Summary Post on the Urea Market Conditions and Prices in February 2017

Urea market activity was moderate; prices remained stable at high levels. Author/Source: China Agricultural Inputs Distribution Association Date: 2017-02-03 Clicks: 13 Last week (January 16–January 20), urea market activity was moderate, with prices remaining stable at high levels. On January 23, the China Urine Price Index (CNPI) was 1,720.41 points, up 26.45 points on a month-on-month basis, representing a growth rate of 1.56% ； An increase of 234.18 points year-on-year, representing a growth rate of 15.76% ； It dropped by 142.84 points from the base period, representing a decline of 7.67%. On January 23, the China Retail Price Index for Urea (CNRI) stood at 1,780.53 points, up 14.72 points month-on-month, representing a rise of 0.83% ； An increase of 160.63 points on a year-on-year basis, representing a growth rate of 9.92% ； It dropped by 124.43 points from the base period, representing a decline of 6.53%. 　　Supply situation: Some companies resumed production last week, resulting in a slight increase in the operating rate of urea manufacturers. Among them, the overall operating rate of domestic urea manufacturers remained around 56%, while that of manufacturers using gas as a feedstock rose to nearly 40%. Coal prices in the upstream market remain stable; most mines have closed for holidays, but sufficient inventory is available to meet demand during this period, with domestic coal use being the main driver of demand ； In terms of synthetic ammonia, the overall operation rate is low; supply is tight in many areas, leading to a slight increase in prices. 　　Demand situation: Recently, there has been a lack of urgent demand for fertilizers in the agricultural sector ； In the industrial sector, as the Spring Festival approaches, most compound fertilizer manufacturers begin to close down for holidays; it becomes more difficult to find shipping capacity, production rates are low, and demand for urea is weak ； On the export side, due to low operating rates of urea production domestically and tight supply conditions, export volumes are low. 　　International market: Internationally, supply remains tight and prices are high, but buyers are reluctant to pay such high prices, leading to a slowdown in price increases. Among them, the FOB price of small-grained urea in the Baltic Sea remained stable at 235–240 USD/ton compared to the price of the previous week ； The FOB prices for small-grained urea in the Black Sea increased by $5 per ton at both the low and high end, remaining at 245–250 dollars per ton ； The FOB prices for low-grade small-grain urea in China remained stable, while the prices for high-grade urea dropped by $5 per ton, remaining at 240–245 dollars per ton. 　　Situation in various regions: Last week, urea prices rose across most regions in the country. In places such as Tianjin, Hebei, Heilongjiang, Jiangsu, Zhejiang, Anhui, Shandong, Hunan, Hainan, Sichuan, Shaanxi, Qinghai, and Xinjiang, the wholesale and retail prices of urea have increased by 5–70 yuan per ton. The wholesale and retail prices of urea in Beijing, Liaoning, Henan, Guangdong, and Yunnan dropped by 5–70 yuan per ton, while prices remained relatively stable in the other regions. 　　Recently, there has been no strong agricultural demand for urea in the domestic market ； In the industrial sector, most compound fertilizer manufacturers are closed for holidays, resulting in insufficient transportation capacity and weak demand for urea ； Although there is demand internationally, domestic urea supplies are tight and the supply is limited. In summary, it is expected that urea producers will maintain stable prices until the end of the year; attention should be paid to environmental policies and changes in coal prices. (Yang Wenchao)

The Comprehensive Index of China’s Fertilizer Wholesale Prices Remained Stable Author/Source: China Agricultural Inputs Distribution Association Date: 2017-02-03 Clicks: 16 Last week (January 16–20), China’s fertilizer wholesale prices remained largely stable. On January 23, the China Fertilizer Wholesale Price Index (CFCI) was 1,973.12 points, up 15.21 points on a month-on-month basis, representing a growth rate of 0.78% ； An increase of 67.43 points on a year-on-year basis, representing a growth rate of 3.54% ； It dropped by 405.75 points from the base period, representing a decline of 17.06%. On January 23, China’s Compound Fertilizer Retail Price Index (CCRI) was 2319.51 points, up 12.02 points on a month-on-month basis, representing a growth rate of 0.52% ； Compared to the same period last year, it decreased by 93.34 points, a drop of 3.87% ； It decreased by 127.20 points compared to the base period, a drop of 5.20%. 　　