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Numerous negative factors are emerging, but there is still hope for urea. Author/Source: China Fertilizer Network Date: 2020-03-23 Clicks: 39 As the saying goes, no flower blooms forever, and no one enjoys good fortune indefinitely – this holds true under various circumstances, and urea prices are no exception. Initially, urea prices rose sharply; the price of large-grain urea delivered to the Suihua area in Heilongjiang reached 2170 yuan per ton. Yet this price turned out to be the peak value in recent times. Negative factors kept piling up: overall, crude oil prices dropped significantly, the international economic situation faced continuous setbacks, and stock indices and futures markets experienced drops due to circuit breakers, causing the market to experience fears similar to those during a pandemic； Domestic urea manufacturers are ramping up production and increasing output. Based on the current comparison between total costs and selling prices, these companies can achieve considerable profits even when operating at full capacity. According to statistics from China Fertilizer Network, the daily production volume of urea across the country is currently 160,000 tons, showing a rapid increase in supply ； On the demand side, as goods gradually arrive in the market and there is low acceptance of high prices at the grassroots level, the pace of demand growth has slowed down. Sales at high prices have been hindered, leading to a gradual decline in prices. Currently, the standard ex-factory price of urea in Shandong is 1750–1780 yuan; in Linyi, compound fertilizer manufacturers are willing to pay 1800–1810 yuan for urea. In Hebei, the standard ex-factory price of urea is 1760–1780 yuan, while in Henan it is 1750–1780 yuan. In Shanxi, the standard ex-factory price of urea is 1680 yuan, with large-grained urea costing 1800–1840 yuan. Although urea prices have been declining recently, there are still several factors that need to be taken into consideration. First, tenders are upcoming in the Indian market. International reports indicate that India is set to launch tenders in the near future. Last year, between March and April, India’s monthly urea sales volume reached over 2.2 million tons; therefore, the quantity offered in these new tenders is likely to be substantial. Although China is affected by the pandemic, the supply of urea from international sources will also decrease. Domestic industry experts hold a positive attitude toward these tenders. If the winning bid price for these tenders is around $260 per ton, then although domestic urea prices may drop, the overall decline is likely to be limited ； Looking at India’s tender history in recent years, domestic urea prices have seen some increases whenever tenders are issued there. Based on public opinion as well as India’s historical demand patterns from last year, it is likely that domestic urea prices will experience some changes as a result of these upcoming Indian tenders. Secondly, there is still demand in the domestic market. Although the demand in agricultural markets for urea in areas such as Lianghe in Shandong has now been met, there is still a demand gap in certain regions in the northeast and northwest, with the gap in the northeast being particularly large. Additionally, the operating rate of industrial compound fertilizer plants remains around 60% at present, and this rate is expected to increase further in the future. Downstream industrial users are also resuming operations as the pandemic gradually subsides. At this stage, there is still a demand gap in agricultural markets, and this demand is mostly essential; once the urea supplies reach the local markets, purchases will surely resume. In summary, it is undeniable that the overall price of urea is showing signs of decline; it is also true that traders at all levels have stock available. There is still a possibility of further price drops in the near future. However, given the ongoing demand from agriculture in certain regions, along with the upcoming tenders in India, it is expected that urea prices will remain stable in the short term.