Summary Post on the Urea Market Conditions and Prices in December 2016

Urea price trends across China Author/Source: China Fertilizer Network Date: 2016-12-01 Clicks: 3 The overall operating rate of urea production remains low, supply is still tight in some areas, and demand from downstream sectors remains moderate. Meanwhile, the situation regarding exports by manufacturers in regions such as Inner Mongolia and Shanxi has improved slightly, resulting in an increase in the available supply of urea in the market. As a result, urea prices in areas like the Two Rivers region and Jiangsu and Anhui provinces have declined. The prevailing ex-factory prices in Shandong region remain stable at around 1,480 yuan per ton (the same unit is used thereafter). A few high-end products have seen their prices drop by 20–30 yuan, while the purchase price in Linyi has fallen by about 10 yuan to... (the omitted details can be found in the member area; the same applies hereafter) ； The situation regarding new orders in the Two Rivers region remains average; meanwhile, a small amount of urea from Shanxi and Inner Mongolia has arrived at the markets, resulting in a slight increase in the available supply of urea. As a result, the mainstream ex-factory prices in Hebei have dropped by another 5-10 yuan, to between 1480-1490 yuan, with transaction prices being slightly lower. In Henan, the mainstream ex-factory prices have fallen by 20 yuan, to around 1500 yuan, and there is still considerable room for price discounts in transactions ； Affected by the price cuts in surrounding areas, the situation regarding new orders in Jiangsu and Anhui is also average; the mainstream ex-factory prices in Anhui are lower by 10 yuan, ranging around 1550 yuan, for shipments over long distances... In Jiangsu, the mainstream ex-factory prices are lower by 30 yuan, ranging from 1550 to 1590 yuan, with some exceptions... Quotations from other locations are currently **. The total inventory of urea at major ports in our country... Internationally, …… Overall, the operating rate of urea plants remains low, and there are few positive factors in terms of exports. Domestic fertilizer preparation activities have not started yet, with dealers adopting a wait-and-see attitude; new orders are weak. The situation regarding the shipment of urea at lower prices has seen some improvement, leading to a slight increase in market supply. It is expected that urea prices in certain regions will continue to decline slightly in the coming period. In areas such as the southeast of the Two Lakes region, the operating rate of local urea plants is very low, and the amount of urea arriving from other provinces is minimal; therefore, prices in these areas should remain stable. Once transportation becomes smoother, there is a risk of further declines in urea prices. If there is any part of the analysis and market data available on this website that you would like to know more about, you can call the consultation hotline at 0451-88001128. Regional market prices: Unit: yuan per ton (large-grained urea is indicated in bold in the table)

Nitrogen Fertilizer Industry: Rising costs drive up urea prices, while low production levels support favorable market conditions. Author/Source: Date: 2016-12-01 Clicks: 6. The urea industry has seen improved conditions over the past three months; low production levels provide strong support for prices, and leading companies will benefit greatly from this situation. Urea, as the nitrogen fertilizer with the highest nitrogen content, has an irreplaceable and essential demand in the agricultural sector when used there, while in the industrial sector it serves as an important raw material for numerous chemical products. After May 2012, urea entered a downward trend that lasted for over four years, driven by factors such as rapid increase in production capacity, falling coal prices, declining grain prices, and a drop in international urea prices. By mid-August of this year, the lowest price of urea in the domestic market was less than 1,200 yuan per ton, with the entire industry facing losses or difficulties in making a profit. However, due to a combination of factors such as soaring coal prices, the elimination of preferential electricity rates, rising transportation costs, environmental regulations, and a continuous decline in inventory levels, urea has seen a fairly strong rebound over the past three months. Looking ahead to 2017, downstream demand and exports are expected to decline slightly. However, under the pressures of raw material costs, transportation costs, and environmental regulations, domestic urea production facilities can only operate at low capacity levels. This will result in a slight shortage of urea products, thereby providing strong support for prices. Currently, amidst the wave of promoting supply-side reforms, urea production capacity characterized by outdated technology and high costs is destined to be phased out. Meanwhile, companies with advanced processes and lower energy consumption will reap substantial profits.

