The price of chemical fertilizer, which is highly consistent with bulk commodities, has fluctuated in recent two years. In 2022, the price once reached its highest level in history. Can the fertilizer market return to normal in 2023, and what trend will the domestic fertilizer price be brewing?

According to a comprehensive interview with industry personnel by the Associated Press of Finance, the fertilizer production capacity gap will be filled in 2023, and the price will tend to be stable. At the beginning of 2023, affected by the peak season of winter storage and spring cultivation, the price of chemical fertilizer may rise, but the decline of epidemic impact and the introduction of new production capacity will ease the previously tight supply and demand pattern.

Price trend of mainstream fertilizer products in the market in recent three years

It is widely believed in the industry that the price of chemical fertilizer will still fluctuate seasonally according to the planting rules in 2023. "In the peak season, the price will certainly rise to a certain extent, but it should not exceed the previous peak," a market person told reporters.

Looking back on the fertilizer price market in 2022, we can describe it as a "roller coaster". The ups and downs of the market have left all links of the industrial chain at a loss.

The overall tone of stabilizing price and ensuring supply is superimposed on the recovery of production capacity. For the fertilizer market in 2023, most insiders believe that after the peak season, there will be a certain degree of decline. In addition, the top-level design of import and export policies also began to adjust.

On December 29, the Tariff Commission of the State Council announced that import and export tariffs on some commodities would be adjusted in 2023. From January 1, 2023, zero tariff will be applied to potassium chloride, potassium sulfate and other potassium fertilizers, and the quota tax rate of urea, compound fertilizer and ammonium hydrogen phosphate will continue to apply a temporary tax rate of 1%.

The tariff adjustment of China's import of potash fertilizer to zero is intended to alleviate the problem of insufficient supply of domestic potash fertilizer, further exert the ability of the state reserve and the light reserve to regulate the market, and reduce the cost of domestic potash fertilizer application, with the ultimate goal of ensuring food security.

From the perspective of nitrogen fertilizer, as about 70% of China's nitrogen fertilizer production depends on coal, the rise in coal prices has increased the cost pressure on domestic nitrogen fertilizer manufacturers. At present, the profits of anthracite based urea companies are close to or even lower than the cost balance point, and the superimposed spring ploughing is approaching. Many securities companies expect that the price of nitrogen fertilizer will continue to rebound in the next few months, but it will not exceed the peak in 2022.

From the perspective of phosphate fertilizer, the lower cost of raw materials led to a sharp drop in the price of phosphate fertilizer from the previous high point. In July, the price of sulfur, a key raw material in the production of diammonium phosphate and monoammonium phosphate, plummeted by more than 70%, but it has rebounded slightly in recent months. The supply of phosphate fertilizer market in 2023 is bound to be looser than that in 2022. The main reason is that the price of raw materials for phosphate fertilizer production has decreased, and the production technology has improved, reducing the production cost of phosphate fertilizer. 

"The production of basic fertilizers will enter a stable stage, and the production enterprises should turn to the in-depth distribution of new fertilizer varieties such as formula fertilizer, slow release fertilizer and controlled release fertilizer," an analyst told the reporter.