Calm Reflections on the Thermal Expansion of Urea

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Calm Reflections on the Rise in Urea Prices / Author/Source: China Fertilizer Network / Date: 12-02-2019 / Clicks: 27. Since last Saturday, urea prices have started to rise gradually; by the end of this week, in some areas the weekly increase was even over 80 yuan per ton. This upward trend came as a surprise to some in the industry. Currently, the average ex-factory price of urea in Shandong is 1670–1710 yuan per ton, in Hebei it is 1670–1700 yuan per ton, in Henan it is 1680–1690 yuan per ton, and in Shanxi it is 1580–1600 yuan per ton, with large-grained urea costing 1580–1595 yuan per ton. Some companies that still have goods ready for export have begun to limit new orders. In Shaanxi, prices increased by over 70 yuan within this week, while the industry has yet to fully adjust to the previous price hikes. In Jiangsu, some companies saw daily price increases of up to 100 yuan. The wave of rising urea prices continues, but there are still those in the market who are not rushing to make purchases due to these sharp price increases, maintaining a relatively calm attitude. The main reasons for this are as follows: First, there has been no significant increase in market demand. Whether it is the downstream chemical plants, compound fertilizer manufacturers, or agricultural traders, there has been no significant increase in new orders for purchases. At present, environmental inspections have become routine in areas such as Lianghe in Shandong Province, and temporary shutdowns of plate manufacturing plants and power plants have become a common occurrence. Although there is a definite demand for urea, the overall consumption volume is affected to some extent ； The overall production level of compound fertilizers is increasing slowly. According to statistics from China Fertilizer Network, as of this Friday, the production rate of large domestic manufacturers was 44.41%. The low-cost urea raw materials purchased earlier can still be used for some time, and there is relatively little willingness to accept products at higher prices. With a long period still to go before fertilizer demand increases, some agricultural traders remain cautious and even plan to consider making purchases only after demand starts to rise, focusing on selling whatever is available at that time ； According to feedback from downstream markets, the initial rise was prompted by companies that export goods attempting to raise prices on a tentative basis, citing a shortage of spot supplies; at that time, the actual demand in the domestic market was not high. Although the price increases have been steep recently, the volume of transactions remains not much different from previous levels. Secondly, the supply volume in the urea market. In summary, the urea production restrictions this winter are \"similar\" to those in previous years – similar in some aspects yet different in others. What’s similar is that the supply of urea this winter has indeed decreased compared to earlier periods; what’s different is that there are no overall production restrictions this time, instead the price of natural gas has been increased slightly (with a maximum increase of 20% in principle). Some enterprises that rely on gas as a raw material have been forced to suspend or reduce their production due to rising costs. Nevertheless, urea production levels remain higher compared to the same period in previous years. In the international urea market, China does not hold a dominant position, making it difficult to achieve simultaneous growth in both volume and price. With export restrictions in place, the supply pressure in the domestic market becomes even greater. Although urea prices are still on the rise at present, some downstream users are adopting a more cautious attitude. How long this increase in urea prices will last will depend on the demand from the downstream market. In summary, it must be said that the price of urea has shown an upward trend recently, with increases continuing to rise in some areas. If short-term trading is considered, purchasing could be an appropriate option; however, for long-term strategies, it is still necessary to pay attention to market conditions regarding compound fertilizers as well as any future adjustments in production activities.