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The downward trend in urea prices begins – Author/Source: China Fertilizer Network, Date: 2020-06-22, Clicks: 49. Recently, the overall production rate of urea has been declining slightly. According to monitoring by China Fertilizer Network, the daily production volume of urea dropped below 150,000 tons this week. However, there are signs of a decline in prices as well. Currently, the mainstream ex-factory price of urea in Shandong is between 1,610 and 1,640 yuan per ton. In Linyi, compound fertilizer manufacturers are purchasing urea at prices ranging from 1,640 to 1,660 yuan per ton. In Hebei, the mainstream ex-factory price of urea is between 1,620 and 1,660 yuan per ton. The market indicates that prices at the lower end are around 1,600 yuan per ton or less. In Henan, the mainstream ex-factory price of urea is between 1,610 and 1,650 yuan per ton, with prices at the lower end being around 1,580 yuan or slightly less. Even in the Northeast and Northwest regions, where prices rose last week, there is now a slight decline. It is reported that the ex-factory price of urea at the lower end in Heilongjiang has dropped to around 1,610 yuan per ton. The main factors contributing to this decline in urea prices are as follows: First, there is a short-term reduction in supply, but an overall surplus still exists in the long term. Recently, due to factors such as high temperatures and the fact that some companies plan to carry out annual maintenance, the production of urea has been somewhat restricted. However, in the long term, the period of extensive maintenance is unlikely to last very long. Some facilities that had been shut down for a long time will resume operation by the end of this month, and with the addition of new production capacity, there will be significant supply pressure for urea in the future. Some industry experts say that, unless there are any special external factors, the daily production of urea this year is likely to remain above 140,000 tons, resulting in high supply pressure. Meanwhile, there has been no significant change in costs. Based on the current average costs associated with urea production, urea manufacturers still enjoy a certain margin of profit, but prices are expected to remain low. Secondly, market demand has temporarily ceased, and demand is not expected to be high in the future. Affected by the cold air this year, the timing of fertilizer application in the Northeast and Northwest regions has been slightly delayed, which has also led to a slight postponement in the timing of top-dressing. Under these circumstances, there is still a certain level of demand in the markets of the Northeast and Northwest. However, the overall situation for chemical fertilizers this spring has changed dramatically; the downstream markets are adopting a relatively cautious attitude, opting for sales at lower prices and showing less enthusiasm for purchases. Additionally, some large traders have sold their stocks this week, so the market is hesitant to purchase large quantities of fertilizers for now. In the future, only occasional demands will remain. In the autumn, high-phosphorus fertilizers will be in greater demand, while the demand for urea will be relatively low. This is one of the main reasons why some large traders are reluctant to make purchases hastily. The downstream markets are waiting to see what happens, while supply reductions are not significant, resulting in a slight decline in urea prices. Finally, the Indian variable remains unresolved, and the international market situation is uncertain. On June 19, the Indian market announced the total volume of bids, which was 2.094 million tons; however, the proportion of goods originating from China was relatively low. The industry showed little interest in this bidding process in India, and it is likely that prices will also be kept low. In summary, overall demand in the domestic market is currently at a moderate level. Downstream compound fertilizer manufacturers are mostly finishing up the production of summer fertilizers, while purchasing activity in the autumn market will not start for some time yet. The industrial market is performing moderately, and some urea factories are facing considerable inventory pressures. Some companies have also begun to engage in joint procurement and marketing with downstream clients. It is expected that urea prices will continue to decline in the near future, with this downward trend likely to intensify after early July. (Wu Wenchao)