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After the Indian tenders, urea prices experienced volatile fluctuations. Author/Source: China Fertilizer Network; Date: 2020-09-07; Clicks: 6. Following the recent conclusion of several Indian tenders, urea prices rose slightly at the beginning of this week due to positive news regarding the lifting of port loading restrictions. However, this good trend didn’t last long – as some ports issued new restrictions on loading again on Tuesday, urea prices dropped accordingly. By the end of the week, the average ex-factory price of urea in Shandong region was 1660–1680 yuan per ton. In Linyi, compound fertilizer manufacturers were purchasing urea at 1670–1680 yuan per ton, with a daily supply volume of 21,000 tons. In Hebei, the average ex-factory price of urea was 1700–1760 yuan, with a negotiation margin of 30–40 yuan. In Henan, the average ex-factory price was 1650 yuan, with actual transaction prices around 1600–1620 yuan. In Shanxi, the average ex-factory price was 1570 yuan, while large-grained urea cost 1590–1600 yuan per ton. Although many urea exporting companies still have tens of thousands of tons of urea ready for shipment, overall urea prices are unlikely to rise. There is a clear downward trend in prices in the main production areas; although prices occasionally rebound in certain regions, the actual volume of transactions and prices remain low. The speculation driven by Indian tenders has subsided, and industry experts expect urea prices to continue falling in the near future. First, market demand. At the current stage, although regions such as North China are in the fertilizer sales season, autumn represents the main period for the use of high-phosphorus fertilizers, and thus the overall demand for urea is relatively low. Moreover, even though there is still market demand, there is an abundance of urea supplies available in the market, and most of these are supplies purchased at low prices earlier on (due to continuous price increases driven by India’s fertilizer pricing decisions, urea prices have risen rapidly, resulting in fewer transactions at higher price levels). It is not very realistic to expect urea prices to rise due to agricultural market demands in autumn ； As for compound fertilizers, more than half of the autumn shipments have already been made. At present, there is a shortage in the supply of raw materials. On the other hand, due to the relatively low prices of finished fertilizers this year, some companies remain cautious about purchasing the raw material urea ； The demand from industrial panel manufacturers and power plants this year is also relatively weak. Given that the price of melamine this year is almost half of last year’s level, it is clear that there is a certain degree of caution regarding raw materials, resulting in weak demand support. Overall, before large-scale purchases of compound fertilizers, the actual demand for urea in the market was relatively modest, and it could not provide any significant positive impetus. Secondly, supply is still likely to continue expanding in the future. At the current stage, the daily production of urea across the country has risen to over 160,000 tons. Based on past trends, after October arrives, the limited supply of natural gas in the country along with environmental inspections are expected to significantly restrict urea production. However, it has been learned from factories in Xinjiang that there are no plans for production cuts this year. Additionally, due to the impact of the pandemic, policies encourage normal operations in all industries; as of now, environmental regulations this year have not imposed excessive restrictions on urea production. Moreover, some urea manufacturers are expanding their production capacity, while those that were shut down for a long time are now restarting operations. Taking all these factors into account, the supply of urea in the coming period is likely to be higher than it was during the same period last year. In summary, at the current stage, the flow of urea among domestic manufacturers is fairly satisfactory; however, due to volume restrictions, some companies face relatively high supply pressures for urea. It is expected that urea prices will continue to decline, though the extent of this drop is likely to be limited in the short term. (Wu Wenchao)