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Monthly sales reach 4.8 million tons; an improvement is on the horizon. Author/Source: China Fertilizer Network. Date: 2019-12-17. Clicks: 72. In mid-December, winter truly set in across various regions. Just as the climate turned cold, the fertilizer market was also in a sluggish state; aside from a slight improvement in the price of urea recently, prices of other types of fertilizers remained low. The rebound in urea prices in various regions of the country is undoubtedly attributed to reduced supply from upstream sources and increased demand from downstream users; however, the benefits associated with this are limited. Just as the prospects for urea prices seem bleak, there are growing rumors that India will conduct tenders in the near future, and these rumors are attracting increasing attention. According to official statistics, as of December 15, India’s urea sales for that month amounted to 2.4 million tons. At this rate, it is estimated that India’s total urea sales for December will exceed 4.8 million tons, representing a significant increase compared to the 4.39 million tons sold during the same period last year. As of December 12, India’s total urea inventory was 7.073 million tons, of which only 792,000 tons remained in the ports. Given the significant acceleration in the sales of urea in India, demand for it is also urgent. Although the recent announcements regarding urea tenders have not been confirmed by the local fertilizer department, merely the expectation of such tenders is sufficient to stabilize sentiment in the domestic winter storage market for now. As for compound fertilizers, this might be the last opportunity to turn things around before the Spring Festival, by taking advantage of the situation with urea. First, quotes stopped falling and stabilized. After a series of price reductions, the prices of compound fertilizers have finally stopped falling and stabilized. Indeed, at the current stage, the average price of compound fertilizers has dropped by 200 yuan per ton compared to the same period last year, but the trend has become more stable, which to some extent gives downstream manufacturers confidence in stocking up supplies. The relative stability of winter storage prices is attributed, firstly, to some support from raw material costs; the strong price of urea, coupled with phosphorus and potassium fertilizers being at near-bottom levels, has prevented further declines in the costs of compound fertilizers ； The second reason is that as winter stockpiling progresses, advance quotes and policies in many areas have become fairly clear, so price fluctuations are likely to be minimal in the short term; therefore, it is a good choice to stock up now. Secondly, demand is increasing day by day. Another major reason why the price of compound fertilizers has failed to rise for so long is the lack of improvement in demand for them. Downstream demand has not only decreased in volume on a year-on-year basis, but the market progress is also severely delayed. The recent increase in demand for downstream compound fertilizers is due, firstly, to a growing confidence in preparing fertilizers; once the main pricing levels became clear, it can be inferred that, considering factors such as raw material availability and supply-demand conditions, future price fluctuations are likely to be limited ； Secondly, the season for localized fertilizer application is approaching; in winter wheat-growing areas such as Henan and Anhui, the need to apply additional fertilizers to winter wheat will arise around the Spring Festival. By stocking up at the currently relatively low market prices, it is possible to ensure a supply of fertilizers during the sales season, while also minimizing the risks associated with preparing these fertilizers. Finally, shipping is tight before the holiday. Winter is an important period for efforts to protect the environment, as well as a critical time for fertilizer manufacturers across the country to carry out winter storage and production activities. Against the backdrop of strict prohibitions against blanket closures, such measures have indeed helped to prevent large-scale shutdowns. However, the poor air quality, accompanied by yellow and orange weather warnings, has affected the normal operations of these enterprises to varying degrees ； Additionally, it has been reported recently that weight checking of freight vehicles will be implemented at all highway entrances in regions such as Jilin Province; phenomena such as overloading have become a thing of the past. This also indicates that freight rates for road transport are set to see another wave of increases. The tight shipping schedule before holidays has further intensified the activity in the winter storage market. In summary, most of the optimism regarding a positive outlook for domestic urea prices in the future hinges on future urea tenders in India. However, it is still unclear whether such tenders will be issued; therefore, relying solely on these expectations may not be sufficient to justify an optimistic outlook. Given the prevailing negative factors affecting urea prices, it is more likely that the winter storage market for compound fertilizers will remain weak and stable until before the Spring Festival. (Feng Hongyang)