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Urea prices rebound; deemed a positive development by authors/source: China Fertilizer Network Date: 2019-09-05 Clicks: 8 As September arrives, the autumn fertilizer market is about to enter its peak season. Normally, companies should be busy shipping products while distributors work hard to stock them up. However, given the current market situation, the compound fertilizer market still suffers from relative stagnation. Yet, as the fertilizer usage season approaches, some markets are starting to recover. Compared to compound fertilizers, there is no sign of recovery in the water-soluble fertilizer market for now. If we are to look for positive factors in today’s fertilizer market, then the recent rise in urea prices might provide some confidence to this sluggish market. Since last weekend, urea prices have increased slightly in various regions, by 10–20 yuan per ton. In some markets, there are signs that trading conditions have improved slightly. Given the current situation in China, companies still have some orders pending, and they are inclined to maintain high prices. Recently, a pessimistic atmosphere has dominated the water-soluble fertilizer market, mainly due to \"unsatisfactory\" supply and demand conditions. Firstly, raw material costs have decreased. As is well known, the price of water-soluble fertilizers is significantly higher than that of traditional compound fertilizers, mainly due to the relatively high cost of raw materials. Generally, the price of water-soluble fertilizers remains stable; aside from companies adjusting the extent of their discounts, few adjust their prices on their own initiative. Recently, the prices of nitrogen, phosphorus, and potassium raw materials have all declined, resulting in lower costs. For example, the price of potassium dihydrogen phosphate, which had risen due to environmental regulations earlier on, has now returned to normal levels. Under the pressure from demand from downstream industries, fertilizer manufacturers cannot unilaterally increase the discounts they offer, so reducing prices in order to attract customers has become the only option left. Secondly, short-term demand is hopeless. In recent years, as efforts have been made in various regions to adjust crop planting structures and to implement integrated water and fertilizer management, the demand for water-soluble fertilizers has increased significantly. In some areas, the seasonal demand for such fertilizers has even surpassed that for traditional compound fertilizers; thus, the distinction between peak and off-peak seasons is not very evident. Generally speaking, the southeastern coastal areas and the northwestern inland regions are areas with high demand for water-soluble fertilizers. At present, the traditional peak seasons in most parts of the northwest, such as Xinjiang and Gansu, have ended, resulting in a significant decrease in the demand for water-soluble fertilizers ； This summer, many areas in the south have experienced frequent rainfall and abnormal weather conditions, which have often disrupted agricultural activities. This has, to some extent, suppressed the growth in demand downstream, resulting in low demand for water-soluble fertilizers in the short term. Finally, the expectation of supply constraints. It is reported that as of July 25, the 6 inspection teams out of the first batch of 8 in the second round, which are responsible for inspecting provinces (cities), have entered the phase of on-the-ground inspections ； The two teams responsible for inspecting central state-owned enterprises have entered the phase of focused inspections. This initiative will take three years to carry out routine inspections, and another year for follow-up checks; an environmental protection campaign that is sweeping the entire country is still ongoing ； Furthermore, as the National Day holiday approaches, the environmental situation in certain areas such as the Beijing-Tianjin-Hebei region is becoming increasingly severe; as a result, there may be shortages in the supply of water-soluble fertilizers. Even during periods of lower demand, this will affect the enthusiasm of downstream users to purchase such fertilizers. In summary, autumn and winter are approaching, and the market atmosphere for water-soluble fertilizers during their traditional off-season is somewhat sluggish. However, as the prices of raw materials such as urea become clearer and show an upward trend, the prices of water-soluble fertilizers may be supported by costs, with a generally stable but weak market outlook in the short term. (Feng Hongyang)