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Urea prices rise further; market struggles in the post-autumn period. Author/Source: China Fertilizer Network Date: 2020-08-05 Clicks: 9 August always brings a string of surprises with each new beginning. Compared to last month, the fertilizer market was in a generally positive state at the beginning of August; not only was there an increase in buying and selling activity, but prices also rose. It is worth noting that the trend regarding urea, which had already been considered settled, suddenly changed recently, with some manufacturers raising prices in a rather aggressive manner. Given that domestic agricultural and industrial demand remains relatively low, such price increases for urea seem a bit excessive. The direct trigger for this rise in urea prices was the Indian tender process. After several adjustments to the rules, Chinese suppliers were finally allowed to participate, and their prices were better than expected, which reduced the pressure on domestic supply to some extent. Due to the significant increase in domestic urea sales this year, India has been forced to issue another round of tender for urea. Although nothing has been finalized yet, this move still provides an export market for Chinese urea. The rise in urea prices may provide support for the autumn market in the short term, but overall, there is little likely to be significant changes in the price of compound fertilizers this autumn, and the same holds true for water-soluble fertilizers. Firstly, prices are stabilizing. The prices of water-soluble fertilizers vary widely; those in the mid-to-high-end range tend to be more stable in price. However, unlike in previous years, the current situation in the fertilizer market requires special attention – competition is extremely fierce. In order to expand their market share, water-soluble fertilizer manufacturers continue to reduce their profits and offer greater discounts, yet overall prices remain relatively stable. Currently, the market conditions for raw materials remain stable overall. After potassium dihydrogen phosphate prices approached the cost level, demand increased slightly, and there is a greater likelihood that prices will stabilize in the future. There are no significant changes in terms of costs; the price benchmarks for previous orders have already been established. If there are no substantial adjustments due to various factors, then the prices of water-soluble fertilizers are likely to remain stable in the future. Secondly, the demand ended early. Market demand in spring and summer is crucial for any type of fertilizer. Although the autumn market is short-lived, demand remains high in certain areas as well. Currently, wheat fertilizer markets are gradually opening up across various regions; their prices have dropped significantly compared to last year, and the market atmosphere is moderate. The market for water-soluble fertilizers also faces difficult prospects; in some areas, demand from end-users may end ahead of schedule. One reason for this is the impact of natural disasters on local incomes – severe flooding in the south and droughts in the north have led to frequent cases of complete or partial crop failures ； The second reason is that the market started earlier in each season this year, yet the overall demand has been declining; as a result, the market may conclude ahead of schedule. Finally, the transition in winter is unstable. The autumn market may end ahead of schedule, continuing the pattern of hasty closures seen in the previous two seasons, with overall demand declining to varying degrees. The seasonal demand for water-soluble fertilizers differs from that of traditional compound fertilizers, as there is still a certain demand for them in some areas during winter. If winter can be seamlessly connected to the autumn market, then market conditions are likely to improve in the future; however, for now the transition period seems to be rather ordinary. The autumn wheat fertilizer market is a good example of this – during the market lull in July, there was a strong sense of stagnation, with no sign of the activity that existed at the beginning. Even though the use of water-soluble fertilizers starts earlier in winter, the process of their adoption still needs time to develop. In summary, the recent rise in urea prices has indeed been rather excessive. The increasing activity in the autumn market is both a good thing and a bad thing; after this recent wave of price changes, it is still necessary for everyone to approach the market with caution. (Feng Hongyang)