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Final confirmation of printing marks: Could urea prices rise? Author/Source: China Fertilizer Network Date: 2019-12-23 Clicks: 95 On the evening of December 20, news came in from the international market: India’s MMTC issued a tender for the import of urea in an unspecified quantity, with the latest shipping date set for January 28, 2020 (Chinese New Year on January 25, 2020), and the bidding process would begin on December 27. According to official statistics, as of December 15, India has sold 2.4 million tons of urea this month. At this rate, the total urea sales in India for December are expected to exceed 4.8 million tons, representing a significant increase compared to 4.39 million tons 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 urea sales process in India and the urgent nature of its demand, the Indian tender was finally finalized. This brought some relief to industry insiders. However, it also gave rise to another topic of discussion: Can India, which has been eagerly awaited, stimulate the domestic market towards the end of the year? There were various opinions at the time, but in the author’s view, the current printing and labeling market cannot drive up prices in the domestic market, for the following main reasons: First of all, the domestic prices are higher than those in the local market. Based on the prices in previous Indian tenders, export prices are generally lower than those in the domestic market. Industry experts estimate that the ex-ship price for this tender will be around $245–250 per ton; converted to the price at the factories in Shandong, this is less than 1,600 yuan per ton, while the price at factories in Inner Mongolia is around 1,460 yuan per ton. Even though sales in the domestic market have been sluggish recently, achieving such prices still requires significant concessions. Some industry insiders suggest that it would be better to make substantial concessions to meet international market demands rather than to the domestic market. Secondly, there are doubts regarding the quantity called for in this tender. In recent years, it has become common for some large-scale fertilizer producers to rely on exports in order to alleviate domestic supply pressures; however, this depends on the volume of exports. Rumors suggest that there may be certain issues with agricultural financing in India at present. Although higher bid prices are being set through forward payments, there are doubts within the industry regarding the actual volume of transactions that will take place. Additionally, considering the goods that pass through China, there is a pessimistic outlook as to the actual amount that China will be able to win in these bids. With low prices and potentially insufficient volumes, these Indian bids might turn out to be of little use. Finally, the pressure of oversupply in the domestic market remains. Statistics show that the current daily actual production of urea nationwide is 123,700 tons. Although this figure represents a relatively low level for this year, it remains higher compared to the same period last year. Moreover, gas-based urea producers in Inner Mongolia, Sichuan, and other regions plan to resume operations in January 2020; even coal-based producers in Shanxi also intend to increase output during that month. As a result, domestic supply pressure is expected to intensify further. At present, the market already suffers from an oversupply situation, which is likely to worsen in the future. In summary, although this pricing announcement does not exert much actual driving force on the domestic market, it is expected that urea manufacturers will use it as an opportunity to create hype and raise their prices; however, the actual transaction prices will not increase, and there is even a possibility of a decline. (Wu Wenchao)