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Urea rebounds unexpectedly – are compound fertilizers the ones thrilled? Author/Source: China Fertilizer Network Date: 2019-12-09 Clicks: 107 In December, the otherwise quiet winter storage market finally saw some activity; a semblance of vitality returned to this stagnant market, with urea prices experiencing a significant rebound. Since the end of November, urea prices have risen by 30–100 yuan per ton. Will this be enough to drive positive development in the entire winter storage market? First, the price of urea has rebounded unexpectedly – how long can this last? Starting from the end of November, subtle changes occurred in the urea market. Initially, these changes began in the Shanxi region, where the standard ex-factory price of urea was 1,520–1,530 yuan per ton. As of now, that price has risen to 1,620 yuan per ton, an increase of around 100 yuan per ton. Urea prices in regions such as Shaanxi and Inner Mongolia also saw increases. The main reasons for these price rises were purchases by some compound fertilizer manufacturers and low-priced purchases by large agricultural supplies dealers. Additionally, there was a slight shortage of supply in certain areas. Recently, the operating rates of urea production plants have declined. With all these favorable factors at play, urea prices have stabilized after experiencing a significant rise. Some urea producers have voluntarily reduced their production volumes, and this is another important factor contributing to price stability. But how long can this situation last? If there are no additional positive factors in the future, it is likely that this situation will not last more than half a month. Secondly, has the rise in urea prices boosted confidence in fertilizer preparation among downstream users? It must be said that this increase in urea prices, along with such a significant rise, is indeed unexpected. So, will it boost confidence among those who plan to stock up on fertilizers? Especially during the period when the winter storage efforts of compound fertilizer manufacturers have reached a stalemate, the rise in urea prices has indeed shaken the cautious attitude of some downstream users who were waiting before making purchases. However, winter storage progress in the Northeast region remains slow; on the other hand, some distributors in Shandong, Jiangsu, and the two river regions are becoming anxious and have already started to stock up in small quantities. Given that the demand for wheat fertilization is set to increase after spring arrives, this rise in urea prices has indeed boosted confidence in making such purchases. Once again, urea prices have risen, and the market for ammonium chloride has also seen a recovery. Starting this week, the sluggish market for ammonium chloride has begun to show signs of improvement. It has become difficult to find supplies at low prices in the Jiangsu region; although companies are operating at high capacity levels, high-priced supplies remain scarce. Meanwhile, low-end products are in high demand, which further exacerbates the tension surrounding fertilizer availability in the Jiangsu market. Finally, the rise in urea prices brings the greatest joy, of course, to urea and nitrogen fertilizer manufacturers, as well as to those compound fertilizer companies that already have reserves of urea raw materials. As deep winter approaches, market demand is expected to gradually recover; in particular, there is still significant demand in the Northeast region after spring. However, for compound fertilizer prices to rise, more positive factors will be needed to support that trend. (Yang Xiaomei)