The attempted price increase for urea was successful

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Urea prices see successful tentative increase Author/Source: China Fertilizer Network Date: 2021-07-12 Clicks: 101 This week, urea prices stopped falling and started to rise; prices in various key regions saw increases to varying degrees. Currently, the standard ex-factory price of urea in Shandong is 2660–2700 yuan per ton. In Linyi, compound fertilizer manufacturers are purchasing urea at 2740 yuan per ton. In Hebei, the standard ex-factory price of urea is 2720 yuan per ton, while in Henan it is 2680 yuan per ton. In Shanxi, the standard ex-factory price is 2620 yuan per ton, with large-grained urea costing 2620 yuan as well. Over the weekend, urea prices continued to rise, with prices in some areas increasing by another 30 yuan or so. This increase in urea prices began around Wednesday of this week; initially, it was only in Shandong that prices saw tentative increases. By the end of the weekend, prices started to rise across multiple regions. The main reasons for this price increase are as follows: First, demand is not strong, but there is still a need for urea. After entering July, the peak season for applying fertilizers across various regions came to an end. There is still a sporadic demand for fertilizers in markets in the northeast, northwest and other areas, while in regions such as Jiangsu and Anhui, there is a demand for fertilizers twice a year. Although this demand is relatively modest, it still exists. Earlier on, due to relatively high prices, purchasing activity was weak, but recently as prices have dropped, purchasing activity has increased, and the amount of fertilizer that companies have in stock has also risen, leading to a slight increase in prices ； Industrial market demand has been moderate, with production focusing on high-phosphorus fertilizers in the later period. However, raw material inventories at downstream compound fertilizer manufacturers are also low. The demand from sheet metal manufacturers and triamine producers has been fairly good recently, and there is still a desire to purchase urea as a raw material; demand remains steady due to the need for replenishment according to actual usage. Secondly, there are again rumors of tenders in India. Later this week, there were reports that India might issue a new round of tenders for urea imports as early as next week. Although there are restrictions on exports in the country, tariffs remain undecided; therefore, it is still possible for some exports to take place. Market rumors suggest that recently some supplies have been concentrated at the ports, which has slightly reduced supply pressure domestically. Meanwhile, some downstream markets are making timely replenishments, reducing the supply pressure on factories, and prices have begun to rise slightly. Finally, the companies’ own inventory levels are currently low. Although the overall domestic production of urea remains at around 160,000 tons, since the beginning of this year, domestic urea manufacturers have had relatively low inventory levels, giving them more control over the market. Although urea prices have declined recently, there has been no significant increase in the inventory pressure on these companies. Additionally, as some traders have started to stock up on urea, the inventory levels of manufacturers have improved, which has allowed urea prices to rise. In summary, the increase in urea prices lasted for some time; the bearish sentiment in the market is gradually diminishing in the short term, and this tentative rise in urea prices has been confirmed. However, from a long-term perspective, the actual demand in the domestic market is relatively modest while supply is relatively high, and the situation in the export market remains uncertain. There are still significant uncertainties regarding urea prices in the future, so caution is still necessary if one intends to hold it for a long time. (Wu Wenchao)