Urea price trends across China Author/Source: China Fertilizer Network Date: 2016-12-02 Clicks: 27 The overall utilization rate of urea production remains low, supply is still tight in some areas, while demand from downstream sectors remains moderate. Additionally, the availability of urea has increased slightly in certain regions; as a result, urea prices in Shandong’s Lianghe area and Fujian have declined. The order situation for most manufacturers in Shandong is average; a small amount of low-cost urea from other provinces has arrived at the market. The mainstream ex-factory prices are 30 yuan lower, ranging from 1450 to 1480 yuan per ton (the same unit applies hereafter), while some lower-quality products are available at just 1420 yuan per ton ； A small amount of urea from Shanxi and Inner Mongolia has also arrived in the Two Rivers region, resulting in a slight increase in the supply of urea on the market. As a result, the mainstream ex-factory prices in Hebei have dropped by another 10–20 yuan, to 1460–1480 yuan. According to China Fertilizer Network, the actual transaction prices at manufacturers are generally... (the omitted details can be found in the member area; same for subsequent mentions). In Henan, the mainstream ex-factory prices have dropped by another 20 yuan at the lower end, to 1480–1500 yuan, for shipments outside the region…… ； The situation regarding the shipment of products by some manufacturers in Shanxi region remains average; the mainstream factory prices are 10 yuan lower, ranging from 1450 to 1500 yuan. High prices continue to be used as a means to control orders, while the prices for local sales remain at 1300–1340 yuan only ； The mainstream ex-factory prices in Jiangsu and Anhui remain stable for now; a few urea manufacturers in Anhui have just resumed production or are about to do so, so there is no significant sales pressure at present, with prices rising by 20-30 yuan. The production rate in Jiangsu… The prices for high-end products have dropped by around 50 yuan ； The production rate in Fujian region… Due to lower quotes from other regions and a slight decline in local demand, the mainstream ex-factory prices in Fujian have dropped by 60 yuan, to around 1610 yuan. The situation regarding shipments from some manufacturers in Inner Mongolia has improved slightly; the standard export price remains at 1200–1300 yuan, while the price for shipments to the Northeast remains around 1550 yuan, with shipments taking place primarily in the early stages. Internationally, urea prices in the Brazilian market may decline to... Overall, the operating rate of urea production remains low. There are currently few positive factors regarding exports; distributors are largely adopting a wait-and-see attitude, and new orders are scarce. Although the situation regarding the shipment of urea at lower prices has improved slightly, the overall market supply has increased marginally. It is expected that urea prices will continue to decline slightly in some regions. In the two river basins of Shandong Province, the ex-factory price may drop to around 1,400 yuan or slightly higher. Once transportation conditions improve, there is a risk of further price declines. However, given the persistently low operating rates, there is also a possibility that urea prices will rise again after New Year’s Day, when downstream distributors begin stockpiling fertilizer. If there is any part of the analysis and market data available on this website that you would like to know more about, you can call the consultation hotline at 0451-88001128. Regional market prices: Unit: yuan per ton (large-grained urea is indicated in bold in the table)

Nitrogen Fertilizer Industry: Rising Costs Drive Up Urea Prices; Low Operating Rates Support Positive Market Conditions. Author/Source: Date: 2016-12-02. Clicks: 25. The urea industry has seen positive trends over the past three months, with low operating rates providing strong support for prices; leading companies will benefit significantly from this situation. Urea, as the nitrogen fertilizer with the highest nitrogen content, has an irreplaceable and essential demand in the agricultural sector when used there, while in the industrial sector it serves as an important raw material for numerous chemical products. After May 2012, urea entered a downward trend that lasted for over four years, driven by factors such as rapid increase in production capacity, falling coal prices, declining grain prices, and a drop in international urea prices. By mid-August of this year, the lowest price of urea in the domestic market was less than 1,200 yuan per ton, with the entire industry facing losses or difficulties in making a profit. However, due to a combination of factors such as soaring coal prices, the elimination of preferential electricity rates, rising transportation costs, environmental regulations, and a continuous decline in inventory levels, urea has seen a fairly strong rebound over the past three months. Looking ahead to 2017, downstream demand and exports are expected to decline slightly. However, under the pressures of raw material costs, transportation costs, and environmental regulations, domestic urea production facilities can only operate at low capacity levels. This will result in a slight shortage of urea products, thereby providing strong support for prices. Currently, amidst the wave of promoting supply-side reforms, urea production capacity characterized by outdated technology and high costs is destined to be phased out. Meanwhile, companies with advanced processes and lower energy consumption will reap substantial profits. (China Agri-Materials Network)

