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After the bidding process, could urea prices rise? _ Author/Source: China Fertilizer Network. Date: August 24, 2020. Clicks: 8. India has held bidding sessions four times in a row recently; however, since the results of the bidding on August 26 were announced, urea prices have declined to some extent. Currently, the average ex-factory price of urea in Shandong is 1650–1660 yuan, while compound fertilizer manufacturers in Linyi pay 1680–1690 yuan per unit of urea. In Hebei, the average ex-factory price of urea is 1710–1780 yuan, and in Henan it is 1640–1650 yuan. In Shanxi, the average ex-factory price of urea is 1570 yuan, with larger particle sizes costing 1590 yuan. At the current stage, sales in the domestic market are poor; demand from the agricultural sector has essentially come to a halt. In the industrial sector, there are still low-priced inventories from previous periods that need to be sold, so new orders are also limited in number. However, recent reports indicate that some companies in regions such as the Northeast have tens of thousands of tons of orders pending shipment, and there is still a certain shortage in the autumn fertilizer market. The latest delivery date for orders placed through India’s bidding process is October 15th, which means that urea manufacturers will still have products available at ports for one and a half months. So, after these bidding processes end, could domestic urea prices rise? According to most industry experts, an increase is possible, but the likelihood is low. This is mainly due to the following factors: First, there is an excess of inventory in the market, resulting in lower enthusiasm for purchasing. Since the end of July, demand in the agricultural sector has essentially ceased on a large scale. Some downstream markets had purchased urea at low prices earlier on; with demand from these local markets temporarily halted, overall consumption of urea in the broader market is low. This year, due to the impact of the pandemic, consumption by fertilizer manufacturers has also decreased compared to previous years. Although there is ongoing demand for compound fertilizers, on the one hand, there is still inventory available at low prices that can be used, and on the other hand, production levels are generally low. Even when considering the costs for the entire year, the market does not believe that urea prices have reached their bottom yet, so purchasing enthusiasm remains relatively low. The main reason why some companies in the Northeast region have started to purchase large quantities of urea is that the inventory left over from the spring period is relatively small; if purchases are concentrated in later stages, it could lead to shortages among urea suppliers, resulting in an inability to deliver goods for a time. Secondly, there is relatively high supply pressure. Although the overall supply of urea is slightly lower compared to the same period last year, with the daily national production of urea remaining at 154,000 tons, what differs this year is that some new urea production facilities are set to start operating or have already begun doing so. Moreover, companies that halted urea production are about to resume operations, and the daily production volume of urea is expected to increase significantly by mid-September. So far this year, there have been no notices of environmental restrictions on production in the 2+26 cities, and according to most fertilizer manufacturers, there are no plans to restrict gas supply this winter. In other words, as time goes on, the supply pressure for urea will increase, which will lead to a decline in prices. In summary, although urea in some areas has begun to be stored in advance for winter use, the market is still faced with an oversupply, and there are signs of further price declines. However, the rate of decline is likely to be moderate, as there is still a certain amount of urea available at ports at present, so pressure is not high in the short term; prices may therefore decline slowly. (Wu Wenchao)