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Date of purchase of compound fertilizers: the time when urea prices rose. Author/Source: China Fertilizer Network. Date: 2020-07-02. Clicks: 6. After the Dragon Boat Festival, some urea manufacturers in Shandong and other regions raised their prices slightly. Currently, the standard ex-factory price of urea in Shandong is 1560–1590 yuan per ton (the same unit applies elsewhere). Compound fertilizer manufacturers in Linyi are purchasing urea at a price of 1620–1640 yuan per ton, while in Hebei, the standard ex-factory price of urea is 1570–1630 yuan per ton； In the Henan region, the prevailing ex-factory prices for urea are 1,600–1,630 yuan. In Shanxi, Shaanxi, and other areas, some factories have seen a slight increase in their outbound selling prices. Overall, order backlogs remain at a reasonable level. As the market enters the late summer and early autumn period, the recent price hikes for urea have come as a surprise to industry insiders. However, upon closer examination, it seems unlikely that these price increases will be sustainable. It is expected that they won’t last until the phase when there is a surge in demand for compound fertilizers. The main reasons for this are as follows: First, why aren’t these price increases expected to last long? On the one hand, most of the new orders received by the factories are for goods at low prices; at present, the factories do not face any sales pressure and can thus sell at higher prices. However, as more goods at low prices arrive, not only will demand from downstream markets decrease, but these low-priced goods will also put downward pressure on the factory’s own pricing ； On the other hand, market demand has been weak in the later period. At the end of summer and the beginning of autumn, the use of high-nitrogen fertilizers is coming to an end, while demand for high-phosphorus fertilizers in autumn has not yet started. Due to the impact of the pandemic, export activities of industrial sheet manufacturers have been hindered, resulting in demand that is lower compared to the same period in previous years. Demand from power plants remains moderate, and there is little possibility of sustained demand in the short term; therefore, this price increase will not last long. Secondly, the export market performance was mediocre. In this tender in India, although the overall volume of bids was high, the lowest winning bid price of 237 dollars on the east coast has dampened the enthusiasm of many urea manufacturers to export. Apart from those located near the ports, most urea manufacturers experience losses when exporting, and it is understood that the amount of urea exported from China is relatively small; thus, supply pressures will remain in the short term. Finally, the operating rate of urea production in the later period will see a significant increase. According to data monitored by China Fertilizer Network, the daily production volume of urea across the country has recently approached 150,000 tons. After July arrives, most enterprises will gradually resume production. Although high temperatures during the summer may force some urea producers to reduce output, based on the current production levels, the daily supply of urea can still be maintained at over 160,000 tons. Taking all of the above into account, the slight increase in urea prices at present is merely a minor market fluctuation. Current market demand is relatively modest, and potential supply pressures remain high. It is expected that urea prices will generally trend downward in the near future. However, it is understood that compound fertilizer manufacturers are still waiting to purchase urea at lower prices; in other words, the moment these companies start buying urea is when its prices will actually rise. It is likely that urea prices will continue to drop slightly in the near term. (Wu Wenchao)