Supply situation: The urea market continues to trade in a range-bound manner. Some producers that had cut output have resumed operations, leading to a slight increase in overall plant utilization rates. The DAP market remains sluggish, with companies primarily focusing on fulfilling advance orders. Inventory levels in the potassium fertilizer market continue to rise, while prices remain stable. New orders in the compound fertilizer market have largely stalled, while company quotes remain stable with only slight fluctuations. 　　Demand situation: In the urea market, downstream agricultural sectors remain cautious and show little enthusiasm for purchasing ； Demand from plywood factories continues to decline, while some industrial compound fertilizer manufacturers purchase according to their needs. Downstream traders of diammonium are unwilling to restock, with few inquiries from end-users. Downstream compound fertilizer manufacturers using potassium fertilizers are not active in their purchases, with small orders being the norm. Downstream distributors of compound fertilizers are cautious, and the demand for fertilizer stockpiling continues to decline. 　　International market: The international urea market remains generally stable. Supply continues to be tight, and prices charged by manufacturers remain high; however, downstream buyers show little willingness to purchase ； International prices for diammonium phosphate remain strong and on the rise, while export quotes for diammonium phosphate from China continue to increase ； The international potash market is operating steadily overall, with weak demand for new orders. 　　With the arrival of the Spring Festival, market activity has gradually slowed down, and transportation conditions are generally tight. Given various favorable factors such as rising international prices for urea and the removal of export tariffs in China, prices are expected to remain stable in the near term, with further upward momentum possible after the Spring Festival ； The current price of diammonium phosphate is somewhat high, with few new orders being placed by downstream customers. It is expected that market activity will remain weak in the coming period, and a situation of available products but no demand will persist, with companies focusing on fulfilling pre-existing orders. Social inventory of potash fertilizers has increased, leading to reduced purchasing demand from downstream users. However, large traders are optimistic about future trends and are supporting prices, so it is expected that prices will remain stable. Given the high costs and low demand for compound fertilizers, it is expected that price increases will be difficult in the future, with stability being the dominant trend overall. (Joelying)

Urea price trends across China Author/Source: China Fertilizer Network Date: 2017-02-04 Clicks: 30 The urea market is generally stable, with some companies beginning to try raising their prices. Since the start of the holiday, the mainstream ex-factory prices in Shandong region have remained stable at 1660–1700 yuan per ton (the same unit is used throughout). Most manufacturers are still processing orders placed before the holiday, while a few have raised their prices by 10–20 yuan today. The price for receiving goods in Linyi is… (the omitted details can be found in the member area; the same applies here) ； The mainstream ex-factory prices in the Hebei region have risen to 1,660–1,700 yuan, with transactions at ex-factory price…… ； In the Henan region, the prevailing ex-factory prices remain stable at 1,660–1,700 yuan. During the holiday period, road transportation was hindered, so rail transport was primarily used. However, manufacturers report that road transport has now shown some improvement and is expected to continue getting better ； During the Spring Festival, the situation regarding the export of iron ore from Shanxi was fairly average; inventory pressure on manufacturers increased slightly. However, most manufacturers still had a large number of orders pending shipment, and transportation conditions are expected to improve. As a result, the prevailing ex-factory prices in Shanxi remained stable at 1550–1650 yuan ； The mainstream ex-factory prices in Anhui region remain stable at 1,700–1,720 yuan ； The mainstream ex-factory prices in Jiangsu region have risen to 1,750–1,760 yuan, while the actual transaction prices at the factory level are... Some lower-end products have seen price increases planned, and the wholesale prices of urea from other provinces in Xuzhou region range from 1,730 to 1,750 yuan. International urea reference prices showed mixed trends, ... Overall, urea prices remained relatively stable during the holiday period. Upon returning from the holidays, most urea manufacturers continued to process orders placed before the break, so there was no significant sales pressure at that time; however, some began to attempt slight price increases ； However, in the industrial sector, purchases are still being made based on demand, while agricultural demand has not fully materialized. It is expected that some companies will raise their quotes to gauge the spring urea market. Moving forward, attention should still be paid to changes in urea production rates and improvements in transportation conditions. If there is any part of the analysis and market data on this website that you would like to know more about, you can call the consultation hotline at 0451-88001128. Regional market prices: Unit: yuan per ton (bolded values in the table refer to large-grain urea)