Urea price trends across China Author/Source: China Fertilizer Network Date: 2016-12-07 Clicks: 19 Today, prices in Henan, Jiangsu, Shaanxi and other regions have declined, while prices in other areas remain stable for now. The mainstream ex-plant prices in Shandong region remain stable at around 1,430 yuan per ton (the same unit is used thereafter). A few high-end prices have dropped by 30 yuan, while individual low-end prices have risen slightly by 10 yuan. The situation regarding new orders is generally average, with low-end transactions being conducted at around 1,410 yuan ； Downstream distributors in the Henan region are still not willing to accept the current urea prices; the mainstream factory prices have dropped by another 10 yuan, to between 1430–1460 yuan, and negotiations are still possible regarding the final price ； The prevailing ex-factory prices in the Shanxi region remain stable at 1,350–1,450 yuan. After a slight improvement in road transportation conditions, the prices for some high-end products transported by road have dropped by 20 yuan, ranging between 1,280–1,320 yuan ； Following the situation in the two rivers regions of Shandong, provinces other than Jiangsu have also begun to supply goods at low prices to this area; moreover, new orders are not performing well, with the standard factory prices dropping by 30 yuan, resulting in prices ranging from 1480 to 1560 yuan ； Sales at the two major plants in Shaanxi province are average; the standard ex-plant prices have dropped by 50 yuan, to around 1,500 yuan. The price for goods shipped outside the region is only 1,420–1,430 yuan. A few urea manufacturers located near Inner Mongolia maintain an ex-plant price of 1,330 yuan, and discounts can still be negotiated for large orders. Regarding large particles, the production rate in Shandong region is low; orders have improved slightly recently, and the mainstream ex-factory prices have risen by 10 yuan to around 1,520 yuan ； Sales in the Jiangsu region are poor, with the mainstream factory prices being 30 yuan lower, ranging from 1590 to 1650 yuan. On the international front, on December 1, Egypt’s Abu Qir Company held an auction for 15,000 tons each of urea in both small and large particle forms. The final winning prices were $224 per ton FOB for small particles and $232.5 per ton FOB for large particles, representing a decline in both prices. Overall, although the operating rate of the urea industry remains low, there are few positive factors in terms of exports, domestic demand is weak, and the situation regarding the export of low-cost urea has seen a slight improvement. It is expected that urea prices in some regions will continue to decline slightly in the coming period. 　　If there is any part of our analysis and market data that you would like to know more about, you can call the consultation hotline at 0451-88001128. 　　Regional market prices: Unit: yuan/ton (bold in the table refers to large-grained urea) 　　

Factors such as a weakening demand for urea have contributed to a divergent trend in liquid ammonia prices. Author/Source: China Fertilizer Network Date: 12-07-2016 Clicks: 20 The current price of liquid ammonia is higher by around 350-450 yuan per ton compared to the beginning of November. Throughout this month, manufacturers have been faced with rising prices. However, although liquid ammonia prices remain high at present, a divergent trend is emerging: since the beginning of last week, prices of liquid ammonia in certain areas of North China, East China, and Central China have declined. For example, in Shijiazhuang, Hebei, the reference price for delivery against acceptance has dropped by 60 yuan to around 2300-2320 yuan per ton. In Shandong, the mainstream reference price for cash transactions has fallen by around 50 yuan to around 2350-2480 yuan per ton. In Henan, the mainstream reference price for cash transactions has also dropped by around 50 yuan to around 2300-2420 yuan per ton； Non-major production areas such as the Northeast, the two Hubei provinces, and Yunnan and Guizhou regions continue to see tentative minor price increases. For instance, the inbound delivery price in the Northeast region is around 3,200 yuan. In the two Hubei provinces, the reference ex-works price for liquid ammonia transactions via acceptance bills has risen by about 30 yuan to 2,600–2,630 yuan. In Yunnan and Guizhou, the prevailing ex-works quotes via acceptance bills have increased by 150–200 yuan, reaching approximately 2,800–3,000 yuan; negotiations on actual transaction prices are still possible. How did this trend of differentiation emerge? 　　