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China Nitrogen Fertilizer Industry Association’s Weekly Urine Market Report (January 4 – January 10) Author/Source: China Nitrogen Fertilizer Industry Association Date: 2021-01-15 Clicks: 20 A brief overview of the domestic urine market over the week. In terms of prices and market conditions, the domestic urine market remained stable with slight increases in some areas. Although production facilities that had been shut down earlier resumed operations, there were short-term disruptions due to cold weather and other factors, as well as ongoing challenges related to natural gas supply. Thus, no significant changes occurred on the supply side, while demand from downstream industries increased slightly, driving modest rises in certain markets. The international market is booming; prices have risen significantly around Christmas, driving up prices in the domestic market as well ； The cautious attitude among downstream traders is increasing. The urea market is expected to remain stable with fluctuations next week. As of now, the ex-factory prices in Shandong are 1,820–1,870 yuan per ton for small and medium-sized particles, and 1,900–2,000 yuan per ton for large particles ； Henan factory price for small particles: 1,810–1,880 yuan per ton ； The ex-factory price of small particles from Hebei is 1,782–1,850 yuan per ton. In terms of production, sales, and inventory for enterprises: The data from this survey show that the production of small-grain urea this week was 560,300 tons, a 3.93% decrease compared to the previous week ； The output of large-grain urea was 155,500 tons, an increase of 7.50% on a month-on-month basis ； Sales of small-particle urea amounted to 654,600 tons, representing a 7.72 percentage point increase on a month-on-month basis ； Sales of large-grain urea amounted to 150,800 tons, a decrease of 10.82% on a month-on-month basis ； The production and sales rate of small-particle urea was 116.81%, an increase of 12.63 percentage points on a month-on-month basis ； The production and sales rate of large-grained urea was 96.98%, a decrease of 19.92 percentage points on a month-on-month basis ； The total inventory amounted to 219,900 tons, a decrease of 15.82% on a month-on-month basis. Regarding the operation rate of enterprises: According to a survey conducted on January 12, 2021, the national daily production of urea was approximately 119,300 tons, with an operation rate of around 55.48%. Among these, the operation rate of urea production plants that use coal as raw material was 68.55%, while that of plants using natural gas or coke oven gas as raw material was 21.14%. The operating rate of urea manufacturers across the country increased by 0.22 percentage points compared to last week, but decreased by 0.14 percentage points on a year-on-year basis. Among them, the operating rate of manufacturers using coal as raw material dropped by 0.06 percentage points compared to last week, but increased by 1.83 percentage points on a year-on-year basis; the operating rate of manufacturers using natural gas as raw material rose by 0.37 percentage points compared to last week, but decreased by 6.37 percentage points on a year-on-year basis. In terms of raw materials: domestic coal prices remain stable with a slight upward trend. Temperatures in the country are generally low, leading to increased demand for coal for domestic use. Demand from the downstream chemical industry remains steady, and there is a high level of enthusiasm for stockpiling coal. Market transactions are performing well, providing strong support for prices. At present, the average price of bituminous coal upon arrival at factories is 953 yuan per ton, a 0.83% decrease on a month-on-month basis and a 5.36% decline on an annual basis; it increased by 0.85% compared to the same period last month ； The average price of bituminous coal for gasification at the plant was 803 yuan per ton, up 3.75% on a month-on-month basis, 11.68% on a year-on-year basis, and 7.64% higher than the same period last month ； It is expected that the coal market will maintain a steady upward trend in the short term. Railway sector: Transport is basically normal. Analysis of the situation of domestic urea manufacturers over a week: According to a survey conducted on January 12, 2021, the national daily urea production was 119,300 tons, a 0.07% decrease compared to the same period last week, and a 3.13% decline on a year-on-year basis ； Among them, coal-producing enterprises had a daily production of 106,800 tons, a 0.09% decrease compared to the same period last week, but an 0.81% increase on a year-on-year basis ； The daily production volume of Qitiu Enterprise is 12,500 tons, up by 0.10% compared to the same period last week, but down by 27.32% on a year-on-year basis. In terms of sales: this week’s production and sales ratio for urea was 112.51%, an increase of 5.80 percentage points compared to the previous week. Regions where sales have increased significantly include Hebei, Shaanxi, Hubei, etc., while regions where sales have decreased significantly include Heilongjiang, Guizhou, Yunnan, etc. In terms of inventory: Based on the fact that the production capacity of key enterprises accounted for 84.78% of the total national capacity, the national inventory was around 259,400 tons, a decrease of 42,900 tons compared to the previous period. This represents a reduction of 317,200 tons when compared to the 576,600 tons in inventory among urea producers, as recorded by the association in the same period last year. The ex-factory price of small-grained urea increased on a month-on-month basis; the average ex-factory price was 1,765 yuan per ton, up by 12 yuan per ton compared to last week, representing a month-on-month increase of 0.63% and a year-on-year increase of 8.02% ； The ex-factory price of large-grained urea declined on a month-on-month basis; the average ex-factory price was 1,814 yuan per ton, down by 30 yuan per ton compared to last week, representing a month-on-month decrease of 1.57%, while there was a year-on-year increase of 9.01%. Developments in the international urea market: At the beginning of the year, the urea market was bullish, just as it was last year, with attention now focused on the markets west of Suez. Since Christmas, U.S. barge prices have risen by $20 per ton driven by rising grain prices, as the U.S. has taken measures to attract spot imports in the spring. Last-minute seasonal buying in Brazil pushed the price of granular urea above $290 per ton this week. Suppliers benefit from strong market demand; Egypt is selling forward contracts for the European market at an FOB price of $290 per ton, while other sellers have raised their target prices. Price increases in the east are caused by a reduction in supply rather than demand. The transaction price in Indonesia is $275.50–$278 per ton FOB, a significant increase from the previous transaction, driven by a lack of exports from China and reduced supply from Malaysia. Rising grain prices have boosted hopes for the U.S. spring season: wheat and corn prices are near seven-year highs, raising expectations of higher demand in the U.S. during that period, which could support further increases in urea prices until domestic import needs are met. Higher prices in Europe and Turkey: Lacking cheaper alternatives, European buyers are forced to pay for goods from Egypt and Algeria. For Turkey, Iranian urea is subject to production cuts. China will continue to restrict exports: China’s daily urea production is less than 120,000 tons, so port exports are not supported. With the approaching spring demand peak during the Lunar New Year, changes are not expected in the short term. The strong demand currently west of Suez will translate into purchases in Australia and Thailand later in the first quarter.