Urea price trends across various regions in China. Author/Source: China Fertilizer Network. Date: February 6, 2017. Page views: 38. The overall urea market remains stable; however, some companies have begun to tentatively raise their quoted prices. New orders for urea in Shandong are not performing well, but most companies are still fulfilling previous orders and are optimistic about future market conditions; as a result, the mainstream ex-factory prices in Shandong have increased by 10 yuan per ton, reaching 1670–1700 yuan ； The prevailing ex-plant prices in the Two Rivers region remain stable, while the actual ex-plant prices of urea in Henan have risen slightly to 1650–1700 yuan ； The mainstream ex-factory prices in Shanxi region remain stable at 1,550–1,650 yuan. At present, manufacturers are mostly waiting to see how things develop, planning to adjust their prices further based on the urea prices in other provinces once the transportation situation improves ； The mainstream ex-factory prices in Anhui region remain stable at 1,700–1,720 yuan, with some companies planning to raise their prices ； The mainstream ex-factory prices in the Shaanxi region remain stable at 1,700–1,720 yuan; for shipments to other areas… (the omitted details can be found in the member area; the same applies here). The ex-factory prices of some urea manufacturers located near Inner Mongolia remain stable at 1,520 yuan ； The mainstream ex-factory prices in Sichuan remain stable at 1,700–1,730 yuan, while the wholesale price of some urea supplies from other provinces in Sichuan is around 1,710 yuan ； The mainstream ex-factory prices in Yunnan region remain stable at around 1,900 yuan, while some high-end products are sold at ex-factory prices in Nanning, Guangxi…… ； Urea manufacturers in Guizhou region are still forced to suspend production for maintenance due to a tight supply of raw coal, according to local manufacturers…… ； The mainstream ex-factory price in Fujian region remains stable at around 1,830 yuan, with new orders being average. Overall, agricultural demand has not fully picked up, and new orders for urea following the Spring Festival holiday have been average ； However, demand is set to increase, and it is expected that some companies will continue to test the spring urea market by raising their prices. Going forward, attention will still need to be paid to the recovery in urea production rates and improvements in transportation conditions. Regional market prices: Unit: yuan/ton (bold in the table refers to large-grained urea)

Analysis of the Monthly Operating Rate in the Urea Market Author/Source: Date: 2017-02-06 Clicks: 26 According to Jinchuang’s statistics on the production volumes of urea manufacturers across the country, in January 2017 (a total of 31 days), the national urea production volume was around 3.9658 million tons, representing a 7.24% increase on a month-on-month basis. The average daily production volume was 127,900 tons, while the average operating rate of these manufacturers was 53.92%, an increase of 7.25% compared to the previous month. In Shandong, the main production region, urea production in January amounted to 499,100 tons, with an average operating rate of 54.47%. The production levels of companies that had reduced output earlier have recovered, and operational rates have increased again ； In Henan province, the average operational rate in January was 41.67%, with production amounting to 334,100 tons ； The production volume in Jiangsu region is 229,400 tons, with an operation rate of 42.05% ； The production volume in Anhui region is 213,500 tons, with an operation rate of 73.29% ； The production volume in Hebei region was 228,300 tons, with an operating rate of 61.49% ； The production in the Shanxi region is 601,900 tons. This month, around 15 domestic urea manufacturers underwent maintenance. With rising prices and increased environmental regulations, the number of manufacturers that were operating this month was much higher than those that were shut down. Domestic production will continue to rise in February, with an estimated level of 57%-58%. (Jinlianchuang)

