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Urea price trends across China on January 8 Author/Source: Business Society Date: 2020-01-08 Clicks: 3 The domestic urea market remains weak, with low transaction volumes. Downstream manufacturers and distributors are becoming increasingly pessimistic, showing little willingness to make purchases. Since the weekend, some manufacturers in Shandong, Hebei, Henan, Shanxi, Inner Mongolia and other regions have reduced their prices by 10–40 yuan. The domestic urea market remains weak, with prices continuing to fall in various regions. In many markets, there is supply despite high prices, and the low production levels resulting from factors such as gas restrictions and environmental regulations are not sufficient to support the urea market. Affected by the heavy snow, shipments from factories in North China, Central China, and Northwest China have been hindered, leading to low levels of inventory in the market; as a result, spot prices have risen slightly. This week, factory prices in Shanxi and Inner Mongolia have increased by 10–30 yuan per ton compared to last week. There is a certain amount of inventory ready for shipment at these factories, so there is no pressure on sales; however, there is still some demand for orders ahead of the holiday. Large-scale compound fertilizer factories in Hebei, Henan, and Shandong provinces are operating at a stable pace; the operation rate of rubber sheet factories has declined, factory prices remain firm, and sales are satisfactory. Sales at factories in the south are performing well, with prices rising slightly; however, a large amount of goods in transit is accumulating due to shipping issues, posing a risk of a surge in deliveries in the future. Overall, prices are likely to remain strong in the short term. In the Shandong region, the mainstream ex-factory price for small and medium-sized urea particles is 1,890–1,920 yuan per ton. The purchase price in the Linyi market is around 1,920 yuan per ton, while in the Heze market it is also approximately 1,920 yuan per ton. Since the weekend, some companies have reduced their prices by 10–30 yuan. In the Hebei region, the transaction price for small-sized urea particles is around 1,870–1,880 yuan per ton, while large-sized urea particles cost about 2,060 yuan per ton. Since the weekend, some manufacturers have lowered their prices by 20–40 yuan. In the Henan region, the mainstream ex-factory price for small-sized urea particles is 1,900–1,940 yuan per ton, with some manufacturers reducing their prices by 20 yuan. In the Anhui region, the mainstream ex-factory price for small-sized urea particles is around 1,930–1,980 yuan per ton, with prices remaining stable for now. In the Jiangsu region, the mainstream prices for small and medium-sized urea particles are around 1,960–2,000 yuan per ton, also stable for now. In the Shanxi region, the transaction prices for both small and large-sized urea particles via road transport are around 1,750–1,830 yuan per ton, with prices declining. In the Inner Mongolia region, the mainstream ex-factory prices for small and medium-sized urea particles are 1,680–1,720 yuan per ton, while those for large-sized urea particles are 1,850–1,920 yuan per ton; prices have dropped by about 20 yuan per ton. In the Hubei region, the mainstream transaction price for small-sized urea particles is around 1,950–1,960 yuan per ton, with prices remaining stable. In the Shaanxi region, the ex-factory price for local sales is around 1,860 yuan per ton, while the price for shipments to other areas is around 1,790 yuan per ton; prices are declining as negotiations take place. In the Guangxi region, the mainstream wholesale prices for both small and large-sized urea particles are 2,030 yuan per ton, with prices dropping by about 10 yuan per ton. In the Sichuan region, the mainstream ex-factory prices for small and medium-sized urea particles are 2,000–2,150 yuan per ton, with prices remaining stable. In the Guangdong region, the mainstream station prices for small-sized urea particles are around 2,020–2,030 yuan per ton, also stable. In the Xinjiang region, the ex-factory transaction prices are around 1,600–1,650 yuan per ton, with prices remaining stable. In the Jilin region, the ex-factory price for urea is around 2,100 yuan per ton, with prices remaining stable. In the Heilongjiang region, the price for urea imported from other regions is around 2,000–2,070 yuan per ton, also stable. In the Liaoning region, the ex-factory price for small-sized urea particles via road transport is 1,990–2,030 yuan per ton, with prices remaining stable. In terms of supply, the current operating rate of the urea industry in China is around 49%. Although it remains at a low level, according to information released by the Nitrogen Industry Association, gas supply for fertilizer production is expected to start recovering again in late January, and the operating rate of the urea industry may increase in mid-to-late January. On the demand side, the demand for industrial urea in the domestic market has not shown any significant improvement due to factors such as environmental regulations. As the Spring Festival approaches, it is expected that the operating rates of downstream industrial manufacturers will decline further. Most plywood factories will shut down for holidays around the Spring Festival, meaning that demand in the industrial urea market will remain weak. The domestic agricultural market is still in the off-season for fertilizer use, and distributors are primarily purchasing fertilizers for future use. Due to the currently high prices of urea and the pessimistic outlook for the urea market, distributors have little enthusiasm for stocking up on fertilizers. Overall, although domestic urea manufacturers maintain low production levels, demand for urea shows no sign of improvement; it is expected that the domestic urea market will remain weak in the short term. In Shandong, prices dropped by 10–20 yuan per ton in some areas; in Anhui, prices remained stable at a level of 10 yuan per ton. In Hebei, prices rose slightly by 10–20 yuan per ton, while in Inner Mongolia, prices increased by 10–20 yuan per ton in certain areas. In Shanxi, prices rose by 20 yuan per ton in some regions. At present, downstream enterprises such as plywood manufacturers are not operating at full capacity in China. Fertilizer manufacturers are stockpiling goods in moderation, and there is occasional purchasing by farmers for their needs. The overall demand for urea is limited. Additionally, rain and snow in various areas have affected market transportation, restricting the ability of companies to ship goods by road. As a result, market activity remains sluggish, although there are many orders that have been placed in advance. With the possibility of increased fertilizer procurement ahead of the Spring Festival, companies are inclined to maintain high prices. Thus, the domestic urea market continues to be stuck in a stalemate, with slight adjustments likely to occur in some areas in the near future. In the coming period, attention should be paid to environmental protection warnings, weather conditions such as rain and snow that affect market transportation, as well as the stock-piling activities of downstream compound fertilizer manufacturers and the progress of agricultural inventory building. (Compiled by Yuege Agricultural Inputs Network)