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Late autumn and early winter: Unlikely to see a sharp rise in urea prices Author/Source: China Fertilizer Network Date: 2019-10-14 Clicks: 34 After the holidays, the seasonal demand for fertilizers in autumn is at its peak; there has been a slight increase in the agricultural demand for urea in some areas. The production facilities in regions such as Shandong and Hebei have also begun to operate again. Meanwhile, the Indian market launched another round of bidding for urea during the holidays. Thanks to these factors, urea prices did not drop significantly during that period. What’s more surprising is that the daily production volume of urea did not increase sharply after October 10, as predicted earlier. In the Jincheng area of Shanxi, production restrictions on urea will continue until March next year. Driven by these positive factors, urea prices saw only minor fluctuations this week. Currently, the average ex-factory price of urea in Shandong is 1740–1780 yuan per ton. In Linyi, compound fertilizer manufacturers are purchasing urea at 1800 yuan per ton. In Hebei, the average ex-factory price of urea is 1740–1790 yuan per ton, while in Henan it is 1750–1760 yuan per ton. For large-scale producers, the average selling price is around 1720–1730 yuan per ton. However, some in the industry say that the overall market for urea remains weak, with relatively low enthusiasm for large-scale purchases, and a cautious attitude persists. First, the demand exists but in small quantities. Although the grassroots market is currently in a peak period for fertilizer use during autumn, the demand for urea in the autumn market for high-phosphorus fertilizers is relatively low. Additionally, as low-priced supplies from factories arrive over time, there is an abundance of urea in stock across the market. Phosphorus fertilizer prices have seen little increase this year, with overall fertilizer prices remaining stable at low levels ； Demand for compound fertilizers in the industrial market is average, and the operation of plate manufacturing plants is gradually resuming. Overall industrial demand remains moderate. There are still orders pending to be fulfilled by urea producers in various regions, but the quantity remaining to be processed is relatively small. Additionally, the number of new orders concluded is average; although there is demand, it isn’t sufficient to support higher prices, resulting in weak urea prices. Secondly, production started low but the decline was limited. This year, in order to avoid overly strict environmental regulations, the level of production of urea has seen only a limited decline. During the same period last year, the daily production of urea remained below 140,000 tons; currently, the areas most affected by production restrictions related to coal-based production are limited to the Shanxi market. On the other hand, gas-based production facilities were already partially shut down during the same period last year, while so far this year, these facilities have continued to operate at high levels, with no explicit orders for suspension or reduction in production yet. Taking all of this into account, it can be inferred that there will be slight fluctuations in overall urea production over time, but no significant decline is expected in the short term. Finally, printing marks are still present, but volume and price are uncertain. Recently, the Indian market has issued numerous tenders. While the industry is pleased, there is also a hint of concern; expectations regarding the volume of tenders in the Indian market are not very optimistic. Some in the industry believe that the amount won by Chinese companies will be only between 200,000 and 300,000 tons. Although there are production restrictions in China, such a volume will have only limited impact on the domestic market ； On the other hand, there are pessimistic expectations regarding prices; international urea prices are fluctuating within a narrow range. The industry’s expectations for China’s winning bid prices are not high, with these prices expected to remain in the range of 255–260 dollars. It seems that there is still some distance to go before such measures can truly help alleviate the pressure on domestic urea supplies. In summary, the overall price of urea has been fluctuating within a narrow range recently, but there is still some time before the winter storage season begins; therefore, it is unlikely that urea prices will see significant increases in the near future. (Wu Wenchao)