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Urea plants shut down; fertilizer market sees a revival. Author/Source: China Fertilizer Network. Date: 2019-09-27. Clicks: 1. Recently, it was reported that urea manufacturers in regions such as Shanxi have started to limit production within their respective areas, resulting in a decline in the overall production rate of urea. Some in the industry tend to exaggerate the extent of these production restrictions, but the actual situation is not as severe as imagined – production restrictions do exist. However, given the extent and duration of these restrictions, their impact on the overall urea production rate is limited. Moreover, there are no signs of a significant increase in demand for urea at present; even if there is a recovery later on, it is likely to be short-lived. It is clear that urea, as the “hope of the entire village,” will also struggle to turn the fertilizer industry around this time. Recently, winter wheat in North China is about to enter the fertilization stage, and the local markets have begun to operate. However, according to distributors, demand this year is lower than in previous years. Additionally, diammonium phosphate, which is available at lower prices, occupies a certain share of the market, resulting in less favorable sales performance for compound fertilizer manufacturers during the autumn period. Recently, a few compound fertilizer manufacturers in the Northeast region have set prices for winter storage. Large compound fertilizer producers from other provinces have also entered the Northeast market, but the prices they offered are relatively low. Although there is some demand, the situation is not optimistic at present; many people are reluctant to buy due to the low prices, and a climate of caution prevails. Fertilizer manufacturers lack confidence in the availability of nitrogen, phosphorus, and potassium as raw materials; a decline in the cost of these raw materials will not bring any benefits to such companies. Turning back to urea, its price has seen fluctuations over the past few weeks, going up and down. Initially, it did not see a significant increase in price following the release of pricing guidelines or as major domestic traders purchased urea, and no stability was achieved. This positive trend did not last long; recently, prices have been fluctuating slightly. Currently, the purchase price for compound fertilizer manufacturers in Linyi, Shandong is around 1800–1820 yuan per ton (the same unit is used throughout). The industry speculates that even though production restrictions bring benefits, urea manufacturers will accept orders at low prices in order to have stock ready for the National Day holiday. Fertilizer manufacturers, facing this situation, will purchase in appropriate amounts to ensure continued production, but such purchases are usually short-term in nature; they are not very optimistic about the future and prefer to make purchases in batches according to demand. The market for ammonium sulfate remains weak, with prices gradually falling. In Hubei, the actual price at which 55% powdered ammonium sulfate is delivered from factories is around 1850 yuan; smaller manufacturers offer slightly lower prices. In Sichuan, the price for low-quality 55% powdered ammonium sulfate sold externally is less than 1800 yuan. In Henan, the actual factory price for 55% powdered ammonium sulfate ranges between 1800 and 1850 yuan. New orders are not performing well across various companies, and there is significant inventory pressure. In particular, the excess production capacity of 55% powdered ammonium sulfate leads to poor sales, with low prices appearing frequently. Recently, compound fertilizer manufacturers have had little demand for monoammonium phosphate; only a few companies have replenished their stocks at low prices. After the holiday, their purchasing intent may increase slightly, but they will remain cautious. For some orders, a minimum guaranteed volume should be negotiated. Although the price of potassium fertilizers is not as low as that of ammonium nitrogen fertilizers, it remains bearish. There is still no stock for border trade; it has not been decided yet whether shipments will take place in October ； Domestic potassium prices remain weak but stable; the arrival price of 60% crystalline potassium chloride ranges between 2,080 and 2,130 yuan ； Port potash prices saw a slight decline. As we are in the off-season for potassium fertilizer demand, the international situation regarding potassium chloride is not optimistic. Coupled with large inventory levels of imported potassium chloride in domestic ports, prices of potassium fertilizers continue to decline slightly. Fertilizer manufacturers pay little attention to this market and are mainly focusing on fulfilling existing orders. The market for potassium sulfate is also modest; recently, compound fertilizer manufacturers have been paying close attention to the bidding process for tobacco in Yunnan. In summary, against the backdrop of a sluggish overall market environment, restrictions on urea production may bring some vitality to the market, but weak demand will always pull prices back to reality. In the short term, the fertilizer market is likely to remain sluggish; compound fertilizer manufacturers will face difficulties, and they will continue to be cautious in purchasing raw materials, focusing on short-term operations. (Zhao Hongye)