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Urea: Labeling issues resurface; volunteers \"fall for the trap\" Author/Source: China Fertilizer Network Date: 2020-06-05 Clicks: 8 Currently, the domestic urea market is stable with only slight tentative price increases. However, end-users believe that the urea market still lacks substantial positive factors to support it, and the supply-demand imbalance in the country persists. As a result, there are concerns regarding the urea market, which has seen price increases over the past half month; hence, people tend to be cautious and avoid making large-scale purchases； While domestic urea prices remain high and stable, India has issued new tender announcements; however, due to the pandemic, these may be delayed by at least a week, with delivery dates likely falling between July 15 and 30 ； It seems to provide export opportunities for domestic urea, but based on past trends around the time when quotes are issued, Chinese manufacturers tend to be cautious and are unlikely to have high expectations. Especially since exports have always been based on price reductions, it can only be said that those willing to do so will end up taking part in such deals. Recently, urea prices in China have remained generally stable, with slight increases in some areas; there were also instances of lower pricing. For example, the standard ex-factory price of urea in Hebei is around 1650–1670 yuan per ton, while in Shanxi it is around 1600–1610 yuan per ton. Fertilizer manufacturers in Linyi are purchasing urea at a price of 1700 yuan per ton ； Currently, large traders have moderate enthusiasm for purchasing and are still waiting; sales at the retail level are progressing slowly, and there is still a situation of inverted prices in some markets. Apart from the news regarding printing marks, whose impact is yet to be determined as positive or negative, supply and demand in the domestic market are the main factors affecting urea prices. Firstly, the operating capacity of urea manufacturers has not shown a significant decline, and it is on an upward trend in the long term, with an increase in production capacity as well. At present, only a few urea manufacturers have halted production or reduced their output; most of them are still operating at a relatively high level. According to statistics from China Fertilizer Network, the overall operational rate of urea manufacturers as of now is around 54.15%, with a daily production volume of approximately 152,000 tons. Some manufacturers plan to reduce their output for maintenance purposes, while others intend to resume production. Therefore, unless anything unexpected happens, there should be no significant changes in the operation of these urea manufacturers, meaning that supply levels will remain stable and there is little risk of supply shortages ； Recently, the liquid ammonia market has seen a strong rebound from its low levels, with prices remaining high and some areas still experiencing slight price increases. This is clearly beneficial for urea. However, in terms of corporate profitability, it remains more advantageous to produce urea rather than liquid ammonia. On the other hand, the methanol market is performing poorly, and some liquid ammonia producers that were shut down for maintenance are preparing to resume operations; an increase in supply in the future could pose a negative factor. As for storage considerations, companies are not likely to shift their production focus to liquid ammonia at this time, which means urea faces the risk of increased selling pressure. Secondly, the demand for urea in industry and agriculture remains moderate, and no decision has been made regarding labeling. Demand in the agricultural market is weak; there is little need for top-dressing in local markets later on. With urea prices remaining high and volatile, there is no desire to stock up in advance, and people prefer to purchase it as needed ； Additionally, the period of transition between summer and autumn is the most \"fatal\" – dealers are not very enthusiastic about stocking up on fertilizers, and the same is true for large agrochemical suppliers, who have no plans to make substantial reserves and instead wait for urea prices to drop before taking action” ； After all, the production of industrial compound fertilizer companies is nearing completion, with low levels of operation; according to statistics from Zhongfei Net, less than 50% of these companies are still in operation, and the amount of raw materials purchased is not large ； Additionally, the operating rate of current plywood factories is low, resulting in weak demand for raw material urea. Currently, the international urea market is in a weak state; the ex-ship prices for both large and small particle sizes in China have dropped by $2, to 230–235 dollars. It is possible that if there is a need to export urgently, prices will have to be reduced. Finally, ammonium chloride, a minor nitrogen fertilizer, can still provide some support for urea. Currently, the price of ammonium chloride in China remains stable with slight increases, which neither poses a negative impact on the urea market nor drives down urea prices. In summary, international urea prices such as those in India are merely one factor affecting China’s domestic urea market; moreover, since the bidding timeline has also been postponed, their supporting role is limited ； Yet, time and again, there are always those who fall for it in the printed labels as well ； It is the supply and demand situation within the domestic market that are the key factors determining the trend in urea prices. As analyzed above, there is a clear downward trend in the urea market; prices are expected to remain stable in the near term, but they may decline later in the month. (Tan Junying)