Thread Content
Urea Price Hikes Spark Envy Among Other Fertilizers; Price Cuts Trigger Competition Author/Source: China Fertilizer Network Date: 2021-03-05 Clicks: 7 Urea prices do change frequently; it was expected that they would drop after the Spring Festival, but instead, prices rose again in a surprising manner. Even though the prices of other raw materials used in fertilizer production, including compound fertilizers, also increased, urea still drew envy from other types of fertilizers； Recently, the urea market has shown signs of weakening, with prices continuing to fall in many areas such as North China, East China, and parts of Central China. In contrast, urea prices remain high in the Southwest region and in Guangdong and Guangxi provinces; in some local markets, prices are even rising further. However, as prices in other markets decline, it is inevitable that prices in these higher-priced areas will also drop in the long run. It is possible that some traders will compete fiercely for supplies at high prices due to their ample stockpiles from earlier periods, in order to capture the opportunities in the spring market. Currently, the operating rates of urea production plants are generally high, resulting in an ample supply of urea in the market – even a surplus. Meanwhile, there is increasing resistance from end-users to high-priced urea. Affected by various negative factors, the sales of urea face pressure, and its prices have dropped since last weekend, with the decline ranging generally between 50-80 yuan per ton, with some prices dropping by as much as 130 yuan per ton. Currently, the standard ex-factory price of urea in the Shanxi region is around 2,000 yuan per ton. In the Henan region, the standard ex-factory price has dropped to around 2,070 yuan per ton, and negotiations are possible. Companies report that there is supply but no demand. In Linyi, Shandong, fertilizer manufacturers are offering a purchase price for urea of around 2,100–2,120 yuan per ton. On this main \"battlefield\" in spring, the price trend of urea is under close attention. A price drop for urea is now inevitable; the question is merely whether it will be a modest drop. Firstly, the operating rates of urea manufacturers remain high, coupled with the gradual release of new production capacity. The decline in urea prices has just begun; production levels at various urea manufacturers remain high, and there are no planned maintenance activities at these plants for the time being. According to statistics from China Fertilizer Network, the overall industry production rate for urea manufacturers is currently around 57.53%, with a daily production volume of approximately 161,500 tons ； Additionally, there have been fluctuations in the prices of liquid ammonia, with changes ranging from 50 to 100 yuan per ton. Although further price increases are expected, overall prices remain low. Compared to urea, companies will continue to focus their production efforts on urea ； Moreover, new urea production capacity has been put into operation gradually; the production at new urea plants in Hubei and Jiangxi is operating well. In the future, additional production capacity from some enterprises in Shandong will also be brought online, and there are also plans for certain gas-based urea manufacturers in certain regions to resume operations. Secondly, the demand for urea in industry and agriculture is average, and the situation regarding printing labels remains unclear. On the one hand, the decline in urea prices at high levels has led some local distributors to wait and observe the market situation, delaying their purchases ； Large agricultural supplies suppliers have sufficient stock reserves at the beginning, and state-owned stock will gradually enter the market, leading to an increase in supply later on. Additional purchases should be made as needed, as there is a lack of large-scale orders to support the market ； Production at industrial compound fertilizer companies has seen a slight recovery, and supported by the costs of various raw materials, the prices of their finished fertilizers have been rising gradually; the procurement of urea is progressing satisfactorily ； However, the pricing details are still unclear. Only if these details are finalized later and prices as well as quantities remain favorable, can that support an improvement in China’s domestic urea market; otherwise, there is still a risk of further declines in urea prices. Following another increase in the price of ammonium chloride, a fertilizer containing low levels of nitrogen, prices have stabilized. Some companies that produce compound fertilizers or blended fertilizers have increased their purchases of ammonium chloride, which serves as a substitute for some urea. Moreover, as urea prices have dropped recently, the ammonium chloride market remains cautious for now, which also has an impact on urea prices to a certain extent. Overall, the urea market is facing an imbalance between supply and demand domestically, and there are no definite updates regarding pricing. With negative factors playing a dominant role and a pessimistic attitude among industry players, as spring approaches, it is expected that the urea market will remain weak in the near term, with slight further declines in prices in some areas. Those regions where prices were high earlier may also see price increases later on. (Tan Junying)