Will urea prices keep rising for half a year? Seriously? Author/Source: Date: 2017-02-06 Clicks: 29 The prices of simple fertilizers have been rising recently. Driven by factors such as rising coal prices and tight transportation capacity in the northwestern region, urea prices have risen by a cumulative 48% since late August 2016, reaching 1,670 yuan per ton ； In Hubei Province, the main production area for monoammonium phosphate, supply shortages have occurred due to plant shutdowns for maintenance in the wake of environmental inspections. Consequently, prices have risen by 21% since late November, now reaching 2,000 yuan per ton ； Due to industry giants collectively reducing production to maintain prices, the price of diammonium phosphate has risen by 11% since mid-November, reaching 2,550 yuan per ton ； Due to restrictions on the export of potassium chloride from the Qinghai region, market supply has been tight, and prices have risen by 6% since early December, reaching 1,920 yuan per ton. 　　Currently, prices of products offered by compound fertilizer manufacturers have generally risen; since late October, the cumulative price increase has averaged around 200 yuan per ton. Amid expectations of price hikes, downstream distributors have recently shown greater willingness to make payments. 　　The supply-demand gap in spring plowing is becoming evident; prices of single-nutrient fertilizers are expected to continue rising. The peak season for spring plowing (February to May) is approaching, and the period for preparing fertilizers for spring plowing is about to begin. Due to dealers delaying their stockpiling efforts as a result of strategic bargaining tactics, the current level of urea stockpiling by dealers is only around 30%. Inventory levels within the industry are low, with an average operating rate of less than 5%. It is likely that the supply-demand imbalance for urea will intensify in the short term, and rising urea prices are expected to persist until mid-2017. Demand for phosphate fertilizers and compound fertilizers will also reach a peak period. 　　The supply-demand situation for urea and phosphate fertilizers has improved. Given the combined effects of **policy regulations, environmental pressures, and the spontaneous elimination of high-cost production capacity, it is expected that outdated production capacity in this industry will continue to be phased out, thereby gradually reducing the pressure of overcapacity in the domestic market. It is likely that domestic production capacity for urea and phosphate fertilizers will decline over the next few years. 　　Export tariff preferences enhance the competitiveness of domestic fertilizer exports and are expected to help absorb excess capacity in the industry. In 2017, export tariffs on urea and phosphate fertilizers were removed, and the tax rate on triple-component compound fertilizers was reduced from 30% to 20%. Against the backdrop of overall overcapacity in China’s production of nitrogen fertilizers, phosphorus fertilizers, and compound fertilizers at present, the complete elimination of export tariffs on nitrogen and phosphorus fertilizers, along with the reduction of export tariffs on compound fertilizers, will effectively help to address the excess domestic production capacity. (Dongxing Securities)

Urea price trends across China Author/Source: China Fertilizer Network Date: 2017-02-07 Clicks: 24 The urea market is generally **, with some companies continuing to raise their prices proactively. The situation regarding new orders for urea in Shandong is not good; there are instances of price reversals in some downstream markets. However, the situation regarding road transportation has improved, with certain large manufacturers delivering 4,000–5,000 tons per day. They remain optimistic about future prospects, which is why the mainstream ex-factory prices in Shandong have risen by 20–30 yuan per ton, reaching 1,700–1,720 yuan. The purchase price in Linyi is... (Some details can be found in the member area; same applies here.) ； The mainstream ex-factory prices in the Two Rivers region remain stable for now; a few manufacturers have raised their prices by 10–20 yuan. The actual ex-factory prices of urea in Hebei are…… ； In the Shanxi region, the mainstream ex-factory prices have increased by 30 yuan, reaching 1,580–1,650 yuan. The situation regarding transportation by road has improved slightly, but local urea manufacturers continue to pay attention to market developments in the Shandong Two Rivers area ； Driven by rising quotes in regions such as Shandong, as well as an improvement in shipping conditions in Anhui, the lower end of the mainstream ex-factory prices in Anhui has increased by 20 yuan, reaching around 1720 yuan ； The mainstream ex-factory prices in Jiangsu region remain stable at 1,750–1,760 yuan; transaction prices are slightly lower. Some large manufacturers that have stopped production may release new products tomorrow ； A few large manufacturers in Hubei region are still shut down, while the mainstream factory prices have increased by 10 yuan, reaching around 1,730 yuan ； The urea market in Sichuan remains stable, with the mainstream ex-factory prices staying at 1700–1730 yuan ； The mainstream ex-factory prices in Inner Mongolia remain stable at around 1,450 yuan; the actual transaction prices are... Some manufacturers offer prices of 1,800 yuan upon delivery in the Northeast region,... Overall, industries are making purchases as needed; there remains a strong sense of hesitation at the grassroots level in