Firstly, changes in the utilization rate are the “culprit”. Taking advantage of this surge in liquid ammonia prices and the resulting substantial profits, manufacturers in the main production regions shifted their focus to producing liquid ammonia. Some manufacturers worked overtime to boost both production and sales. Meanwhile, enterprises that had undergone maintenance earlier in certain areas resumed operations. As a result, the available supply in the market gradually increased. However, before these manufacturers could rejoice over this development, frequent environmental inspections began to be carried out. For instance, the Two Rivers region is still undergoing such inspections. Consequently, production at liquid ammonia plants—and especially at downstream ammonia-consuming enterprises—has been restricted or even halted. This has led to a significant decline in downstream demand, exacerbating the oversupply situation. Faced with this scenario, manufacturers have no choice but to lower their prices in order to clear their inventories. However, in non-major production areas such as the Northeast and Yunnan-Guizhou regions, coal prices remain high. Due to rising costs, liquid ammonia manufacturers use it only for their own needs, and some of them have continued to suspend production, which has allowed prices to rise slightly further. 　　Secondly, the impact of the weakening trend in urea prices. From market sources, it is understood that the outward shipment of low-priced urea from Shanxi and Inner Mongolia has improved somewhat. In Xinjiang, the price increase for urea has been minimal; for instance, Huajin in Xinjiang saw only a 70-yuan rise this time, and the export prices remain negotiable. These low-priced supplies have driven down the prevailing urea prices in certain local markets. Additionally, due to environmental inspections, some plywood mills and compound fertilizer plants have reduced their purchases of urea. Some industry insiders believe that the urea market is likely to continue weakening, with little chance of a short-term rebound. Compared to urea, liquid ammonia is still profitable and has a greater advantage; after weighing the pros and cons, some manufacturers still choose to produce more liquid ammonia when conditions permit. 　　Once again, caution in downstream procurement. At present, chemical companies maintain a steady demand for liquid ammonia, though this proportion is not high compared to fertilizer companies; the ratio of consumption between the two is approximately 3:7. Fertilizer manufacturers are primarily engaged in the production of nitrogen fertilizers, phosphorus fertilizers, and compound fertilizers. The market for nitrogen fertilizers remains weak; phosphorus fertilizer production is restricted due to environmental inspections, and the winter stockpiling of compound fertilizers is progressing slowly. The market conditions for all three types of fertilizers are poor, with low production rates – according to data from Zhongfei Net, these rates are 50%, 41–51%, and 55% respectively. As a result, there is resistance to using expensive liquid ammonia, and purchases are usually made in quantities based on actual needs, which slows down the flow of liquid ammonia in the market. 　　In summary, although the liquid ammonia market has shown mixed trends, given the aforementioned factors, the number of bearish factors has clearly increased and their scope of influence is gradually expanding. Consequently, there is a risk of a general decline in prices. (Tan Junying)

Urea price trends across China Author/Source: China Fertilizer Network Date: 2016-12-06 Clicks: 27 Due to sluggish sales, urea prices in regions such as Shandong, the Two Rivers area, Shanxi, and Jiangsu have continued to decline slightly since the weekend. Compared to last weekend: A small amount of low-cost urea from other provinces has arrived in the Shandong region. Most manufacturers report that orders for new shipments are average, with the prevailing ex-factory prices ranging around 1430 yuan per ton; those manufacturers with better orders have prices that are slightly higher, by 10–30 yuan ； A small amount of urea from Shanxi and Inner Mongolia also arrived in the Two Rivers region, resulting in a slight increase in market supply. As a result, the mainstream ex-factory prices in Hebei dropped by another 20-30 yuan, to 1420-1450 yuan; transactions generally take place at... (the omitted details can be found in the member area; same for subsequent entries). The mainstream ex-factory prices in Henan dropped by 20-30 yuan, to 1440-1460 yuan, and transactions also occurred there…… ； The situation regarding the shipment of goods by road in Shanxi region remains tight; most local manufacturers are under significant inventory pressure. Recently, the situation with road