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With such low bidding prices, it’s difficult to see an increase in prices. Author/Source: China Fertilizer Network. Date: 2020-08-31. Clicks: 50. The fourth consecutive tendering process in India has come to an end, and it has drawn considerable attention from the industry. The lowest landed price at India’s east coast ports is $283.52 per ton, while the lowest price at the west coast is $288.89 per ton. A total of 1.7 million tons were tendered this time, with rumors suggesting that China might acquire around 800,000 tons of them. Both the price and quantity factors are favorable for domestic urea producers. However, several days have passed since the tendering process ended, yet the rise in urea prices in many parts of the country has been relatively slow; in some areas, prices have even declined slightly. In Shandong province, the standard factory price for urea is between 1,640 and 1,680 yuan per ton. In Linyi, fertilizer manufacturers are willing to purchase urea at 1,700 yuan per ton, with transaction prices around 1,640 yuan per ton. In Hebei province, the standard factory price for urea is between 1,740 and 1,790 yuan per ton, while in Henan it’s 1,650 yuan per ton. Prices in these regions have increased to some extent. Yet in some areas, prices have slightly dropped compared to before. In Shanxi province, the standard factory price for urea is between 1,530 and 1,540 yuan per ton, while large-grained urea costs 1,580 yuan per ton. In Jincheng, the lowest transaction price for urea is around 1,510 yuan per ton. Even in Sichuan province, the transaction price for urea has dropped to around 1,600 yuan or slightly less. This trend in prices is quite different from those seen in previous Indian tenders. There are several reasons behind this situation. Firstly, port loading restrictions still exist, hindering the flow of goods shipped by enterprises. Over the past month, India has launched tender processes on four occasions in a row, which has driven up international prices. Especially during the last two tenders, India paid high prices for urea; China won bids for a total of around 1.4 million tons of urea. At present, the amount of urea available at ports is only between 500,000 and 600,000 tons. Due to the impact of the pandemic earlier on, many companies are less inclined to export, resulting in relatively low stock levels at ports. With India’s large-scale tender processes taking place this month, and given the limited loading capacity at ports, even those companies that are able to export still face difficulties in getting their goods shipped out. As a result, domestic prices remain relatively low. Secondly, domestic market demand is limited at the current stage. Although the production of compound fertilizers in China during autumn continues, most companies still have sufficient stock to use, and it is still early enough for winter fertilizer stockpiling. Purchases by steel mills and power plants are relatively low, and agricultural market demand in many areas is moderate. For example, in Sichuan, due to its relatively weak export advantages, demand from local industrial and agricultural sectors is average. Although the selling prices offered by most factories are around 1,650 yuan, the actual transaction prices are around 1,600 yuan or slightly less. At present, production levels in the domestic market remain high, with the daily output of urea across the country staying above 150,000 tons. With more companies resuming production, some downstream distributors believe that supply will likely be sufficient in the future. However, due to uncertainties related to labeling requirements, there is a possibility that urea prices could decline. Even if prices rise in the future, the ample supply means that the likelihood of shortages is low. As a result, some cautious traders have suspended their purchases for now. In summary, it can be seen that not every increase in labeling costs leads to an immediate rise in domestic urea prices. Nevertheless, it must be admitted that once the port handling capacity improves in the near future, domestic urea prices are likely to increase, even if demand for domestic urea remains low. (Wu Wenchao)