Urea prices are falling slowly – could they rise at any time?

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Urea prices are falling slowly – could they rise at any time? Author/Source: China Fertilizer Network Date: 2020-09-09 Clicks: 8 Urine prices have been declining steadily, and they finally show signs of reaching a bottom at a level 40-50 yuan/ton higher than the lowest prices seen in late July this year. Yesterday, the purchase price of urine in Linyi increased by 10-20 yuan/ton; today, a urea manufacturer in Shaanxi raised the price by about 10 yuan/ton. Last weekend, after collecting payments at low prices in Inner Mongolia, payments were stopped once again. 　　Urea is declining slowly – is it on a path to rise at any moment? 　　The reason for the gradual decline is simple: there is still a demand gap for urea in the autumn market. The improvement in weather has led to a slight recovery in orders from plywood factories. After the loading and unloading pressures at ports eased at the end of August, they have become tense again; rumors that these pressures will ease in the near future have given market participants some confidence. On the 15th, Bangladesh issued tenders for 150,000 tons each of large and small particle urea. There are also rumors of new tenders in India. With urea prices already having dropped so much, downstream buyers’ concerns are decreasing, and end-users are becoming more inclined to make purchases. Firstly, it is time to start considering stockpiling for the winter; secondly, exports are strong; and thirdly, concerns about a possible reduction in the supply of urea from Xinjiang, Shanxi, and the southwest during winter are prompting end-users to consider purchasing urea. 　　For urea prices to rise, only a few conditions need to be met: for example, India issuing new tenders for urea procurement, China doing well in winning bids for urea procurement in Bangladesh, or the lifting of restrictions on loading and unloading at ports. An increase at any time is possible, and it is highly likely to happen in mid-September. 　　What we really need to focus on is the possibility that port handling issues might not be resolved in time, the possibility that urea shipments at the ports could be sent back to domestic markets, and the possibility that India might stop issuing tenders. 　　Specifically, there is no significant shortage of urea in the autumn market. The floods in some areas of the south have reduced enthusiasm for fertilizer preparation during autumn; however, rising grain prices later on may increase the willingness to stock up on fertilizers ； Given the shipping and sales cycles of one to two weeks or more, the production of autumn fertilizers by compound fertilizer manufacturers is now in its middle to later stages, and the intake of urea will continue to slow down ； The plywood industry is closely linked to furniture exports; with the severe pandemic abroad, demand for furniture is set to be lower than in previous years. Although plywood manufacturers have seen a slight increase in their orders for urea, this is not enough to drive up urea prices. 　　Looking at exports again, whether the problems related to loading and unloading at ports can be resolved represents a time bomb. The later loading and unloading operations resume, the more detrimental it will be to the rise in China’s urea prices; after all, it is almost certain that exports will weaken after the end of October ； The latest information indicates that sales of urea for domestic use in India have slowed down, and the date for new tenders in India is unknown. In the tender on the 15th in Bangladesh, our country’s urea is likely to win the bid, and the price is expected to be good as well. But returning to the original topic, the issue of loading and unloading at our country’s ports remains the most critical factor. 　　In short, urea prices could rise at any time going forward, but this will be difficult to achieve, and a sharp increase is unlikely; firstly, there are many variables related to ports, and secondly, the daily production of urea could soon reach 165,000 tons. 　　Urea prices have started to decline gradually; for customers with essential demand, it is the best approach to purchase the product promptly and sell it at the right time. For those without such essential demand, it might be more appropriate to wait until the impact of export restrictions lessens before considering stockpiling. 　　 　　(Cheyan Hong)