agriculture. Distributors are facing poor sales, with procurement slowing down; in some areas, price inversion has occurred ； However, the situation in the road transport sector has improved slightly, with inventory pressures decreasing a bit. Moreover, as agricultural demand is set to rise, it is expected that some companies will continue to raise their prices in order to gauge the conditions in the urea market during spring. Going forward, it will still be necessary to pay attention to the increase in urea production rates and the improvement in transportation conditions. If there is any part of the analysis and market data on this website that you would like to know more about, you can call the consultation hotline at 0451-88001128. Regional market prices: Unit: yuan per ton (bolded values in the table refer to large-grain urea)

Urea price trends across China Author/Source: China Fertilizer Network Date: 2017-02-08 Clicks: 34 Urea prices in Shandong, the Two Rivers regions, and Jiangsu and Anhui provinces continue to rise. With the improvement in road transport, the mainstream ex-factory prices in Shandong region rose by 10 yuan (per ton; the same applies below) to 1710–1730 yuan. Most urea manufacturers continued to fulfill previous orders in order to reduce their inventory levels ； The mainstream ex-factory prices in Hebei region have risen by 10–20 yuan, reaching 1670–1720 yuan ； In the Henan region, the mainstream factory prices for high-end products have increased by 20 yuan, reaching 1660–1720 yuan ； In the Anhui region, the mainstream factory prices for high-end products have increased by 10 yuan, reaching 1720–1730 yuan ； In the Jiangsu region, the mainstream factory prices have increased by 10 yuan, reaching around 1,760 yuan at the lower end ； The prevailing ex-factory prices in the Shaanxi region remain stable at 1,700–1,720 yuan. However, some urea manufacturers located near Inner Mongolia have a large volume of orders pending shipment, which has pushed their ex-factory prices up to 1,550 yuan ； The mainstream ex-factory prices in Guangxi region remain stable at 1,980–2,000 yuan. The price of urea delivered to Sanya, Hainan from that region is … (the omitted details can be found in the member area; the same applies hereafter). Some manufacturers that have ceased production will resume operations in the near future ； The urea market in Zhejiang remains stable, with the standard ex-plant price staying around 1,900 yuan; these prices are largely in effect as of now. However, manufacturers say that production costs remain high, and they will suspend production for maintenance again in the near future ； The mainstream ex-factory price in Inner Mongolia has risen slightly to around 1,470 yuan, while the local natural gas price is... Internationally, …… Overall, most urea manufacturers have strong orders ahead of the holiday period; road transportation is improving, shipments are proceeding smoothly, and sales pressure is not high at the moment. With agricultural demand set to increase, some companies are likely to raise their prices further. Going forward, as urea production rates rise and transportation conditions improve, there may be a risk of a decline in prices for high-end products in certain areas. If there is any part of the analysis and market data on this website that you would like to know more about, you can call the consultation hotline at 0451-88001128. Regional market prices: Unit: yuan per ton (bolded values in the table refer to large-grain urea)

Urea Prices to Rise After the New Year: Can There Be a Price Increase in February? Author/Source: JLCC Date: 2017-02-08 Clicks: 28 The Spring Festival is over, and industries have resumed production; the urea market has also started to activate, with generally high confidence in the market. Will there be a new price increase in February? 　　An increase in demand is inevitable. After the holiday, demand from downstream sectors for urea shows an upward trend. In the industrial sector, the operation rate of compound fertilizer plants is on the rise, and board manufacturing plants are also starting to resume operations. It is expected that around the Lantern Festival, the operation rate of downstream industrial enterprises will reach or exceed the levels before the New Year, leading to a significant increase in industrial demand at that time ； In the agricultural sector, there is still much anticipation in the market; as spring plowing begins, agricultural demand will increase as well, and this will be one of the key factors influencing the trend of urea prices ； In terms of export demand, orders from India remain promising, and with the removal of export tariffs in China, export volumes are likely to be better than before. In summary, purely from a demand perspective, the urea market is expected to receive upward support. 　　