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The increasing prices of sulfur and potassium fertilizers are set to significantly raise production costs, while it remains uncertain how much farmers can absorb these higher expenses. As a result, phosphorus and compound fertilizer companies must prepare for potential challenges. This warning was issued by Wu Xiyan, Chairman of the China Phosphate Fertilizer Industry Association, during the 8th Phosphorous Compound Fertilizer Production and Marketing Conference held on November 5.
In 2005, China's total phosphate fertilizer output surpassed that of the United States for the first time globally. By 2006, the self-sufficiency rate of phosphate fertilizer in China reached an impressive 99.8%. From January to September this year, after meeting domestic demand, China achieved a net export of 1.288 million tons (refined) of phosphate fertilizer. However, the industry is now facing new and growing challenges, particularly due to the sharp rise in the prices of sulfur, sulfuric acid, and potash, which have placed unprecedented pressure on companies.
According to Wu Xiyan, the price of imported sulfur has surged from $79 at the start of the year to between $260 and $280 today. This alone could increase the cost for ammonium phosphate producers by approximately RMB 800 per ton. The price of imported potassium chloride has also risen from 1,900 yuan/ton to 2,500 yuan/ton. Wu noted that this irrational price surge is causing significant pressure on companies and has triggered widespread concern across the industry.
He further explained that the tight supply of sulfur is expected to worsen in the fourth quarter of this year and may persist for two to three years. Regarding potash, with ongoing construction of domestic projects and no current large-scale production, China will continue to rely heavily on imports for the next two years. Therefore, the supply shortage is unlikely to ease before 2009.
As production costs climb, market dynamics are also shifting. According to data from the China Phosphate Fertilizer Industry Association, the average ex-factory price of monoammonium phosphate has reached 2,300 yuan/ton, up 600 yuan/ton compared to the same period last year. Diammonium phosphate prices have climbed to 2,700 yuan/ton, a 400 yuan/ton increase. Compound fertilizer prices have also risen, averaging 2,100 yuan/ton, up by 200 to 300 yuan/ton from the previous year. The question now is whether the market can absorb these significant price increases, which remains the biggest concern for companies.
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