August saw the domestic diammonium phosphate (DAP) market remain weak and range-bound, while September may bring a gradual recovery as the autumn fertilizer application season approaches.

Typically, September marks the peak period for autumn fertilizer preparation. However, this year, high DAP prices and continued pressure on grain-growing margins have significantly weakened purchasing enthusiasm among grassroots distributors and farmers. As a result, fertilizer preparation has progressed noticeably slower than in previous years, leaving the market in a prolonged wait-and-see state.

August Market Remained Under Pressure

In early August, raw material prices remained elevated, keeping production costs high for DAP manufacturers. Most producers focused on fulfilling existing orders, while new downstream demand remained limited.

In Hubei, the ex-factory price of 64% DAP was generally maintained at RMB 4,800–4,850/ton, although actual transaction prices were negotiable. Market inquiries remained weak, and while some lower-priced offers emerged, transactions at these levels were limited. Overall, the market negotiation center gradually shifted downward.

By mid-August, raw material prices eased slightly, but production costs remained relatively high. Manufacturers therefore showed a strong willingness to maintain firm quotations while gradually increasing shipments to winter-storage markets. Although producers continued to hold their asking prices, actual transaction prices remained negotiable, resulting in a slow start to the autumn fertilizer season.

In the second half of August, the weak market trend continued. A sharp decline in raw material prices further affected market sentiment, while manufacturers largely maintained their quoted prices. Downstream demand showed no significant improvement, and overall trading activity remained subdued.

As the fertilizer application season approached, inquiries and transactions picked up slightly. However, overall volumes remained limited. High production costs and firm producer quotations continued to clash with weak downstream demand and limited price acceptance, leaving the market largely at a stalemate.

DAP Production Recovered in August

According to Longzhong Information, domestic DAP production reached 905,800 tons in August, an increase of 116,400 tons month-on-month, or 14.75%. However, production was still 28.81% lower year-on-year.

The industry's average capacity utilization rate stood at 45.85%, up 5.89 percentage points month-on-month, but down 19.49 percentage points year-on-year.

As the autumn fertilizer season approaches, some DAP producers have gradually resumed operations, driving a recovery in overall industry operating rates. Nevertheless, market activity remains relatively low.

Looking ahead to September, downstream demand is expected to improve gradually, while operating rates may continue to recover as manufacturers prepare for the peak fertilizer application season.

Market Expectations for September Remain Divided

Market participants have mixed expectations for the September DAP market.

A recent survey showed that 20% of participants were bullish, 20% bearish, and 60% expected the market to remain stable.

Those expecting stable prices believe that ongoing supply and price stabilization policies will continue to provide support. With manufacturers maintaining firm quotations and downstream demand gradually recovering, DAP prices may remain at relatively high levels with limited fluctuations.

The bullish camp is betting on a potential wave of concentrated restocking as the autumn fertilizer season approaches. If manufacturers continue to hold firm on prices and previously low-priced inventories are gradually absorbed, new-order transaction prices could see a modest increase.

Meanwhile, bearish participants remain concerned about weakening cost support following the recent decline in raw material prices. High DAP prices continue to face resistance from downstream buyers, while relatively sufficient spot availability limits the potential for a sustained price increase.

Overall, the market remains relatively balanced, with the key focus shifting toward the pace of downstream demand recovery and changes in raw material costs.

September Outlook

With the autumn fertilizer application season approaching, downstream demand is expected to recover to some extent, which could improve overall market sentiment.

However, given the current resistance to high DAP prices, demand is likely to be released gradually rather than in a concentrated manner. Some traders may become more flexible on pricing in order to accelerate inventory turnover.

In the short term, the DAP market is likely to remain stable with a slight downward bias. The key factors to watch in September will be the actual pace of downstream demand recovery, changes in raw material prices, producer operating rates, and government policy guidance.

For the DAP market, September may bring a modest improvement in demand—but whether this translates into a sustained price recovery will depend largely on how quickly downstream buyers return to the market.