Continuous increase in operational activity The rise in operational activity within the industry is also evident. Firstly, there was an increase in output from enterprises that had previously cut production or switched to other products; secondly, enterprises that had suspended operations earlier resumed production. Both factors contributed to a continuous rise in the operating rate after the Lunar New Year. According to data from Jinchuang, before the Spring Festival, the operating rate of the domestic urea industry was around 55%; by February 3rd, it had risen to about 57.5%, an increase of 4.54% on a month-on-month basis. This upward trend in operating rates is set to continue. In terms of daily production, it has recovered from 130,000 tons before the festival to around 140,000 tons after it. An increase in supply could dampen the optimism in the market. 　　External factors also affect the market. In addition to supply and demand, factors such as coal prices, transportation conditions, and environmental regulations also influence market trends to a certain extent. Regarding coal, as the heating season in the north comes to an end, the prospects for the future are not optimistic; being a key raw material for the urea industry, this will have an impact on the urea market to some extent ； The transportation situation may improve to some extent after the New Year, but if agriculture carries out large-scale stockpiling of fertilizers, tight conditions could still persist ； In terms of environmental protection efforts, **stricter measures may continue to be implemented, which will lead to a reduction in supply in the short term and have an impact on market conditions as well. 　　Regarding the urea market in spring, the balance between supply and demand will directly influence its trend. As of now, although production levels have increased, the market remains under supply pressure due to rising demand. Moreover, there is strong confidence in the market’s prospects for the future, which will provide support for it. JLC predicts that, in the short term, the domestic urea market will continue to show an upward trend, with the overall situation in February likely to be optimistic. (Cai Yingchao)

Urea price trends across China Author/Source: China Fertilizer Network Date: 2017-02-09 Clicks: 23 Urea prices in Hebei, Jiangsu, Anhui, and Shaanxi regions continue to rise. In the Shandong region, the acceptance of higher urea prices by downstream users has been average; as a result, the mainstream ex-factory prices have remained stable at 1710–1730 yuan per ton. The purchase price in Linyi has risen slightly to... (the omitted amount can be found in the member area). However, most compound fertilizer manufacturers are waiting for lower urea prices, so their purchasing of urea is currently weak ； The mainstream ex-factory prices in Hebei region have risen by 10 yuan, to 1680–1730 yuan ； The mainstream ex-factory prices in the Henan region remain stable at 1,660–1,720 yuan; some high-end products sold locally have an ex-factory price of around 1,720 yuan, and these are shipped to Chenzhou in Hunan Province…… ； The mainstream ex-factory prices in Anhui region have risen by 10–20 yuan, reaching around 1,740 yuan ； The mainstream ex-factory prices in Jiangsu region have risen by 20 yuan, reaching around 1,780 yuan; some manufacturers’ actual transaction prices at the factory level are higher. The wholesale price of goods from Shanxi in Lianyungang region is approximately 1,770 yuan ； The mainstream ex-factory price in the Shaanxi region has risen to around 1,750 yuan; discounts for shipments to other areas or individual negotiations may be available ； The mainstream ex-factory prices in Xinjiang remain stable; the wholesale prices of some urea from Xinjiang in Sichuan are only…… ； In Inner Mongolia, the prevailing ex-factory price has risen and remains stable at around 1470 yuan. For shipments to the Northeast region, the delivery price has increased by 50 yuan, reaching 1800–1850 yuan; for some large orders, the actual transaction price is 1750 yuan upon delivery. Regarding large-grain products, the mainstream factory prices in Hebei have increased by 10 yuan, reaching 1760–1780 yuan ； A major manufacturer in Jiangsu has finally released its products, with the mainstream factory price ranging from 1,810 to 1,830 yuan. Regarding ports, …… Internationally, …… Overall, most urea manufacturers have raised their prices on their own initiative, but the acceptance level among downstream users remains moderate; therefore, prices vary in certain areas** ； However, as demand is approaching peak levels, the rate of production recovery is slow; it is expected that urea prices in some areas may rise slightly again. In the long term, as transportation conditions improve and production rates continue to rise, and given factors such as the cessation of heating in the northern regions that could lead to a decline in coal prices, purchasing by urea manufacturers’ downstream clients is largely complete, which may result in a drop in high urea prices. Regional market prices: Unit: yuan/ton (bold in the table refers to large-grained urea)