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Urea price trends across China on April 7 Author/Source: Yuege Fertilizer Network Date: 2020-04-07 Clicks: 8 Daily report on the domestic urea price market; demand is weak, and some urea manufacturers in Shandong and other regions have reduced their prices by 10–60 yuan each. There has been no significant increase in the operating rate of the urea industry at present. Due to weak demand from the agricultural sector, the operating rates of compound fertilizer manufacturers are gradually declining. Their purchase prices for urea remain low, and there are also no positive developments in terms of exports; as a result, urea prices are likely to continue to fall. In the long term, there may be concentrated replenishment purchases in the Northeast region, especially after mid-April when compound fertilizer manufacturers will resume production of high-nitrogen fertilizers for the summer season. At that time, urea prices might stop falling. It will still be necessary to closely monitor changes in the operating rate of the urea industry. Agricultural demand in Shandong is weak, and competition for low-priced urea in the markets where it is sold is intense. The standard ex-factory prices have dropped by 20 yuan, to between 1540–1560 yuan. It is reported that environmental inspections in Hebei remain strict, industrial production there has recovered only moderately, and agricultural demand is in a dormant phase; as a result, the standard ex-factory prices have fallen by another 10 yuan, to between 1515–1550 yuan. In Henan, both industrial and agricultural conditions are poor, and the major manufacturers continue to operate at high capacity; thus, the standard ex-factory prices have dropped by 20 yuan, to around 1550 yuan. In Shanxi, new orders for urea from companies are generally mediocre, with some prices dropping by as much as 40 yuan. The standard ex-factory prices have fallen by 30–40 yuan, to between 1460–1500 yuan, with prices subject to negotiation based on individual deals. In Jiangsu and Anhui, the urea market is weak, and some prices have also declined. In Chongqing, the export of urea to the southeast is greatly affected by the low prices of urea from Shanxi, Shaanxi, and Sichuan. Additionally, local agricultural demand in Chongqing has ended, so the standard ex-factory prices have dropped by 30 yuan, to around 1630 yuan, though discounts are still available for purchases. In the Northeast, agricultural demand is delayed, and local distributors still have unsold inventory from previous periods. Large agrochemical companies are having difficulty selling their products downstream and have suspended purchases, while the situation for one major factory in Liaoning when exporting to other provinces is also mediocre. The ex-factory price of Henan Xinlianxin fertilizer is 1,590 yuan per ton; it is used in agriculture. The ex-factory price of Shandong Ruixing fertilizer is 1,606 yuan per ton; it is also used in agriculture. The ex-factory price of Anhui Linquan fertilizer is 1,610 yuan per ton, again for agricultural use. Anhui Haoyuan’s fertilizer also has an ex-factory price of 1,610 yuan per ton, intended for agricultural purposes. Hualu Hengsheng’s fertilizer costs 1,540 yuan per ton and is used in agriculture as well. Due to overall weak demand, some urea manufacturers in the two rivers areas of Shandong have lowered their prices. There are still no positive factors affecting exports, and domestic demand remains weak. Low-priced urea from regions such as Xinjiang and Inner Mongolia is putting pressure on markets across the country. Yuege Fertilizer Network believes that in the short term, the situation of supply exceeding demand in the overall urea market is unlikely to improve, and some companies’ pricing may continue to drop. In the long run, as April arrives, industrial enterprises should resume production, with compound fertilizer manufacturers likely to focus on producing fertilizers for the summer season. Coupled with certain agricultural demands, urea prices might stop falling. Going forward, it will be important to pay attention to changes in the utilization rate of the urea industry as well as specific agricultural demand patterns. Industrial demand in Shandong is fairly decent, but with the arrival of low-priced urea from other provinces, the supply exceeds demand in the market, and the standard ex-factory prices for urea have dropped by 20-30 yuan, reaching 1600-1610 yuan. In Hebei, the standard ex-factory prices have fallen by 10 yuan, coming to 1580-1600 yuan. The mainstream ex-factory prices in Henan have dropped by another 10 yuan, to 1,570–1,580 yuan. In Jiangsu and Anhui, the mainstream ex-factory prices remain stable, though a few manufacturers in Anhui have reduced their prices by 20 yuan. In Guizhou, the mainstream ex-factory prices stay at 1,910–1,930 yuan. Local urea manufacturers that had been shut down for a long time have seen their restart dates postponed further due to the weak market conditions. In Guangxi, a large volume of urea from other provinces arrives at local markets, resulting in poor sales of locally produced urea. The main factory prices have dropped by 20 yuan, to between 1900–2000 yuan, while the higher-end prices are no longer useful as a reference point. A major factory in Heilongjiang is likely to start producing ordinary urea in the near future; the current estimated factory price is 1670–1700 yuan, with settlement to take place later. As the operating rates of domestic urea manufacturers increase, the imbalance between supply and demand in the market has once again come to the fore; overall domestic demand is likely to be delayed or viewed skeptically, leaving urea prices without any positive factors supporting them at present. Coupled with the disruption caused by goods returning to ports recently, urea prices may experience a significant decline. As the saying goes, \"It’s the right time to plant melons and beans around the Qingming Festival.\" The northern part of China has just experienced a period of cooler temperatures and rainfall; it is hoped that this will lead to a surge in purchasing activity around the Qingming Festival, thereby helping to establish a bottom level for the declining prices of urea.