\"Urea\" sees a sharp reversal – fluctuations in an instant

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\"Urea\" sees a sharp reversal – prices drop in an instant Author/Source: China Fertilizer Network Date: 2019-08-20 Clicks: 40 From last Saturday to this Tuesday, urea prices experienced a significant decline; in regions such as Shandong and the Two Rivers areas, the price drop exceeded 50 yuan per ton. During this period, the selling prices of low-quality urea produced by some large factories in Shandong dropped to 1700–1720 yuan per ton. A series of negative factors emerged: most orders destined for India were shipped around the 10th, and typhoon Lekima disrupted highway transportation in Shandong, which could affect the export orders of some factories. The downstream market adopted a cautious attitude, with relatively low purchasing intentions. However, starting on Wednesday, some large factories in Shandong announced price increases. In the following days, the low prices in various regions gradually disappeared; in fact, the supply and demand dynamics for urea in areas like Shandong and the Two Rivers areas seemed to have reversed. Some industry experts were surprised by this sudden change in urea prices. According to these experts, there are several reasons behind the sudden rise in urea prices in certain regions: firstly, the delivery timeline for exports might be delayed by one week. According to international information, due to force majeure factors in the domestic market, the goods scheduled to be transferred aboard ships on August 16 may not be delivered on time. The delivery schedule for the Indian market might be delayed by 7 days compared to the original date. At present, the impact of typhoons on transportation has diminished significantly. It is understood that some urea manufacturers in Shandong and Hebei provinces are rushing to ship their products, which has temporarily reduced sales pressure in the domestic market. These companies now hold a relatively dominant position in domestic sales, which also lays the groundwork for price increases. Secondly, the situation regarding acquiring payments at low prices is fairly good. It is understood that the uptake of urea in various markets was fairly good this Tuesday; most of the supply came at low prices. In Shandong, the price at the factory level for low-quality urea was 1700–1720 yuan, while in Shanxi it was slightly higher at 1600 yuan. In Inner Mongolia, the price was slightly lower at 1560 yuan. As of now, there are a relatively large number of orders pending shipment at these low prices. Although overall production levels remain high at present, there is no pressure on sales in the short term; in fact, the supply of spot goods is relatively tight. Finally, capacity has just been restored, and there are many urgent orders from earlier periods. Affected by the typhoon, the shipment of some long-term orders placed with urea manufacturers in China was hindered. As transportation capacity has just begun to recover, some factories in Shandong have started to urge the dispatch of previously placed orders, which has led to a tight supply situation in the market. It is therefore somewhat understandable that some factories have raised their prices. In summary, due to the factors mentioned above, urea prices have seen a slight rebound in certain areas. However, demand for urea in the market during autumn is limited, and at present most regions are in the off-season for fertilizer use; therefore, the amount of urea available at the local level is relatively small. Moreover, the arrival of urea supplies at low prices may also restrict the upward trend in urea prices. As for the Xinjiang market, which is currently at a price low, it is focusing on exports, so it is expected that overall urea prices will continue to decline. (Wu Wenchao)