transportation has improved slightly, so shipments are mainly carried out by road. High prices have helped to reduce the number of orders received, and the average ex-factory price has dropped by 50–100 yuan, to between 1350–1450 yuan. The ex-factory price for local sales remains stable at 1280–1340 yuan ； Affected by the price cuts in Shandong region, some Jiangsu-based manufacturers located near Shandong have lowered their quotes by 40 yuan. As a result, the mainstream ex-factory prices have decreased by 40 yuan at the lower end, now ranging from 1,480 to 1,590 yuan ； The prevailing ex-factory prices in Anhui region remain stable at 1,500–1,550 yuan, with most manufacturers stating... Overall, the operating rate of urea plants remains low, and there are still few positive factors regarding exports. Domestic distributors tend to adopt a wait-and-see approach; new orders are weak. The situation regarding the export of urea at lower prices has seen slight improvement, leading to a slight increase in market supply. It is expected that urea prices in some regions will continue to decline slightly in the coming period. 　　If there is any part of the analysis and market data available on this website that you would like to know more about, you can call the consultation hotline at 0451-88001128. Regional market prices: Unit: yuan per ton (large-grained urea is indicated in bold in the table) 　　

Urea hitting 1900? Diammonium up 200? Potassium chloride is priced at 2050! Author/Source: China Fertilizer Network Date: 2016-12-05 Clicks: 23 These days, WeChat Moments has been flooded with posts about how the price of urea reaching 1900 isn’t unfounded! ”What, \"led by Yuntianhua... the price of (diammonium phosphate) is expected to rise by 200 yuan!\" ”, What “Qinghai potash fertilizer is crying!” ”……Recently, fertilizers have become so overpriced that even the usually cautious media can’t help but exaggerate in their headlines! The author also wants to join in the discussion and share some similar and different views on the potassium fertilizer market. 　　Is urea priced at 1,900 yuan? Even if it’s possible, it should be a distant dream. Did diammonium increase by 200 yuan? It will become clear in a few days. Is potassium chloride priced at 2,050 yuan? Well, it’s a fact now! Data from China Fertilizer Network shows that currently, the premium price for 62% potassium sulfate in domestic port markets has reached 2,050 yuan! Some traders have halted sales, indicating that their intended selling price going forward is also 2,050 yuan! 　　Let’s hear the reasons given by traders: First, the transportation of domestically produced potassium in Qinghai has encountered rare difficulties, with no clear timeline for recovery yet. This has shifted the previously expected situation of supply exceeding demand toward one of tight supply, which is one of the main reasons behind the rise in potassium fertilizer prices, as well as a key factor contributing to further price increases. 　　Secondly, exchange rate fluctuations have led to an increase in costs. As major international producers take more and more drastic measures to limit production in order to maintain prices stable, and despite the relatively stable international market conditions for some time now, expectations of rising prices for new large-scale contracts in our country are increasing. It is said that foreign suppliers are even refusing to supply goods available for purchase in our country. 　　Once again, considering both the current stock available at the port and the forecasts for shipments in the future, the supply of white powder is relatively low. Scarcity makes things more valuable, especially since white powder is already a variety with high demand. 　　Finally, on the one hand, difficulties in transportation and high freight costs, rising prices for coal, electricity, and gas, as well as environmental pressures and temporary setbacks in exports, have led to low operating rates for urea production; the operating rates in the phosphate and potash fertilizer industries are also not high. On the other hand, there is less enthusiasm for winter stockpiling, with the market favoring spot purchases, which in turn results in a situation where downstream users lack inventory and need to replenish it. As a result, fertilizer prices, which are already not very high, are likely to rise sharply once the market really gets going next spring, due to concentrated demand and difficulties in shipping. 　　