Urea price trends across China on May 29

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Urea price trends across China on May 29 Author/Source: Agri-Market Report Date: 2020-05-29 Clicks: 7 As late May arrived, the demand for chemical fertilizers entered a slow season. Urea prices across the country remain strong, with some factories seeing slight increases in prices; manufacturers in Henan and Anhui have raised their quotes by 10 yuan per ton, while other regions are waiting to see how things develop. Some agricultural supplies are stocked in advance, while industrial supplies are replenished as needed. In the Shandong market, the prevailing price for small-grained urea is 1630–1680 yuan per ton; in the Hebei market it is 1600–1620 yuan per ton, while in the Henan market it is 1650–1660 yuan per ton. Overall, prices remain stable. Urea prices remain strong, with increases of 10 yuan per ton in some areas. Demand for urea is gradually declining. As a raw material for the production of compound fertilizers, the restart of compound fertilizer production was delayed by half a month to a month this year due to the pandemic; however, the production of high-nitrogen fertilizers started slightly earlier than in previous years. The production cycle for high-nitrogen fertilizers generally falls between March and May, and they are primarily used as base fertilizer for rice and corn. Although other types of fertilizers are also produced using various formulas, high-nitrogen fertilizers remain the most common. Yu Lijuan, an urea analyst at Longzhong Information, analyzed that the overall operational rate of the compound fertilizer industry is currently significantly higher than in the previous two years, and this trend is set to continue in the short term. In late May, the production of high-nitrogen fertilizers gradually came to an end; compound fertilizer manufacturers in Shandong, Hebei and other regions stopped production or shifted to manufacturing high-phosphorus fertilizers, as a result of which the demand for urea decreased steadily. Affected by the pandemic, the operating rate of panel manufacturers began to recover in mid-March this year, but weak sales have resulted in limited demand for urea. Internationally, India is the main export destination for China’s urea, and the domestic market pays close attention to India’s urea tenders. However, affected by the public health crisis, the international market for urea and related products has suffered a severe impact; international urea prices have continued to fall, which does not provide any positive support for domestic trade. Export volumes from January to March this year were lower compared to last year. It seems that the demand for urea in agriculture remains relatively stable at present ； The demand for compound fertilizers remains relatively stable, with little fluctuation ； In terms of sheet materials, affected by the real estate industry, consumption of such materials is set to decrease by 1 million tons ； Demand for urea used in environmental protection is declining. The market trend is becoming more rational. In the first quarter, due to the pandemic, the price of urea evolved in a way that exceeded expectations. Based on domestic supply and demand conditions, it was expected that the price would rise by around 100 yuan per ton after the Spring Festival; however, because of the pandemic, the increase was around 200 yuan per ton, with larger-grained urea seeing an increase of around 300 yuan per ton. As various industries gradually recovered in the later period, the trend of urea prices became more rational, and daily production reached its peak ahead of schedule. Yu Lijuan believes that as the spring fertilization market comes into operation, the surplus of supply and demand has led to a gradual decline in prices. It was not until labeling began that prices stabilized, providing a reference point for the domestic market; prices then rebounded at the lower end. Coupled with short-term maintenance work by companies, there was a slight upward trend in prices. Looking at the supply side first, it is increasing; estimates suggest that production in the first half of the year could reach up to 700,000–800,000 tons, so the supply level is relatively sufficient ； In terms of demand, although there may be an increase in the agricultural sector, industrial demand has declined significantly; the overall estimated decline in demand is 500,000 tons ； In terms of exports, the volume from January to June last year was around 1.77 million tons. The export volume from January to April this year was about 900,000 tons, and it is estimated that the export volume for May and June will be around 600,000 tons. Therefore, the total export volume for the first half of this year is expected to be 1.5 million tons, which is nearly 300,000 tons less than the same period last year. It is estimated that in 2020, supply will increase by 700,000–800,000 tons, while demand is expected to decline by around 500,000 tons. Exports are likely to drop by about 300,000 tons. There will be a surplus of around 1.5 million tons in the first half of the year. In summary, due to the ample supply, the supply-demand balance is favorable, making it difficult for prices to rise significantly. Overall, it is expected that market prices will remain stable in the short term.