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Urea prices in Shandong rise first – has a turning point arrived? Author/Source: China Fertilizer Network Date: 2021-03-11 Clicks: 5 In the past two days, the prices of urea in regions such as Shandong and northern Jiangsu have seen a slight increase of 10–20 yuan per ton. Although the overall increase is not significant, it still represents some relief for urea, whose prices had been falling for over 10 days. There is a slight increase in demand from local industrial and agricultural sectors, leading to higher prices. Some downstream buyers who have not yet placed orders are showing interest. The initial assumption that urea prices would not rise due to issues with labeling has changed. Currently, the average ex-factory price of urea in Shandong is between 2020–2040 yuan; compound fertilizer manufacturers in Linyi pay 2060–2070 yuan per ton for urea. In Hebei, the average ex-factory price is 2040–2050 yuan, while in Henan it is 1990 yuan. In Shanxi, the average ex-factory price is 1900–1920 yuan, with larger-grained urea costing 1920–1940 yuan. Has this round of price drops for urea come to an end? However, considering the current market situation, even if there remains demand for high-nitrogen fertilizers in the future, the price of urea is likely to remain weak in the short term, primarily due to the following negative factors: First, the demand is relatively scattered and lasts for a relatively short period of time. Recently, the spring market has been developing gradually from south to north. The peak demand for urea in regions such as Jiangsu and Anhui has now passed. It is reported that the ex-factory price of low-quality urea in northern Jiangsu is around 2,000 yuan. There is indeed demand from the agricultural sector in regions like Shandong, but according to feedback from downstream markets, on the one hand, some agricultural traders have already purchased goods in advance due to previous price increases; on the other hand, the duration of this demand is only about ten days or so ； Recently, industrial market demand has also been relatively weak. Fertilizer manufacturers still have raw materials that need to be used, and given that urea prices are showing signs of decline in various regions, their purchasing activity has not yet been fully unleashed. Secondly, urea prices are weak in many regions, and any upward trend is likely to struggle on its own. Recently, apart from regions such as Shandong and northern Jiangsu where urea prices have risen, prices in many other areas have shown a downward trend. In the Shanxi market, which is in a relatively low-price range, prices have continued to fall; it is reported that the price at which some companies sell their urea is already below 1,900 yuan. In the western Mongolian region, the price of urea in this low-price category has dropped to 1,830 yuan. If urea prices in Shandong continue to rise, there will not be much pressure for supplies from low-price regions to enter that area, and these low-priced urea supplies will act as a factor that prevents further price increases. Finally, the overall utilization rate remained at a relatively high level. Recently, the overall operation of urea production facilities has remained stable. In addition to the new urea production capacity added this year, in order to ensure sufficient domestic supply, the environmental inspection standards applied during this year will be lower than those in previous years. At present, the daily urea production volume remains above 160,000 tons; without any planned maintenance activities, most urea producers still face supply pressures, and price increases are likely to be held in check to some extent. In summary, the increase in market demand in regions such as Shandong is understandable, and a tentative rise in prices is also logical. However, overall supply pressures remain, and since the tenders in India have not yet been announced, it is expected that prices of high-quality urea across the country may continue to fall in the near future. (Wu Wenchao)