Look! The urea level is still dropping

Thread Content

Look! Urine prices are still falling. Author/Source: China Fertilizer Network. Date: 2019-08-05. Clicks: 14. Recently, urea prices in areas such as Lianghe in Shandong have seen slight adjustments, while prices in regions like Xinjiang, Jiangsu, and Anhui are declining more rapidly. Supported by orders from exports, even though demand in areas such as Lianghe in Shandong is weak, there are no obvious signs of a price drop. Domestic traders remain cautious for now, with a relatively bullish attitude; compound fertilizer manufacturers are maintaining moderate purchasing levels. Currently, the average ex-factory price of urea in Shandong is 1850–1900 yuan per ton (the same unit is used throughout). In Linyi, compound fertilizer companies purchase urea at 1860 yuan per ton； The mainstream ex-factory price of urea in Hebei is 1,870–1,900 yuan, while in Henan it is 1,830 yuan. Although these prices remain stable, the actual transaction prices as reported by the market indicate that there is more room for negotiation compared to before. In Xinjiang, the price of urea continues to drop by 100 yuan per week, setting a new low for urea prices in China; as of this week, the mainstream ex-factory price in Xinjiang is 1,550–1,650 yuan, with a price of around 1,450 yuan for shipments to other regions. In areas such as Jiangsu and Anhui, too, declining demand has led to a slight drop in prices. It is reported that the Second Youth Games will be held in Shanxi region in the near future, and the 70th anniversary of National Day will also cause some urea manufacturers to reduce production. The reason behind the drastic drop in urea prices is mainly as follows: First, there is insufficient demand. The domestic autumn fertilizer market is starting slowly, and the demand for urea in this season is relatively low. Coupled with traders’ bearish attitude, they remain fairly cautious about purchasing urea. Additionally, as the demand from rural agricultural markets in Jiangsu and Anhui regions has declined, urea prices in those areas as well as in Shanxi and other regions have begun to drop to some extent ； Internationally, there is still no news regarding India’s next tender. Based on the current port loading times, it is estimated that by the 10th of this month, most companies will have completed their export orders. Under the pressure of weak demand both domestically and internationally, urea prices are likely to continue to fall. 　　Secondly, there is excessive supply pressure. At present, the operating rates of urea manufacturers in China remain high. This is partly due to demand from the export market, and partly because some manufacturers that use gas as a raw material have reduced production in an effort to avoid supply shortages in the future. According to statistics from China Fertilizer Network, the daily actual production volume of urea across the country remains above 150,000 tons. Although some companies have begun to stock up on supplies, the pressure on supply has not been effectively alleviated. Against this backdrop, overall prices for urea are showing signs of decline. 　　In summary, although the overall price of urea has remained relatively high in recent times due to the support from additional export orders in certain regions such as Hebei and Inner Mongolia, demand in the domestic market has been weak since mid-month. In the international market, factors such as the sharp drop in crude oil prices mean that even if there is some demand, prices will still be under pressure. It is expected that the price of urea will continue to decline after mid-month. 　　(Wu Wenchao)