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Is the rising price of urea once again seen as a lifeline? _Author/Source: China Fertilizer Network Date: 2019-12-10 Clicks: 41 In mid-December, the market for winter stockpiling of fertilizers remained stagnant. In the absence of any significant positive developments in the overall market situation, prices and preferential policies for winter stockpiling of compound fertilizers were introduced; these prices were naturally much lower than those in the same period last year, and downstream buyers’ enthusiasm for purchasing such fertilizers was also reduced compared to before. Since the autumn market, not only has the price of compound fertilizers been weak, but other types of fertilizers have also suffered the same fate. Even water-soluble fertilizers, which usually maintain a relatively stable price, are now facing difficulties, and the atmosphere typical of the peak demand period in winter is also poor. However, just when the market seemed to be at a standstill, urea prices suddenly rose, and the increase continued. As of now, the prevailing ex-factory prices of urea in Shandong and the regions along the two rivers are between 1,670 and 1,720 yuan per ton. Recently, several local urea plants have undergone maintenance work, resulting in a temporary reduction in supply. Coupled with decent demand from downstream buyers, some companies have begun to raise prices. With sufficient advance orders from domestic plants and an uncertain situation in the international market, the urea price is expected to remain strong in the short term. There are few positive factors at this stage; the rise in urea prices is seen as a lifeline. However, the water-soluble fertilizer market may be entering a true \"winter\" this winter. First of all, the price is not high. As is well known, the price of water-soluble fertilizers is significantly higher than that of traditional fertilizers, and the pricing of products from leading manufacturers changes relatively infrequently. Although there have been no significant fluctuations in the prices of water-soluble fertilizers recently, the transaction prices remain relatively low; in some cases, there are even substantial discounts. One reason for this is that raw material costs are generally low. Apart from fertilizers like monoammonium phosphate and potassium nitrate, whose prices remain stable, the prices of other types of fertilizers have all seen varying degrees of decline ； The second reason is the intensifying market competition and uneven price levels. In order to gain market share, many companies adjust their prices by offering greater discounts to attract buyers, forcing businesses to follow these market trends. Secondly, demand is weak. The trading atmosphere in the winter market for water-soluble fertilizers is sluggish, with poor demand being the main reason. Unlike traditional fertilizers, water-soluble fertilizers are often considered to be in a peak period during winter. However, this winter, the demand for them has not followed the usual pattern of a peak period, with growth being rather slow. Downstream demand is weak. One reason for this is the reduced enthusiasm of farmers to plant crops; affected by factors such as low prices of agricultural products and frequent natural disasters, farmers’ incomes have remained poor for years, which directly dampens their willingness to plant ； Secondly, the water-soluble fertilizer market is plagued by numerous problems: a mixed supply of products and numerous competing brands, which has led to greater caution among downstream buyers, resulting in a market operation that is not very smooth. Finally, the supply issue. With the rise of the new fertilizer market in recent years, water-soluble fertilizers have become increasingly in demand, and as a result, more and more production enterprises have emerged. During the critical period of winter environmental protection, the production status of enterprises is a cause for concern. There are an increasing number of water-soluble fertilizer manufacturers, and some of them have substandard production conditions or are in the process of renovation. Under the strict environmental regulations in winter, the production performance of such companies may not be ideal. Additionally, due to the significant seasonal increase in demand in certain areas, it is possible that these companies will run out of products to sell ； Additionally, in most regions, shipping costs have risen significantly during winter. For companies that already operate on relatively low profit margins, the high shipping costs have put them in a difficult situation. In summary, as expected, urea prices have indeed risen, bringing hope to the already weak fertilizer market. Currently, urea prices are at a level after the increase and have stabilized; if this trend continues, the overall fertilizer market is likely to remain stable in the future. However, it will still be necessary to keep an eye on changes in supply and demand in the long term.