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Urea prices see a slight rise; sustained growth unlikely _ Author/Source: China Fertilizer Network Date: July 27, 2020 Clicks: 102. After July 20, demand for urea in various regions temporarily ceased, and there were more negative factors affecting the market. However, thanks to the increase in urea futures prices and India’s renewed bidding efforts, urea prices stopped falling and started to rise. Currently, the standard ex-factory price of urea in Shandong is between 1,560–1,610 yuan per ton. In Linyi, compound fertilizer manufacturers pay 1,630–1,650 yuan per ton for urea. In Hebei, the standard ex-factory price is 1,600–1,640 yuan per ton, while in Henan it is 1,580–1,610 yuan per ton. In Shanxi, the standard ex-factory price is 1,500 yuan per ton, with larger granules costing 1,520 yuan per ton. The sudden change in market trends has left some downstream distributors confused. Some urea producers have also raised their prices cautiously. Although some downstream markets accept this price increase, many do not believe it will be sustainable. The main reasons for this are as follows: First, the positive factors affecting the market are expected to last only for a short period of time. Whether it’s the recent urea futures or the upcoming bidding process for urea in India (it is reported that the CIF price for the new Indian bids on the east coast could be 250 dollars ； The FOB price of large-grain urea in Indonesia may rise from $233–236 to $241.05; the former is highly speculative, and it’s not yet clear when speculative capital will leave the market. While the latter can help reduce the supply pressure associated with domestic urea, on the one hand, demand alone is not sufficient to determine the future price trend of urea. On the other hand, this effect will only last until the end of this month, and the next time of procurement has not been determined yet. At present, agricultural demand in the domestic market has largely been met, and in the industrial compound fertilizer sector, phosphate fertilizers are those that require the most raw materials in the future, while urea accounts for a relatively smaller proportion. Taking all these factors into account, the supply pressure on urea is currently low in the short term, but the positive effects will not last very long. Secondly, supply pressure will increase in the later stage. According to China Fertilizer Network, the current daily production volume of urea across the country is over 160,000 tons. Although this figure remains roughly the same as that of the same period last year, and with some urea production plants currently undergoing maintenance, it is believed that the duration of these maintenance periods will not be long. Additionally, there will be an increase in urea production capacity as more plants resume operations and new production facilities come online this year. So far, factors such as environmental inspections have not had a significant impact; if urea production returns to normal levels in the future, the overall production volume could exceed 170,000 tons. This year, the export situation is worse than in previous years. In the long term, the supply-demand imbalance for urea will continue, which may lead to a decline in prices. In summary, due to various unexpected factors in recent times, the price of urea has seen a slight increase. Meanwhile, the demand from compound fertilizer manufacturers in the autumn is also on the rise. However, given that the positive effects are limited, the autumn demand for compound fertilizers means that the demand for urea is relatively short-term. In the long run, there will be a relatively large supply of urea in the market, so its price may remain stable at high levels in the short term, or even see further increases. But on a longer scale, there are still signs of a decline in urea prices. (Wu Wenchao)