Urea price trends across China on August 20

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Urea price trends across China on August 20 Author/Source: Date: 2019-08-20 Clicks: 44 Prices of urea in the domestic market are rising steadily, with purchases being made according to demand. Domestic urea prices have risen modestly, and driven by the tendency to buy when prices are rising and avoid buying when they fall, there has been buying pressure in both industrial and agricultural sectors recently. In the short term, the industry is seeking so-called bottom-line support, but urea prices will gradually rise, whether from a cost perspective or from the standpoint of international exports. In the long term, both positive and negative factors affecting the urea market are likely to become apparent, so it is best to proceed with caution. Production at downstream facilities is at a low level, and purchases are made as needed; therefore, the urea market is expected to see steady upward trends in the future. Recently, the pace of environmental inspections in the country has not slowed down; power restrictions are in place in some areas. Demand is weak as well. In the agricultural sector, the application of fertilizers during the summer season has been completed in various regions, leading to a slack period. In some areas, preparations for applying wheat fertilizers have begun. Most large agricultural suppliers decide their purchasing plans based on demand, so large orders are unlikely to be placed. Prices of end-product agricultural goods remain weak, which makes it difficult to encourage greater use of fertilizers. Saving on input costs is the top priority; as a result, nitrogen fertilizers of the same particle size are used as substitutes. Although production of autumn fertilizers started early, the overall operational rate of domestic compound fertilizer manufacturers has only increased slightly and slowly. The price of raw material urea is rising, and domestic urea producers are keen to hold their prices high. Some downstream traders also wish to restock, but new orders in the market are scarce, leading to cautious purchasing behavior and generally low enthusiasm for making purchases. Some enterprises continue to reduce production or carry out maintenance, so the load on the facilities remains acceptable. The supply in the upstream anthracite market remains tight; coal prices have risen again recently. The shortage of natural gas, which is a raw material for urea, has shown significant improvement, and the cost factors supporting urea prices remain strong. Production of compound fertilizers remains at low levels, with slower sales of raw materials; agricultural demand at the grassroots level has decreased, and prices have already risen in some areas. Urea prices continue to rise in many areas, with transaction prices following suit. The agricultural demand for urea has ended in many regions; however, the demand for urea in the main production areas of compound fertilizers remains decent. Nevertheless, the volume of transactions at high prices remains relatively low. Most urea manufacturers are raising their prices continuously due to a large number of orders pending fulfillment. The operating rate of large domestic compound fertilizer manufacturers was 50.06%, up by 3.81 percentage points on a weekly basis. With the peak season for fertilizer preparation in autumn approaching, the overall operating level of these companies has increased slightly. The urea supplies that were purchased earlier are now arriving at the factories; however, since these supplies can cover short-term demand, there is little willingness to accept higher prices. As of this Friday, the prices at which urea is purchased by compound fertilizer manufacturers in the Linyi area also saw a significant increase on a weekly basis. In Shandong, the main factory outlet price of urea increased by 60 yuan compared to last week, reaching 1,920–1,930 yuan. The transaction prices also rose slightly, and the overall production rate increased as well. Factories have ample orders ready for shipment; they supply compound fertilizer manufacturers in the surrounding areas, as well as in regions such as Hubei and Jiangsu-Anhui, with relatively low demand from agricultural sectors. In Hebei, the main factory outlet price of urea rose by 40 yuan compared to last week, reaching 1,910–1,920 yuan. There are sufficient orders ready for shipment, with a small amount of goods being sent to ports. In Henan, the main factory outlet price of urea increased by 30–50 yuan compared to the same period last week, reaching 1,885–1,920 yuan. Some large factories are still operating at reduced capacity; their products are mainly supplied to local industrial markets, and there are few new orders at higher prices. Since there are still orders waiting to be shipped, sales pressure is not high at present. In Shanxi, the main factory outlet price of urea rose by 90 yuan compared to last week, reaching 1,870–1,880 yuan. Due to a large number of orders placed at lower prices earlier on, local companies have continued to raise their prices. It is said that it is now difficult for any factory to supply goods at a price below 1,850 yuan. In Anhui, the main factory outlet price of urea rose by 40 yuan compared to last week, reaching 1,940–1,980 yuan. The local agricultural demand has basically ended, with only limited supplies meeting industrial needs. In Jiangsu, the main factory outlet price of urea increased by 60 yuan compared to last week, reaching 1,990 yuan. Overall, there are sufficient orders ready for shipment, and prices have risen slightly due to an increase in inquiries. In Hubei, the main factory outlet price of urea rose by 20 yuan compared to last week, reaching 1,920 yuan. In Guangdong and Guangxi, urea manufacturers are still shut down. In the Northeast region, except for Liaoning, most manufacturers are shut down for maintenance. In Inner Mongolia, the main factory outlet price of urea has risen to around 1,700 yuan, with some companies still shut down. In Shaanxi, the main factory outlet price of urea has risen to around 1,930 yuan; large factories have resumed production and are supplying products to local markets. In Xinjiang, the main factory outlet price of urea has risen to around 1,500 yuan. Local demand is relatively low, and this price increase is mainly driven by demand from other regions. In Guizhou, the main factory outlet price of urea has risen to around 1,950 yuan; companies have begun collecting payments for winter storage. In Yunnan, prices remain stable for now, with average performance in terms of new orders. In Sichuan, the main factory outlet price of urea has risen to 1,930–1,970 yuan. International urea prices rose by 5–24 dollars on average, while prices in Iran dropped by 10 dollars; the inventory at China’s major ports increased by nearly 90,000 tons on a weekly basis. Overall, the operating rate of urea plants has increased slightly; urea manufacturers have a sufficient amount of orders pending fulfillment. On the downstream side, concerns about future shortages are likely to lead to an increase in inquiries. It is expected that there will be tight supplies of spot goods in the short term, and urea prices may rise further in the future. However, some distributors are being cautious at present, and with the arrival of supplies at lower prices, it is anticipated that the actual price increases for urea in the near term will be modest.