Following the Spring Festival, upstream products in the fertilizer industry chain have demonstrated robust performance, while compound fertilizer transactions and shipments have seen localized increases in proportions. What does this portend for the future?

01 Compound Fertilizer Costs Remain Supported

Post-holiday, upstream raw material prices have shown strong momentum, with benchmark products leading the way. Agricultural demand improved during the holiday period. Combined with low pre-holiday urea factory inventories and signals of elevated international prices from India's tenders, urea shipments remained robust under favorable support, driving prices higher repeatedly.

Ammonium chloride also demonstrated strong performance, with cumulative price increases exceeding 100 RMB/ton in some regions before and after the holiday. Among other raw materials, monoammonium phosphate (MAP) maintained firm pricing due to elevated production costs, pending orders, and persistent downstream demand. The potassium chloride (KCl) market also remained resilient, with some high-end grades seeing slight price increases amid tight supply. Overall, post-holiday compound fertilizer production costs steadily climbed, underpinning market prices.

02 Concentrated Release of Essential Demand

Around the holiday period, temperatures in most agricultural regions nationwide were 1°C to 4°C higher than the historical average for this time of year. Fertilizer demand has started well for winter wheat, rapeseed, open-field vegetables, fruit trees, and other crops.

Looking ahead, favorable weather conditions will continue to support the gradual regreening and growth of winter wheat in northern regions. Southern areas will experience adequate heat and increased precipitation, enhancing soil moisture retention and reservoir storage. These water and heat conditions will benefit the growth of in-field crops like winter wheat and rapeseed, as well as early rice sowing and seedling cultivation in southern China.

The concentrated release of spring demand will boost sales of compound fertilizers and other chemical fertilizer products.

03 Localized Supply Tightness

During the holiday period, numerous production facilities were idled, causing compound fertilizer capacity utilization to drop to a low of 24.5%. While output decreased, corporate inventories remained at reasonable levels. Compared to the pressure of elevated inventories during the same period last year, companies managed stockpiles effectively this year. Consequently, after the holiday, as essential demand rapidly materialized and downstream buyers showed strong purchasing enthusiasm, supply became somewhat tight in certain regions.

Compound fertilizer producers have swiftly ramped up operations to ensure supply, with concentrated shipments underway. Overall shipment volumes have seen a noticeable boost compared to pre-holiday levels, and the supply-demand tightness has indirectly supported compound fertilizer price trends.

Overall, supported by multiple favorable factors on both the cost and supply-demand sides, some enterprises have raised their quoted prices, shifting the transaction focus upward. Looking ahead, fertilizer products are expected to remain firm overall in February and March, with the compound fertilizer market advancing rapidly amid adjustments.

It should be noted that while some small enterprises and distributors harbour a slight inclination to raise prices, buoyed by spring ploughing demand, industry insiders anticipate limited upward potential for fertiliser prices. This is due to policy constraints and the limited acceptance of higher prices at the retail end.

Additionally, Jasmine Antunes, a senior reporter covering sulfur/sulfuric acid at Argus, recently provided an overview of the global fertilizer market in February and forecast short-term price trends in a public report. She noted that urea prices rose in February while trading slowed, with potash prices remaining stable in most regions and sulfur loading prices declining. Antunes anticipates that the urea market may experience significant volatility in the near term. Phosphate and compound fertilizer prices are expected to remain stable to firm, potash prices are projected to continue rising, sulfur prices may weaken short-term, and sulfuric acid prices are expected to hold firm.

Regarding synthetic ammonia, ample supply in eastern regions drove down quotations in February. After six months of adjustments, Middle Eastern plants resumed normal capacity, putting overall regional prices under pressure. Global synthetic ammonia shipping faced tight vessel availability. Looking ahead, Western market sentiment continues to provide solid support for near-term synthetic ammonia trends.

In urea, market transactions gradually slowed as global urea prices rose. In February, India's Rashtriya Chemicals and Fertilizers (RCF) issued a urea tender; Middle Eastern granular urea spot prices strengthened; and Brazilian suppliers raised urea quotations. Looking ahead, the urea market is expected to experience significant volatility in the short term.

In the phosphate fertilizer sector, Saudi Arabia's Maaden conducted diammonium phosphate transactions in India at higher prices; Coal India Limited (CIL) maintained stable phosphate transaction prices in Q1; negotiations between Morocco's OCP and Indian counterparts continue; and adverse weather conditions at Moroccan ports have eased. Looking ahead, phosphate fertilizer prices are expected to remain stable with a slight upward bias in the near term.

Potash: Global potash chloride trade slowed in February, with prices remaining stable in most regions. Domestic Chinese potash chloride prices rose; Brazil's January potash chloride imports hit a record high; freezing weather may delay Baltic Sea shipments. Looking ahead, the upward trend in potash chloride prices is expected to persist in the short term.

Regarding compound fertilizers, Spain has been hit by heavy rainfall; Baltic freight rates have surged significantly; Morocco's Jorf Lasfar port has resumed operations; and trade activity in China and Southeast Asia has slowed. Looking ahead, compound fertilizer prices are expected to remain stable with a slight upward trend in the short term.

For sulfur, February loading prices are expected to decline further due to weakening demand across multiple regions. Upcoming holidays have stalled new spot orders, with suppliers selling to Brazil at lower transaction prices. The sulfur market is projected to remain weak in the near term, with potential for a rebound later.

For sulfuric acid, suppliers are quoting CIF India prices at $168–170 per ton. Saudi Arabian Mining Corporation procured at least 20,000 tons of sulfuric acid at approximately $185 CIF. China's mid-range FOB offers stand at $150, while European supplies remain in traders' hands. Looking ahead, sulfuric acid prices are expected to remain firm in the near term.

As an integrated internet platform providing benchmark prices, on February 27, the benchmark price of SunSirs potassium chloride (imported) was RMB 3,600.00/ton, a decrease of 0.46% compared with the beginning of the month (RMB 3,616.67/ton).

Application of SunSirs Benchmark Pricing：

Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).

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