I heard urea prices have gone up?

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I heard urea prices have gone up? Author/Source: China Fertilizer Network Date: 2020-05-18 Clicks: 8 Starting this Wednesday, some large urea manufacturers in Shandong have begun to talk about price increases. Although there has been no significant increase in demand in various regions, and thus there is little support for such price rises, over time the prices of urea have started to increase in many places. Currently, the average ex-factory price of urea in Shandong is 1590–1600 yuan per ton. In Linyi, compound fertilizer manufacturers are offering a purchase price of 1640–1660 yuan per ton for urea. In Hebei, the average ex-factory price of urea is 1600–1650 yuan per ton, while in Henan it is 1600–1610 yuan per ton. Prices of urea in Jiangsu and Anhui provinces have also increased to some extent. Even the market situation in the Northeast region has improved; the inventory buildup that some companies had previously faced has now led to a reduction in supply pressure. Some time ago, most in the industry were pessimistic; the daily production of urea remained above 160,000 tons, and even some large traders were selling at a loss. The market was overwhelmingly negative. Yet now the situation has changed, with some factories starting to suspend orders. The main reasons for this sudden shift in the attitude toward urea are as follows: First, **with an upcoming event, there have been some changes in market sentiment.** Affected by the pandemic this year, the meeting that was supposed to take place in March has been **postponed to late May. As is usual, most fertilizer manufacturers in the country will be required to operate safely during that period, and coal supply will decrease. Taking these two factors into account, the overall cost of urea may rise; furthermore, transportation restrictions may also apply, which has led some urea manufacturers to raise their prices accordingly. 　　Secondly, large traders believe the time to buy at rock bottom has arrived. Based on past fertilization practices, there is still a certain demand for urea as a top-dressing fertilizer in some areas. In recent years, the supply chain for chemical fertilizers has become increasingly short, and traders are reluctant to purchase goods hastily. Nevertheless, there is still demand in the market. To avoid risks, large traders are compressing the time between procurement and the actual time when the fertilizer will be used; waiting until after ** before making purchases may not be sufficient, which is why purchases are made at higher prices. 　　Although urea prices have started to rise recently, and the selling prices of some urea manufacturers have also increased, considering the overall supply and demand situation in the market, it is likely that this increase in urea prices will not last for long, nor will the increase be significant. The main reasons for this are as follows: First, there is no expectation of a significant reduction in production in the short term. After work resumed in various regions, the operating rates of urea manufacturers remained high for an extended period. In the second half of this year, some companies that had been shut down for long periods will resume production. As for most companies, there is no indication so far that they plan to suspend operations for an extended time in order to meet their production targets for this year. In other words, there was already significant supply pressure on urea manufacturers in the first half of 2020, and this pressure will be even greater in the second half; therefore, the industry generally expects a downward trend in the future. 　　Second, the actual market demand has not been high recently. Although summer is a peak season for the nitrogen fertilizer market, due to excessive production, urea has been available in large quantities for compound fertilizers at least one month earlier. The actual demand in the top-dressing market is relatively low; once summer arrives, the potential demand for urea will be limited, while supply will continue to increase, which is not favorable for urea prices. 　　In summary, urea prices have seen a certain increase recently, but it is expected that this rise will not be significant. Moreover, supply and transportation will return to normal levels afterward, and prices are likely to continue to fall.