Domestic demand continues to decline; urea prices keep falling

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Domestic demand continues to decline; urea prices keep falling. Author/Source: China Agricultural Inputs Distribution Association. Date: 2019-08-08. Clicks: 9. http://my.fert.cn/attached/image/20190808/20190808103752_980.jpg Last week (July 29–August 2), domestic demand continued to decline, resulting in a continuous drop in urea market prices. On August 5, China’s urea wholesale price index (CNPI) was 1,957.31 points, down 13.12 points on a month-on-month basis, representing a decline of 0.67% ； An increase of 24.31 points on a year-on-year basis, representing a growth rate of 1.26% ； It rose by 94.06 points compared to the base period, representing a growth rate of 5.05%. http://my.fert.cn/attached/image/20190808/20190808103806_735.jpg On August 5, China’s urea retail price index (CNRI) was 2076.22 points, down by 15.09 points on a month-on-month basis, representing a decline of 0.72% ； An increase of 22.80 points year-on-year, representing a growth rate of 1.11% ； It rose by 171.26 points from the base period, representing a growth rate of 8.99%. http://my.fert.cn/attached/image/20190808/20190808103821_292.jpg On August 5, China’s urea export price index (CNEI) was 1864.62 points, up by 1.13 points on a month-on-month basis, representing a growth rate of 0.06% ； An increase of 13.87 points on a year-on-year basis, representing a growth rate of 0.75% ； It rose by 5.62 points compared to the base period, representing a growth rate of 0.30%. 　　Supply situation: Last week, some domestic urea production plants suspended operations for maintenance, resulting in a decline in their operating rates. The overall operating rate of domestic urea plants dropped to around 70%; among them, those using coal as a feedstock had an operating rate of around 69%, while those using natural gas as a feedstock saw their operating rate rise to around 74%. In terms of raw materials, the domestic coal market remained stable last week, with prices holding steady ； Natural gas market prices rose last week. 　　Demand Situation In the agricultural sector, domestic demand for agriculture is declining. In the industrial sector, domestic compound fertilizer manufacturers have largely finalized their orders for autumn fertilizers; environmental pressures remain high. Production in compound fertilizer and plywood factories stays at low levels, resulting in weak demand for urea. Internationally, after the printing and marking process, there is no significant demand support in the global market as a whole. 　　International Market Last week, the bidding period for ships in India came to an end; with ample supply in the international market, prices dropped. Among them, the FOB prices of small-particle urea in the Black Sea dropped by 8 dollars per ton at both the lower and higher ends on a week-on-week basis, reaching 255–257 dollars per ton ； The FOB prices for small-grained urea in the Baltic Sea have dropped by $5 per ton at the lower end, and by $1 per ton at the higher end, reaching 260–265 dollars per ton ； The FOB price of small-grained urea in the Middle East remained stable on a week-on-week basis, at 275–280 USD/ton ； The FOB price of small-grained urea in China dropped by $6 per ton at the lower end and by $4 per ton at the higher end on a week-on-week basis, reaching 275–278 dollars per ton. 　　Table: International ex-ship price table for small-grained urea (unit: USD/ton) Compiled based on relevant materials Domestic situation Last week, urea prices across various regions in the country declined on a week-on-week basis. In 13 provinces, autonomous regions and municipalities including Hebei, Jiangsu, Anhui, Fujian, Shandong, Hubei, Hunan, Guangdong, Guangxi, Sichuan, Shaanxi, Gansu and Xinjiang, prices dropped by 3.3 to 50 yuan per ton. Prices in Hebei and Yunnan increased by 3.1 yuan per ton and 29 yuan per ton respectively, while prices remained stable in the other areas. 　 　Table: Domestic urea wholesale price changes (unit: yuan/ton) Data source: China Agricultural Inputs Distribution Association Future outlook At present, the period for agricultural fertilizer use in China is coming to an end, with demand declining ； In the industrial sector, environmental protection measures remain strict; demand for fertilizers in autumn has largely been met. Fertilizer manufacturers tend to adopt a wait-and-see approach, resulting in little increase in production rates, and overall demand remains weak. On the export side, there is an oversupply in the international market leading to falling prices, and opportunities for domestic supplies are limited. 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)