Thread Content
Positive factors resurface, pushing urea prices upward _ Author/Source: China Fertilizer Network Date: November 23, 2020 Clicks: 5 Last week, as heating season began in regions such as Shandong, local chemical plants were instructed to suspend steam production, which led to a decrease in demand for urea and a slight drop in its prices. However, after Wednesday and Thursday of this week, environmental restrictions were lifted, allowing the downstream market to recover slightly; prices in areas like Shandong rose modestly. In places such as Yuncheng, Shanxi, rising demand also contributed to an increase in overall prices, with prices for urea shipped by road being relatively high. Currently, the standard export price for urea in Shandong is 1,800 yuan per ton. Fertilizer manufacturers in Linyi are offering purchase prices of 1,820–1,830 yuan per ton for urea, while in Hebei the standard export price is 1,800–1,820 yuan per ton. In Henan, the standard export price is 1,790–1,810 yuan per ton, and in Shanxi it is 1,730 yuan per ton; the price for large-grained urea is 1,730–1,740 yuan per ton. The premium price for urea shipped by road in Shanxi is around 1,780 yuan per ton. Although the agricultural market is performing poorly at present, demand from the industrial sector keeps urea prices from falling too much. In recent days, however, positive factors have once again impacted urea prices. Recently, rumors have surfaced in the market: India is set to launch another tender for urea. It is estimated that the volume of urea up for bid in this tender could be between 1.6 and 1.8 million tons. International reports indicate that, aside from supplies from China, the available supply in the global market is only around 700,000–800,000 tons. Although China’s current prices are relatively higher than those in the international market (based on current mainstream prices, China’s ex-ship price should be no less than $280), if India wants to ensure an adequate supply, urea from China will likely be included in the procurement, which will further drive up domestic urea prices ； In fact, what the industry is really concerned about is not how much share China will gain from this round of labeling; the main focus is on how much more the price of urea will rise as a result of this labeling initiative. Some compound fertilizer manufacturers say that at the current stage, it is somewhat awkward whether to purchase urea or not: if high-priced supplies are acquired, the risks associated with those high prices must be borne, as the grassroots market will not start making large-scale purchases until after February. This year, due to the practice of reduced commercial stockpiling of fertilizers, companies responsible for storage and distribution are purchasing in advance. Once January arrives, these companies will also enter the sales channel, which could lead to a sudden increase in overall supply in the short term. This might result in a significant drop in prices. As a result, some manufacturers are choosing to wait and see, and some compound fertilizers may face shortages of raw materials, potentially leading to problems with the supply of finished products in the future. Taking all these factors into account, it is estimated that if India begins to issue tenders, domestic urea prices may rise again or remain stable for the time being. However, the high prices of urea have already led to some reluctance among downstream buyers to purchase it. Coupled with the practice of some traders selling at a loss, it is expected that urea prices will decline after this round of increases, probably not later than mid-December. As a result, downstream markets facing raw material shortages are likely to purchase some urea in order to meet their immediate needs. For the agricultural sector, however, given the currently high cost of urea, there is a possibility of price drops in the future, so they will likely adopt a cautious approach.