Weekly Urea Market Report for the Fourth Week of September 2016

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Weekly Report on the Urea Market for the Fourth Week of September Author/Source: China Fertilizer Network Date: 2016-09-26 Clicks: 7 This week, some downstream distributors in the agricultural sector within China made slight purchases of fertilizer. A few manufacturers in Shandong and Hebei secured export orders worth over 10,000 tons each. The overall production capacity for urea remained low, and the shortage was moderate; as a result, urea prices in Shandong, Hebei, Jiangsu, Hubei, Sichuan, and Chongqing saw a slight increase； However, the production of autumn fertilizers in industrial compound fertilizer plants is coming to an end, and the volume of orders in this area has decreased significantly. On Wednesday, authorities began to enforce strict regulations against overloading in road transport, which reduced the profits of transportation companies. In some areas, urea manufacturers faced difficulties in transporting their products by road, and prices in places such as Shanxi remained stable on the surface but actually declined or have already started to fall. 　　Compared to last week, the order volume received by compound fertilizer manufacturers in Shandong region has decreased. Some distributors have stocked up slightly on fertilizers, while the operating rate of urea plants is around 54%. The main export prices have risen by 10–20 yuan per ton, reaching 1190–1200 yuan. Additionally, due to increased transportation costs, the purchase price in Linyi has risen by 30 yuan compared to last week… (The rest is available in the member area.) ； Some large manufacturers in the Hebei region received new port orders of over 10,000 tons at the beginning of the week; the standard selling prices increased by 20 yuan, reaching 1170–1180 yuan. However, shipments by road slowed down over the weekend, and a few large manufacturers reduced their prices slightly ； The mainstream ex-factory prices in the Henan region remain stable at 1,180–1,190 yuan. According to China Fertilizer Network, the actual transaction prices paid by manufacturers are still low…… ； A large factory in the Shanxi region has increased its production volume, yet demand across various areas remains low; competition from other suppliers is fierce. As a result, the standard outlet prices have dropped by 20 yuan, ranging around 1120 yuan…… ； The production rate in Jiangsu region... sales are fairly good; the main factory prices have increased by 20 yuan, reaching 1320–1330 yuan at the lower end ； The production rate in Hubei region... The mainstream factory prices have increased by 20 yuan at the lower end, reaching around 1,250 yuan, while prices for larger orders are slightly lower ； The volume of low-cost goods from other provinces arriving in Sichuan and Chongqing has decreased slightly, while the standard factory prices in these two regions have risen by 20–30 yuan ； A low-end pricing manufacturer in the Fujian region has no inventory left and has no plans to resume production; the mainstream factory prices for such products have increased by 10 yuan, reaching around 1390 yuan ； The farming demand in Xinjiang region is expected to be delayed until early October. Currently, sales in the local market are weak; the prevailing ex-factory prices remain stable at 850–930 yuan. Sales to other regions are slightly better, with ex-plant prices corresponding to that level. A few manufacturers that have stopped production plan to resume operations by the end of the month ； A large factory in Ningxia suspended production for about 8 days, causing the price of urea supplied from other local suppliers to rise by 20 yuan ； The operation rate in the Northeast region... A large factory in Heilongjiang is still producing SODM urea, which is supplied only to the provincial company. The production capacity of the two factories in Jilin and Liaoning is not high; the price of bulk shipments is around 1,150 yuan. Regarding large particles, demand has slowed down slightly; the mainstream export prices in Shandong have dropped by 20 yuan, to around 1,230 yuan. The prices offered by manufacturers in Inner Mongolia remain stable, but there are not many new orders from ports, so sales have slowed a bit. 　　Internationally, the offshore reference price for China’s export of small-particle urea is… In the tender held in India on the 22nd, bids were received from 25 suppliers for a total of 2.8 million tons of solid urea; the lowest cost at the east coast was 203.81 dollars per ton, which is roughly equivalent to the ex-ship price of urea in China, which is 194 dollars per ton. The inventory of urea at ports in our country is approximately… 　　Overall, domestic industrial compound fertilizer manufacturers are seeing limited orders (the overall operational rate for compound fertilizers is around 62%, an increase of only about 2 percentage points compared to last week). Strict regulations on overloading in road transport have increased the transportation costs for these manufacturers. Meanwhile, the overall operational rate for urea has declined further; however, there is occasional demand from agriculture in certain regions, which should help alleviate the pressure on urea producers. It is expected that urea prices will remain stable in the short term, with only slight fluctuations in some areas at lower levels ； In the long term, demand remains weak and downstream players lack confidence in future market conditions; it is expected that urea prices will continue to fall. It will be important to monitor whether the production rate stays at low levels.