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Slowing Down in Urea Prices: Companies Explore Stabilization Author/Source: China Fertilizer Network Date: April 7, 2020 Clicks: 7 Although overall urea prices remain weak at present, and in some regions the main factory prices have dropped by more than 100 yuan per ton this week, there are signs of stability in the prices of urea offered by certain companies in Shandong, the Two Rivers region, and other areas. Currently, the main factory price for urea in Shandong is 1,680–1,690 yuan per ton, while compound fertilizer manufacturers in Linyi offer urea at 1,710–1,720 yuan per ton. In Hebei, the main factory price for urea is 1,720 yuan per ton, in Henan it is 1,670–1,690 yuan per ton, and in Shanxi it is 1,610 yuan per ton, with large-grained urea costing 1,650 yuan per ton. Demand from the agricultural sector remains relatively weak, and some companies are seeing an increase in their inventory levels. The market remains in a weak state. The current stabilization in urea prices is mainly due to the following factors: First, there is still a demand gap for high-nitrogen fertilizers during the summer season. Recently, business owners have expressed demands for replenishments needed for industrial use as well as for the production of compound fertilizers. There has been no significant increase in demand in the industrial sector; however, as various industries resume operations gradually, demand for urea is expected to rise. In terms of the compound fertilizer market, the spring fertilizers have been mostly distributed, with only a few orders remaining to be shipped. Some factories have already started producing high-nitrogen fertilizers for the summer season. But given that overall market demand remains moderate, most companies in the compound fertilizer industry plan to begin purchasing raw materials after the Qingming Festival. Potential demand in the future is considered decent, and some factories are currently trying to gauge market reactions by maintaining stable purchasing levels. Secondly, the bidding situation in India is gradually becoming clearer. The tender for this occasion has already revealed the number of bids as well as the prices. According to current international reports, the amount of urea originating from China could amount to 5–6 ships’ worth, with the lowest bid price being slightly below $245 per unit. Although this price is still somewhat different from the current domestic prices, it does not constitute a bottom price level. However, due to the severe international pandemic situation and in order to avoid risks, it is expected that once domestic-supplied urea wins the bid, the time it stays in the domestic market before being exported will be greatly reduced. As a result, there may be a short-term shortage of urea supplies in the domestic market, which could lead to an increase in prices. Finally, factory production has decreased. Although some companies have resumed production in recent times, due to issues such as sluggish sales, the production rates of certain large manufacturers have declined; their daily output has dropped from 167,000 tons earlier on to 162,000 tons at present. Although the overall reduction is not significant, urea producers in regions such as Anhui also plan to cut production in the near future, which helps to ease the situation of over-supply in the market. While the situation has not yet been reversed, conditions have improved compared to before. At present, the areas in agriculture where there is still demand are limited to regions such as Heilongjiang and Xinjiang. Due to a later start date compared to other areas, the volume of new orders there, as well as willingness to accept higher prices, is relatively low. Nevertheless, there has been some sales activity recently. The urea market remains stable at present, with companies initially testing the reactions of the downstream market. While stability may continue in the future, it is still a bit early to talk about a rebound in urea prices. (Wu Wenchao)