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Weak domestic demand for urea vs. strong external demand: Uncertainty surrounds price fluctuations Author/Source: China Fertilizer Network Date: 2020-09-10 Clicks: 8 As the autumn fertilizer market enters its middle to later stages, there have been certain fluctuations in urea prices. Currently, the standard ex-factory price of urea in Shandong is between 1,640 and 1,680 yuan per ton. In Linyi, compound fertilizer manufacturers are purchasing urea at 1,660–1,670 yuan per ton, which translates to an approximate ex-factory price of urea in that region of around 1,610 yuan. In Hebei, the standard ex-factory price of urea is between 1,690 and 1,750 yuan, with a negotiation margin of around 40 yuan. In Henan, the standard ex-factory price remains at 1,650 yuan, while the actual transaction price is around 1,600–1,620 yuan. The daily supply of urea in that region is 13,000 tons. In Shanxi, the standard ex-factory price of urea is 1,540 yuan, while that of large-grained urea is 1,570 yuan. Although there are occasional price increases in some areas, prices generally show a downward trend in most regions. Even though some companies raise their prices slightly, actual sales in the market remain weak. As a result, the market is faced with mixed factors, leading to uncertain price fluctuations. The main reasons are as follows: inconsistent domestic and external demand. Over the past two months, India has conducted tender calls on four occasions. Due to the impact of the pandemic, there is a **relatively limited supply** of products that can be provided stably and in large quantities in the international market. China, on the other hand, can meet the demands of the Indian market in terms of cost, quantity, and the safety of the goods. After these four tender calls, Chinese suppliers delivered satisfactory results for both suppliers and buyers; over one million tons of urea are ready for export. As of now, most urea manufacturers still have many orders waiting to be shipped from ports. If shipments can be carried out steadily, domestic urea prices are likely to rise. However, restrictions on port handling capacity have temporarily curbed this increase in prices. Yesterday, it was reported that from September 9th to September 20th, the port will once again be under such restrictions. Although road transport to the port is allowed, the overall loading and unloading capacity is limited ； The demand in the domestic market is currently relatively weak. The production of compound fertilizers for autumn is coming to an end, while the preparation of fertilizers for winter is progressing slowly. Demand from the agricultural sector has essentially ceased; in regions such as the southwest, purchases will not start until mid-September at the earliest. Facing current supply pressures, urea manufacturers are supplying goods in appropriate amounts at ports, and deliveries within the country are also increasing gradually. Even though there is a volume of tens of thousands of tons being sent to ports, continued price drops in the domestic market are inevitable. There are also some \"strange\" aspects in the Northeast market: since India’s fourth round of tender announcements, there has been a clear increase in requests for urea in the Jilin and Liaoning regions. Over time, the price of urea upon arrival in Liaoning has risen to 1730–1750 yuan, while in areas like Jilin it is around 1700 yuan. In Heilongjiang, the farthest north in the Northeast, the factory prices for urea remain at 1620 yuan. The declining price of urea has raised doubts among some industry professionals. Upon further investigation, it was found that due to relatively good profits from fertilizers last year, some compound fertilizer manufacturers, given the limited inventory levels in the Northeast this year, have started to stock up on raw materials in advance. Since there are more compound fertilizer manufacturers in larger scales in the Jilin and Liaoning regions compared to Heilongjiang, this results in lower prices the further north one goes. However, currently domestic urea prices are on a downward trend, so caution is still necessary if one wishes to engage in any trading activities. In summary, although there is still demand from some companies, the ports’ capacity to receive shipments is limited. Coupled with relatively weak domestic market demand, it is difficult for factories to raise prices even if they wish to do so. It is expected that urea prices will fluctuate within a narrow range in the near term, and no significant increase is likely until new international bidding activities emerge.