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If urea prices rise further, it might end up being a case of \"beautiful but unappreciated\". Author/Source: China Fertilizer Network. Date: 12-13-2019. Clicks: 156. Since December, the domestic urea market has shown a moderate upward trend; such increases may seem excessive for manufacturers, but they appear somewhat puzzling to end-users； The reasons for this rise are undoubtedly the purchases made by compound fertilizer manufacturers as their production activities gradually resumed, further speculation as the deadline for printing labels approaches, and the significant rebound in the price of liquid ammonia, among other factors ； So far, the upward trend in urea prices has been halted; prices remain stable on the whole, with slight fluctuations occurring in some areas. Meanwhile, a few companies, supported by pending orders, still expect further price increases. However, many industry experts believe that urea is simply overvalued. The urea market remains in a state of slight stability; urea prices have seen a slight increase in some markets in Inner Mongolia and the Northeast, while prices have dropped slightly in certain areas of Shaanxi. In other regions, prices remain largely stable. For example, the prevailing ex-factory price of small-grain urea in Inner Mongolia has risen to around 1510–1590 yuan per ton; in the Northeast, the ex-factory price is 1670–1740 yuan per ton, with some high-end products priced at 2000 yuan per ton. In Shaanxi, the ex-factory price for certain products destined for external markets has dropped to 1633 yuan per ton. Feedback from distribution and wholesale markets indicates that sales of urea have declined following price increases; agricultural demand is still a long way off, and large agrochemical suppliers purchase only as needed. There is generally an oversupply in the market with little demand, and it seems that the urea market has reached a deadlock. So what will be the situation going forward? On the one hand, the operation status of urea manufacturers remains a key focus for the industry. In some areas, due to environmental regulations and restrictions on natural gas supply, the operating rates of urea production plants are declining. According to data from China Fertilizer Network, the overall operating rate of such plants as of now is around 44.43%, with a daily production volume of about 124,700 tons. This is clearly beneficial for these urea production plants. However, one urea production plant in Jiangsu Province that was under maintenance is set to resume operations soon ； Recently, due to factors such as weather conditions in North China and East China, the operating rates of some ammonia-using enterprises have decreased, leading to a weakening market for liquid ammonia and a drop in its prices. If these prices continue to fall, it is possible that some enterprises may shift their production focus to urea, thereby increasing the sales pressure on urea manufacturers. On the other hand, demand is weak. The most effective “weapon” for dealing with the off-season market is to adopt a cautious approach and remain calm; of course, after weighing the pros and cons, traders will stock up as needed based on their requirements. The agricultural market is currently calm; aside from slight purchasing in some areas, overall activity is sluggish. It is understandable that in local markets, there is demand but no supply ； Large agrochemical suppliers had some urea in stock that needed to be sold, and they were cautious about placing new orders; in fact, since the beginning of this year, these suppliers have been purchasing only as needed. The operating rate of industrial plywood factories remains low. The operation level of compound fertilizer manufacturers has seen some improvement, and the progress of winter stockpiling is also advancing slowly. There is a certain increase in demand for urea; however, compound fertilizer manufacturers are having poor sales, so the recovery in their operations is slow and limited, resulting in modest demand for urea that is not sufficient to support large-scale purchases ； Looking at exports, the deadline for booking shipments in November is the 19th of this month; it’s normal for there to be attempts at speculative buying in the market as part of the final wave of activity. However, international urea prices are falling, while domestic urea prices have risen and there is still a tendency for further increases in some areas. This creates a situation where domestic and international markets seem to be moving in opposite directions. One of the conditions necessary for facilitating exports is a reduction in prices. Once again, the market for ammonium chloride, a minor nitrogen fertilizer, has stopped falling and stabilized; however, prices remain low, and manufacturers are cautious about making shipments. This still represents a certain degree of ‘drag’ on urea – it’s not a clear positive factor, nor can it be considered a significant negative one. In conclusion, the domestic demand market for urea in our country is generally weak; relying solely on industrial demand is insufficient, and the export market does not offer significant advantages ； Some urea manufacturers that have undergone maintenance are set to resume operations, while some urea plants that use gas as a raw material may see an increase in production before the Spring Festival ； Furthermore, liquid ammonia, which is closely related to it, has a significant impact on operations ； In the later stages, urea is likely to face pressure from both supply and demand again; attempting to raise prices further might seem like an overreaching move. Judging from the recent supply situation of urea producers and the uptake by end-users, there is little support for further improvement in the urea market; it is expected that prices will decline moderately on a localized basis in the near term. (Tan Junying)