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Urea: Prices are said to still need to drop. Author/Source: China Fertilizer Network. Date: 2020-07-03. Clicks: 6. In recent days, the prices of urea have seen a slight increase in a few companies in regions such as Hebei, Henan, and Shandong; some manufacturers even believe that urea prices may rise further or remain stable； However, as observed in the current market, urea prices are falling in many local markets. In particular, some large traders say that agricultural demand is weak, and there is little industrial demand to provide support; meanwhile, high inventory levels are contributing to the continuous decline in prices. Industry insiders are well aware of the imbalance between supply and demand in the urea market, and they hold a bearish outlook on its future trend, predicting that urea prices will fall. Currently, the price of urea is quite chaotic, with a situation where goods are available at certain prices but not available in the market. In the Linyi area of Shandong, the purchase price of urea for compound fertilizer manufacturers has risen to 1640–1660 yuan per ton, and transactions remain slow; in Shanxi, urea prices have dropped slightly after rising. Currently, the standard export price for small-grained urea is around 1530 yuan per ton. The urea market in Inner Mongolia is in a particularly poor condition, with the standard export price dropping to around 1380–1420 yuan per ton. In Guizhou, the delivery price of urea is around 1700–1800 yuan per ton. In some provinces in Sichuan and Chongqing, the delivery price of urea from outside the region is generally around 1600 yuan per ton. To determine future fluctuations in urea prices, it still depends on adjustments in supply and demand. Firstly, there has been little change in the operating levels of urea manufacturers, which remain at a low level, but there is a trend toward improvement. At present, a small number of urea production plants in Shandong, Shanxi, and Anhui provinces are shut down for maintenance; in some individual cases, the operating capacity of these plants is not at full level. According to statistics from China Fertilizer Network, the overall operational rate of urea production plants in China is 51.29%, with a daily production volume of 144,000 tons. In fact, there has been little change in these figures since June. However, once the plants that are under maintenance and those with low operating capacity resume operations, the supply of urea will increase ； Additionally, around the middle of the month, a large urea production facility in Shandong that is undergoing technical upgrades is set to resume operations. If nothing goes wrong, the newly built urea plants in Hubei and Jiangxi should also begin producing products in the second half of the year. As a result, both the capacity and output of urea production will increase, leading to an even more severe surplus of urea in the market. Secondly, demand has cooled down, leading to a slowdown in the sales of urea. Currently, the overall demand in the agricultural sector is low during this off-season period; local top-dressing operations have also been completed, and there are only a few occasional orders left. In the market, wholesale goods often remain unsold despite having prices set, prompting distributors to adopt a wait-and-see attitude ； Some large agrochemical suppliers are waiting for policies related to stockpiling during low-demand periods. Meanwhile, the market has ample supplies, and much of it consists of goods purchased at high prices earlier on; as a result, sales are slow. Currently, there is little enthusiasm for placing new orders, with suppliers preferring to purchase goods as needed ； In the industrial sector, production at compound fertilizer manufacturers has seen a slight recovery, but it has not yet reached 50% of normal levels. There may be further increases in some areas in the future, but the extent of such increases is unlikely to be significant ； However, the power plant may still have some expectations regarding the demand for urea ； The market for plywood factories is weak, with low production levels among enterprises, resulting in limited purchases of urea. Re-exporting does not provide much support to the domestic market. “\"Speculating on every tender\" is no longer a new topic; this time, driven by rumors of tenders in India, the strong price of urea or localized price increases will not last long. Some traders or factories will likely have to lower their prices if they want to obtain export orders. During this period, it is also necessary to keep an eye on changes in urea prices in regions such as Inner Mongolia and Shanxi. In the end, the price of ammonium chloride, a minor nitrogen fertilizer, remained strong and was quite decent; it served as a source of support for urea ； The liquid ammonia market remains stable at high levels; in terms of prices, most companies will not shift their production focus to urea for the time being. In summary, the use of urea in agriculture is gradually declining; although there is support from industrial demand in the future, this demand is limited after all. Moreover, low prices in certain regions such as Shanxi, Inner Mongolia, and Xinjiang have a significant impact on the market ； It is expected that the urea market will weaken in the short term; the trend predicted by market participants is not unfounded, as there is room for its price to decline gradually. (Tan Junying)