Domestic demand continues to decline, leading to a drop in urea prices

Thread Content

Domestic demand continues to decline; urea prices have dropped. Author/Source: China Agricultural Means of Production Distribution Association. Date: 2019-08-01. Clicks: 5. http://my.fert.cn/attached/image/20190801/20190801143855_898.jpg Last week (July 22–July 26), agricultural demand came to an end, and industrial demand was constrained by environmental regulations, resulting in a drop in urea market prices. On July 29, the China Urine Price Index (CNPI) was 1,970.43 points, down 13.41 points on a month-on-month basis, representing a decline of 0.68% ； An increase of 15.00 points on a year-on-year basis, representing a growth rate of 0.77% ； It rose by 107.18 points compared to the base period, representing a growth rate of 5.75%. http://my.fert.cn/attached/image/20190801/20190801143917_735.jpg On July 29, the China Nitrogen Urine Retail Price Index (CNRI) was 2091.31 points, down by 7.05 points on a month-on-month basis, representing a decline of 0.34% ； An increase of 28.76 points on a year-on-year basis, representing a growth rate of 1.39% ； It rose by 186.35 points compared to the base period, representing a growth rate of 9.78%. http://my.fert.cn/attached/image/20190801/20190801143939_0.jpg On July 29, the China Urine Export Price Index (CNEI) was 1863.48 points, up by 0.88 points on a month-on-month basis, representing a growth rate of 0.05% ； A decrease of 80.17 points on a year-on-year basis, representing a decline of 4.12% ； It rose by 4.48 points compared to the base period, representing a growth rate of 0.24%. 　　Supply situation: Last week, some domestic urea production plants that had been under maintenance resumed operations, leading to an increase in their operating rates. The overall operating rate of domestic urea plants rose to around 72%; however, the operating rate of plants that use coal as a feedstock dropped to around 72%, while that of plants using natural gas as a feedstock fell to around 71%. In terms of raw materials, due to increasing environmental regulations, coal-consuming enterprises have adjusted their production schedules, leading to a reduced demand for anthracite; as a result, its price dropped last week ； Natural gas market prices rose slightly last week. 　　Demand Situation In the agricultural sector, domestic demand is beginning to decline. In the industrial sector, increased environmental regulations last week led to reduced operations of rubber sheet factories, resulting in a decline in demand for urea ； Fertilizer manufacturers are reducing their purchases of raw material inventory in a downward market trend, and are currently adopting a wait-and-see approach. Internationally, following the printing and marking process, there is an ample supply in the global market, and the collection of domestic goods at ports has been largely completed, which reduces the impact on supply, demand, and prices in the domestic market. 　　International Market Following the bidding process in India last week, the international market saw an ample supply, resulting in a slight overall decline in prices. Among them, the FOB price of small-particle urea in the Black Sea remained stable at the lower end on a week-on-week basis, while the higher end price dropped by 5 dollars per ton, to 263–265 dollars per ton ； The FOB price of small-grained urea in the Baltic Sea remained stable at 265–266 USD/ton ； The FOB prices of small-grained urea in the Middle East remained stable at the lower end on a week-on-week basis, while the higher-end prices dropped by $5 per ton, to 275–280 dollars per ton ； The FOB price of small-grained urea in China dropped by $1 per ton at the lower end and by $2 per ton at the higher end on a week-on-week basis, settling at $281–$282 per ton. 　　Table: International price list for small-particle urea ex-ship (unit: USD/ton) http://my.fert.cn/attached/image/20190801/20190801144007_999.jpg Compiled based on relevant materials Domestic situation Last week, urea prices across various regions in China declined on a week-on-week basis. In 11 provinces, municipalities and autonomous regions including Beijing, Tianjin, Jiangsu, Jiangxi, Henan, Hubei, Guangdong, Guizhou, Gansu and Xinjiang, prices dropped by 1–70 yuan per ton; in the four provinces of Shanxi, Fujian, Shandong and Shaanxi, prices rose by 2.5–10.8 yuan per ton, while prices remained stable in the remaining areas. 　　Table: Domestic urea wholesale price changes (unit: yuan/ton) http://my.fert.cn/attached/image/20190801/20190801144030_207.jpg Data source: China Agricultural Inputs Distribution Association Future outlook At present, the domestic market for agricultural fertilizers is entering its final stage, with demand declining ； In the industrial sector, plywood factories are operating at reduced capacity due to environmental regulations, while compound fertilizer manufacturers tend to adopt a wait-and-see approach, resulting in an overall decline in demand. On the export side, the gathering of Chinese goods at ports has largely come to an end, and the international market offers ample supply, so its impact on the domestic market is limited. On the supply side, the operating rate of urea plants has seen a recovery. Based on the above, it is expected that urea prices will remain on a downward trend in the near term, and attention should be paid to the sales situation in the autumn fertilizer market. (Yang Wenchao)