Urea price trends across China on August 15

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Urea price trends across China on August 15 Author/Source: Yuege Agri-Materials Website Date: 2019-08-15 Clicks: 30 Report on urea prices for today, August 15, 2019: The latest factory prices for urea. Currently, few urea manufacturers are reducing production for maintenance; the operating rate of these manufacturers remains around 66%, with an average daily production of about 158,000 tons. In the same period of 2018, the average daily production of urea factories in China was around 130,000 tons. The operating rate and daily production of urea are higher than they were last year, resulting in an ample supply in the market. Overall demand remains weak at present; most in the industry are adopting a cautious attitude and have no strong desire to make large purchases. The domestic urea market is expected to see mixed trends in the short term. Looking at the past three years, August has generally been the lowest point of the year; therefore, with current weak demand for spot goods, it will take some time before the market truly picks up momentum. The main urea contract, UR2001, hit its daily price limit at the end of trading – this was the first time such a limit had been reached since the launch of urea futures. Yesterday, the main contract for urea futures, UR2001, showed a one-way upward trend. After several rounds of price increases, it hit its daily limit near the end of trading, closing at that limit price of 1,767 yuan per ton, representing a gain of 4.00%. According to statistics, a total of 646,100 contracts of the UR2001 contract were traded, with a trading volume of 22.52 billion yuan, which was higher than that of the previous trading day. The number of contracts in holding increased by 36,500, bringing the total holding volume to 130,400 contracts. Trading remained active, and bullish sentiment was strong. In terms of spot markets, the domestic urea market has seen orders placed at reduced prices in recent days; demand for advance purchases has improved in some areas, with supplies going to ports as well as to meet domestic demand in those regions. Prices at some manufacturers in Shandong and Jiangsu provinces have seen a slight rebound, but overall demand remains weak, and there is a clear sense of caution among industry players. The prevailing ex-plant prices for small-particle urea in the Shandong region remain stable for now: Yangmei Pingyuan offers 1,850 yuan per ton, with no change in price; Ruixing Chemical quotes 1,760 yuan per ton, showing a slight decrease of 10 yuan per ton; Mingshui Chemical offers 1,910 yuan per ton, with a slight increase of 10 yuan per ton. Overall, the ex-plant prices of urea in Shandong region remain stable today, with actual transaction prices determined through negotiation. The enthusiasm for purchasing at the downstream end is moderate, and urea prices are expected to remain stable at low levels in the coming period. Yangmei Pingyuan Chemical Co., Ltd. quotes 1,865 yuan per ton for urea. Urea specifications: Purpose: Agricultural use; Grade: Top grade. This quote is valid for 3 days. Quotation provider: Yangmei Pingyuan Chemical Co., Ltd. Shandong Ruixing Chemical Co., Ltd.’s quote for urea is 1,760 yuan per ton. Urea specifications: Purpose: Agricultural use; Grade: Top grade. This quote is valid for 3 days. Quotation provider: Shandong Ruixing Chemical Co., Ltd. Shandong Jinmei Mingshui Chemical Group Co., Ltd.’s quote for urea is 1,910 yuan per ton. Urea specifications: Purpose: Agricultural use; Grade: Top grade. This quote is valid for 3 days. Quotation provider: Shandong Jinmei Mingshui Chemical Group Co., Ltd. In the Shandong region, the ex-factory price for small and medium-sized particles is 1,720–1,830 yuan per ton. In the Linyi market, the transaction price is around 1,790–1,800 yuan per ton, while in the Heze market it’s around 1,780–1,790 yuan per ton. Some companies have raised their prices by 10–20 yuan per ton. In the Hebei region, the ex-factory price for small particles is 1,760–1,830 yuan per ton; a few companies have lowered their prices by 30 yuan per ton. In the Henan region, the typical ex-factory price for small particles is 1,780–1,810 yuan per ton, with some companies reducing prices by 10–20 yuan per ton. In the Anhui region, the typical ex-factory price for small particles is around 1,840–1,880 yuan per ton, with no changes so far. In the Jiangsu region, the typical price for small and medium-sized particles is around 1,850–1,900 yuan per ton; a few companies have raised their prices by 10 yuan per ton. In the Shanxi region, the price for large and small particles is around 1,690–1,730 yuan per ton, with some companies lowering their prices by 20 yuan per ton. In the Inner Mongolia region, the typical transaction price for small and medium-sized particles is around 1,580–1,690 yuan per ton, with some manufacturers reducing prices by 50 yuan per ton. In the Hubei region, the typical price for small particles is 1,850–1,880 yuan per ton, with no changes so far. In the Shaanxi region, the ex-factory price for small and medium-sized particles is around 1,700–1,770 yuan per ton, with some companies reducing prices by 30 yuan per ton. In the Guangxi region, the typical wholesale price for small and medium-sized particles is around 1,950 yuan per ton, with no changes so far. In the Sichuan region, the ex-factory price for small and medium-sized particles is around 1,780–1,900 yuan per ton, with no changes so far. In the Guangdong region, the typical wholesale price for small particles is 2,000 yuan per ton, with no changes so far. In the Xinjiang region, the transaction price is around 1,400–1,480 yuan per ton, with no changes so far. In the Jilin region, the price for small urea particles is around 2,000 yuan per ton, with no changes so far. In the Heilongjiang region, the transaction price for small urea particles is around 1,730 yuan per ton, with prices reduced by 20 yuan per ton. In the Liaoning region, the price for small urea particles transported by truck is 1,820 yuan per ton, with negotiation possible regarding the final price, and no changes so far. Regarding agricultural demand, as August arrives, agricultural urea demand has declined in many parts of the country. Agricultural distributors are being cautious when stocking up on urea, preferring to wait and observe the situation. In terms of industrial demand, due to environmental inspections, the operating rates of plywood factories in the Linyi area of Shandong remain low, resulting in a fairly average demand for industrial urea. The production activities of fertilizer manufacturers downstream are generally stable; in autumn, fertilizers are mainly high-phosphorus and high-potassium types, which do not require much urea, and ammonium chloride can be used as a substitute. Fertilizer manufacturers are becoming more reluctant to purchase urea at high prices and tend to order only what they need. The international urea market remains under pressure and on a downward trend; demand is below average, while urea manufacturers have a relatively sufficient supply of goods. There are no signs of improvement in the international market in the near future. Currently, the sales of urea in India are performing well; inventory levels in July were 550,000 tons, compared to 815,000 tons in the same period last year. Foreign media speculate that India may issue another tender at the end of August or in September. By mid-August, the weak trend in the domestic urea market showed no signs of improvement, and in the absence of any positive factors, the industry remained bearish regarding urea prices. The traditional major urea production areas have successively seen price drops of over 50 yuan per ton. As of August 12, the prevailing price for urea in Shandong was between 1780 and 1820 yuan per ton, while the price upon arrival in Linyi was 1800 to 1820 yuan per ton. The actual transaction prices in Shandong, Hebei, and Henan can be considered to be around 1750 to 1770 yuan per ton. As for the wholesale price in Shanxi, it goes without saying. Given the increasing sales pressure on factories, the situation regarding stockpiling or maintaining minimum levels during off-peak periods is clearly not ideal. Due to dealers’ caution regarding the operational risks associated with high-priced urea, models such as manufacturers holding large inventory have not been observed recently. Additionally, Typhoon Lekima made landfall in various provinces and cities in South and East China, causing disruptions to transportation and agricultural production, which in turn created difficulties for the sale of urea. At the same time, the international urea market is also in a phase of decline and adjustment; as a result, China’s offshore prices have dropped. Apart from contracts signed earlier in the supply chain, there is a lack of new orders.