compared to the same period last year. It’s estimated that domestic production capacity for diammonium and monoammonium exceeds actual demand by over 50%.
Manufacturers are forced to reduce prices to stay competitive. In June and July, the fertilizer market in Shanxi saw limited activity, mainly driven by corn top-dressing. With the off-season approaching, farmers tend to prefer high-nitrogen compound fertilizers or urea. As urea prices fell, more farmers opted for it, reducing the trading volume of compound fertilizers and causing their prices to drop as well.
According to an official from Fengxi Fertilizer, the decline in prices of key raw materials like coal, mineral oil, and phosphate rock has weakened cost support for fertilizers. With low demand, future price trends are not optimistic. Many manufacturers are producing on demand during the off-season, and some have even stopped operations for maintenance. Reports indicate that production rates in the southwest region are low, and most small manufacturers have already halted operations. The average operating rate among major manufacturers is only about 34%, down nearly 50% compared to last year.
Meanwhile, farmers’ enthusiasm for growing grain has increased. Wang Cheng, a villager from the city outskirts, is happy after seeing more than 50 acres of corn thriving. This year’s heavy rainfall has led to good yields, with his corn producing 1,500 pounds per mu. At a price of 1.5 yuan per kilogram, he expects to earn over 100,000 yuan this season.
“This year’s fertilizer is cheaper than ever. Planting just one acre of corn can take five to six months and still bring in over 100,000 yuan. What else could be better?†Wang Shun couldn’t hide his joy. It’s reported that due to government agricultural support policies, the sown area of corn in southern Shanxi this year is double that of previous years.
Industry insiders predict that the fertilizer market will continue to lack support in the coming period. Affected by falling raw material prices, the outlook for compound fertilizers is likely to worsen. While the high-nitrogen fertilizer preparation season has ended, price adjustments are minimal. Autumn fertilizer prices are still uncertain. Shi Zuowu noted that the market is gradually entering the off-season, with no autumn policy yet announced. Although the market conditions are chaotic, the overall trend remains downward. Based on past practices, the raw material market may offer some support after the autumn fertilizer preparation begins, but current stockpiles of compound fertilizers and low raw material prices suggest that price increases in the autumn are unlikely.
Shandong Yahong New Materials Technology Co., Ltd , https://www.okrooftile.com