Thread Content
More positive factors for urea; its upward trend may continue. Author/Source: China Fertilizer Network Date: 2020-06-08 Clicks: 5 Over the past half month, urea has managed to rise in price despite numerous doubts from within the industry. Entering June, it was thought that the interest in urea would decline, but recently its price has continued to climb. Currently, the standard ex-factory price of urea in Shandong is 1,650 yuan per ton; compound fertilizer manufacturers in Linyi are paying 1,700 yuan per ton for urea. In Hebei, the standard ex-factory price ranges from 1,650 to 1,670 yuan per ton, while in Henan it’s between 1,640 and 1,660 yuan per ton. In Shanxi, which is considered a region with relatively lower prices, the ex-factory price for small-grained urea transported by road has also risen to 1,610 yuan per ton. Based on the orders that various companies had pending prior to now, it seems that most of these orders have been fulfilled. However, according to data from China Fertilizer Network, the daily production volume of urea has decreased significantly, currently standing at 154,000 tons per day. There are two main factors contributing to this situation: first, limitations related to environmental conditions and equipment. As summer approaches, temperatures are rising in various regions, which gradually increases the operational pressure on the facilities. It is reported that the load on urea production facilities in some areas has already decreased ； Secondly, it coincides with the annual maintenance periods for some large manufacturers. Based on historical data from this year, even during the most severe phases of the pandemic, the overall production volume of urea remained above 140,000 tons. As plants operated at high capacity for extended periods, equipment failures increased gradually. Although some factories began their maintenance work earlier, due to the high operating loads during summer, and considering the fact that such loads are already high, some companies have scheduled their annual maintenance for this month as well. Secondly, the arrival of Safety Production Month. June is Safety Production Month; some companies reduce their production levels slightly in order to avoid any failures during this month, keeping production below the level required for safe operation, which results in a slight decline in their operational capacity. Recently, there remains demand for urea in the agricultural market. Although there is still sales pressure in some areas of the southwest, it is only at the higher price levels that a decline has occurred. In Xinjiang, where prices are relatively low in China, market demand is gradually returning to normal, and the inventory pressure on companies has been significantly reduced. It is expected that demand will continue until early July, with prices also rising compared to before. Along with this increase in demand, the amount of goods shipped outside these regions has decreased, resulting in a reduction in the supply of low-priced products from the northwest and southwest. Although market demand is limited at present, it is still a period of peak demand, and the price increases seen earlier are now being confirmed. In summary, there is still demand for urea in the current market, and the supply pressure has eased somewhat. Some companies have sufficient orders pending fulfillment, while other factories still have maintenance plans scheduled. Overall prices remain relatively stable. The industry expects that this demand will continue at least until mid-month, and it is likely that urea prices will continue to rise in the near future. (Wu Wenchao)