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Urea price rise: Making the most of each day – Author/Source: Zhongshuo Guohua Fertilizer Network – Date: 2019-09-16 – Clicks: 7. To date, urea remains the standout product in the fertilizer industry; prices have increased by 10–40 yuan per ton since last week. Although downstream users are reluctant to do so, they are forced to raise their prices as well. At the same time, they are worried, as these price increases make it more difficult to make purchases or to stock up on supplies in advance. The reasons for the rise in urea prices are mostly due to upcoming label printing, companies having sufficient orders at low prices from earlier periods, or temporary speculation related to low inventory levels, etc. Such arbitrary price changes in urea remind one of the saying, \"Don’t worry about what will happen after you die; make the most of the days you have.\" After the factories raised their prices, the market fell into a downturn. The main reason for this is weak demand in the agricultural sector; end-users tend to wait before making purchases. Major agrochemical suppliers, being cautious, have also slowed down their stockpiling efforts and are more cautious about their purchases. As a result, wholesale prices in the market keep changing. For example, in some areas of Jiangsu, sales have slowed down due to the increase in urea prices, which has led to a slight drop in wholesale prices. Currently, the wholesale price in Jiangsu is around 1840–1890 yuan per ton. In Linyi, composite fertilizer manufacturers are purchasing urea at prices of around 1890–1900 yuan per ton. For detailed prices in other regions, please visit the member area of China Fertilizer Network. Judging from the recent market enthusiasm and the expectations of factories regarding price increases, it seems that urea prices may continue to rise, or at least be driven up artificially. However, whether this will indeed happen depends on several factors outlined below. On the one hand, it is difficult for urea manufacturers to voluntarily reduce supply. According to China Fertilizer Network, the overall operational rate of urea manufacturers in China has risen to around 55.46%, with a daily production volume of approximately 155,700 tons. The highly scrutinized issues related to environmental and safety inspections, as well as the operation of fertilizer and chemical enterprises during the National Day holiday, remain a source of concern. Environmental and safety inspections have become routine, and it seems that the operational status during the National Day holiday has little impact on the operations of urea-producing enterprises; rather, attention should be paid to the production constraints in the downstream sectors ； Furthermore, the market for liquid ammonia is weak; increased shipments by liquid ammonia producers in key production areas have led to a significant drop in prices. Although there have been slight price increases in some areas, these are minimal. In terms of profits, some companies still prioritize the production of urea. From these two aspects, the operating rates of urea manufacturers will remain high. If these companies do not voluntarily reduce their production levels, their prices will be under pressure to some extent, which poses risks in the long run. On the other hand, demand is limited, making it difficult to sustain prices in the long term. First is the most challenging agricultural market; this year, many areas suffered poor yields due to weather conditions such as typhoons and heavy rainfall ； In addition, local communities in the northwest, southwest and other areas have reported that agricultural product prices are low, which is reducing farmers’ enthusiasm for cultivation. Moreover, water-soluble fertilizers are gradually becoming popular in surrounding regions such as the northwest, leading to a decline in the market for traditional fertilizers ； Large agrochemical suppliers are even more cautious as urea prices rise; their attempts to purchase goods at rock-bottom prices have failed on multiple occasions. With low expectations regarding strategic stockpiling, they are even more careful when preparing fertilizers, which makes it difficult for factories to hold onto their prices. Next are the demands in the industrial sector; environmental protection and safety inspections certainly play a role here. As a result of these factors, the operating rates of plywood factories and some compound fertilizer manufacturers have declined, with some companies even shutting down due to cost pressures. There are also reports from the Guangdong and Guangxi regions indicating that plywood factories have been performing poorly this year, which is one of the factors contributing to the weak market conditions for raw materials. Finally, there is the demand from international markets; certainly, this represents one of the few positive factors supporting the domestic urea market at present. India has issued tenders for purchasing an unspecified quantity of both large and small granule urea, with the tender period ending on September 13. The urea goods are required to be loaded by October 16, so demand for urea will remain strong until then. Overall, with some urea manufacturers still having a sufficient supply available, and supported by factors such as high demand for labeling services, the domestic urea market is likely to remain strong for some time. However, given the high operating levels of these manufacturers and the weak demand from downstream industries, there is no long-term support for urea prices; it is therefore prudent to be cautious. A price increase might be possible in the near future. To obtain more detailed information on the fertilizer market, you can call the consultation hotline at 0451-88001128, or visit the official website of China Fertilizer Network (www.fert.cn), its mobile app (www.fert.cn/app), and its WeChat official account (fert-cn). You can also become a member of China Fertilizer Network to enjoy more premium services. Or visit the \"Talk about Fertilizers\" section on China Fertilizer Network to engage in more in-depth discussions on fertilizer market trends. 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