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Fluctuations in urea prices: variations in temperature and prices across different regions Author/Source: China Fertilizer Network Date: May 25, 2020 Clicks: 2 Since last Sunday, the urea market has shown signs of weakness. Although prices in some areas have not dropped yet, the overall volume of transactions has decreased. While many factories plan to reduce prices, a few urea manufacturers in Shandong have seen their prices rise again due to pre-orders for tens of thousands of tons of urea. Currently, the average ex-factory price of urea in Shandong is 1610–1620 yuan per ton. In Linyi, compound fertilizer manufacturers are purchasing urea at 1660 yuan per ton. In Hebei, the average ex-factory price is 1620–1650 yuan per ton, while in Henan it is 1610–1630 yuan per ton. Even in some large factories in the Northeast, prices have risen slightly. Although prices have increased again in the northern market, the southern market is performing relatively poorly; in some areas of Jiangsu, sales prices are even lower than the cost price. Prices in Yunnan have also dropped significantly. The main reasons for these differences between the northern and southern markets are as follows: Firstly, there is an increase in demand for fertilizers in the north. Recently, top-dressing operations have begun in regions such as the Northeast. Following the decline in urea prices previously, some large traders believe that it is now the right time to buy at lower prices, resulting in an increase in purchasing volume and enthusiasm. Additionally, some factories in Inner Mongolia have entered maintenance periods. Taking all these positive factors into account, the inventory levels of urea producers in the Northeast and other similar areas remain relatively low, meaning that these companies face relatively little sales pressure. It is therefore not difficult for them to raise prices slightly without encountering excessive pressure. Secondly, supporting the sales of agents. Due to the prolonged period of cold weather that urea experienced earlier on, some distributors suffered losses. Although traders have been purchasing goods at lower prices in an attempt to take advantage of the situation, without support from factory prices, these distributors will face increased sales pressures. Moreover, with an ample supply from factories at present, raising prices slightly can not only help sustain sales activities and recover some losses, but also reduce the sales pressure on factories, even if new orders are difficult to place at those higher prices. The demand in the southern market is performing relatively poorly; industrial market demand is limited to occasional purchases, and there is still a long time before the next fertilizer application period. Some contract holders, under pressure from their inventory levels, have begun to sell off their stock in the market, which will certainly have an impact on both the volume of transactions and prices. Although prices in the northern markets have rebounded and there is no pressure on sales at present, it is expected that this increase will not last long and the magnitude of the increase will be limited. The main reason for this is the short-term nature of market demand; there is only a moderate demand for fertilizers in the agricultural sector. In Liaoning and some areas of Jilin, the demand for fertilizers has changed, with less demand in the area of top-dressing, and this demand also lasts for a relatively short period of time ； On the other hand, there is the well-known issue of an excessive supply of urea: as we move into the second half of 2020, some companies will resume production, resulting in high overall supply pressure, while actual market demand remains relatively limited. In summary, if urea has not been purchased earlier and there is a demand in downstream markets in the near future, appropriate purchases can be made. However, looking at the long-term outlook for the urea market, caution should still be exercised when making such purchases.