Fertiliser prices will still rise in 2023!
Fertiliser prices will still rise in 2023!
This year, by the global COVID-19, the Russian-Ukrainian war, the energy crisis and other factors,fertilizers and other commodity prices fluctuate greatly,fertilizer production and supply overall by severe challenges,there are also significant price fluctuations.
Internationally: up to 70% of European ammonia industry factories have reduced or stopped production
The energy crisis is hitting Europe's energy-intensive industries and has now led to the disruption of production at several major European fertiliser companies!
The USDA recently released the "Impact and Consequences of Price Increases on the Global Fertilizer Market" report, and the International Fertilizer Industry Association (IFA) released the "Medium Term Fertilizer Outlook 2022-2026" report, both of which predict that global fertilizer supply pressure will remain high this year and next. Fertilizer supply pressure will remain and fertilizer prices will remain high. The domestic market may differ in price performance for different varieties in the short term.
What will happen to domestic fertiliser prices in 2023?
Nitrogen fertiliser: Typically, a tonne of nitrogen fertiliser requires 1.5 t of coal or 615 m³ of natural gas. Coal or natural gas is first converted to ammonia, ammonia is then synthesized into urea, which becomes the main variety of nitrogen fertilizer, and the shortage of natural gas just stuck in the neck of nitrogen fertilizer production. The current domestic urea business start-up rate gradually pick up, the market urea supply will be safeguarded, but into the heating season, combined with the tight supply of international natural gas, or domestic natural gas supply will be affected, is expected to late urea prices fluctuate mainly, winter storage period or rise.
Phosphate fertilizer: phosphate fertilizer prices by the last two years power cells to promote phosphorus chemical demand, combined with high energy prices, power and chemical raw material costs increased, the high cost of phosphate fertilizer production, resulting in price increases. Due to the lack of support for the international price of diammonium phosphate, while the price of raw materials such as sulfur yellow back down, is expected to be basically stable or accompanied by minor fluctuations in the price of diammonium phosphate. But the follow-up if the international market environment fluctuations, the international supply of raw materials is limited, or will form a certain impact on the supply of phosphate fertilizer in China.
Potash fertilizer: Potash is more relevant to the international situation such as the Russia-Ukraine conflict. If Russia and other potash exports are relaxed, then domestic potash prices will fall, if exports are tightened, then domestic potash supply will also be affected, therefore the subsequent trend of potash will be with the Russia-Ukraine conflict situation, there is uncertainty about price fluctuations. The global potash industry is also facing sanctions from the USA and the EU on the sale of potash from Belarus. In addition, trade in Russian fertilisers has been affected by sanctions and difficulties in providing services for Russian exports due to many shippers, banks and insurance companies.
Summary
The following points are the key factors currently swaying the market: the Fed's interest rate hike, macroeconomic tightening and falling commodity prices; historically high fertiliser prices and a general lack of purchasing power; the impact of geopolitical conflicts still in place and lack of supply effectiveness etc.
Therefore, in the short term, although fertiliser prices have now fallen back a lot, there is still room for adjustment until supply and demand are balanced; in the medium term, a look at the very tight status quo in the European energy market means that later this year and in 2023 there could be or be a shortage of fertiliser goods or high prices, and a shortage of world food.
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