These reasons are quite compelling; at least for now, it seems that this will be the general trend for the development of the potassium chloride market in the future. Although 62% purity powder is still being sold at 1,950 yuan in many ports, based on current trends, the likelihood of a decrease in the price of potassium chloride is low, and its price is likely to rise further over time. However, there are still many voices of hesitation and skepticism in the market. The author has briefly summarized these points to serve as a reminder for everyone, so that they can come up with a better plan when taking action: First, it’s hard to say what will happen regarding transportation. Some believe that after the New Year, the railway system will resume normal operations under its new transport plan; others think it might not improve until after the peak spring season. But all these are merely people’s “opinions.” Ultimately, it depends on the railway authorities. Nevertheless, if the continuous feedback from relevant enterprises and recent media coverage truly manage to draw attention to this issue, even a slight improvement would help reduce the pressure driving price increases. 　　Secondly, there are inherent reasons why international prices fail to rise. Even putting aside the issue of price lows, given the context of large-scale contracts signed in our country, there is no precedent of our country leading to a rise in prices. Additionally, recent fluctuations in exchange rates can be used by our country as a means to keep prices low, and national reserves as well as overseas facilities are also advantages at our disposal. Therefore, the claim that potassium fertilizer prices should rise due to these large-scale contracts is not valid; moreover, it’s not certain that prices will actually rise. Ultimately, the impact of international conditions on domestic prices will depend on the volume of supplies arriving in the future, especially those arriving in January and February. 　　Third, the so-called “tightness” actually has no real basis; in a seller’s market, claiming that there is tightness simply means that there is tightness, and it cannot be verified at all ； The impact of the overall economic environment is very important, but it is ultimately supply and demand that determine the situation. There is a high possibility of a sharp rise next spring, but there is also a significant chance of a rapid decline, unless there is sustained low production levels, transportation difficulties, a sharp increase in grain prices, or a noticeable improvement in exports. 　　In short, the market is constantly changing, and when driving up prices it is important to know the limits. The damage caused by sudden, reciprocal fluctuations is mutual; the market does not forbid trading, but rationality is essential. Facing potassium fertilizers for which price increases are still expected, and an fertilizer market that remains active even during the off-season as prices keep rising, the safest approach is to act quickly when prices are low, to diversify purchases and make multiple transactions, and to control quantities without acting impulsively. (Adu)

Ministry of Commerce: Fertilizer prices rose by 0.3% last week Author/Source: Date: 2016-12-07 Clicks: 6 According to monitoring by the Ministry of Commerce, last week (from November 28 to December 4), the price index for edible agricultural products across the country increased by 0.4% compared to the previous week, while the price index for means of production rose by 1%. 　　Market for edible agricultural products: The average price of 30 types of vegetables increased by 0.2% compared to the previous week, with the prices of pumpkins, cauliflower, and broccoli rising by 9.9%, 6.8%, and 5.3% respectively. Prices of edible oils saw a slight increase; specifically, the prices of soybean oil and rapeseed oil rose by 1% and 0.8% respectively, while the price of peanut oil remained unchanged from the previous week. Food prices remained generally stable, with rice prices staying the same as the previous week and flour prices rising by 0.3%. Meat prices saw slight fluctuations; prices of pork and beef both decreased by 0.1%, while the price of mutton rose by 1.9%. The average price of aquatic products decreased by 0.1%; the prices of crucian carp, silver carp, and common carp fell by 1.4%, 0.7%, and 0.3% respectively. Prices of poultry and eggs saw slight fluctuations. Specifically, the prices of eggs and dressed ducks decreased by 0.5% and 0.4% respectively, while the price of dressed chickens rose by 0.1%. 　　Factors market: Steel prices rose by 2.6% compared to the previous week, with rebar, ordinary medium-grade steel plates, and high-speed wire rods seeing increases of 3.1%, 3%, and 2.8% respectively. Rubber prices rose by 1.8%, with the prices of synthetic rubber and natural rubber increasing by 2.3% and 1.3% respectively. The prices of basic chemical raw materials rose by 1.7%, with the prices of caustic soda, methanol, soda ash, pure benzene, and sulfuric acid increasing by 3%, 2.4%, 2.3%, 1.3%, and 0.3% respectively. Coal prices rose by 1%, with the prices of thermal coal, anthracite, and coking coal increasing by 1.1%, 1.1%, and 0.6% respectively. Fertilizer prices rose by 0.3%, with urea prices increasing by 0.6%; the prices of potassium chloride, diammonium phosphate, and compound fertilizers remained unchanged from the previous week. The prices of non-ferrous metals declined by 1%; among them, the prices of aluminum, nickel, and tin dropped by 4.5%, 3.9%, and 1.9% respectively, while the prices of lead, zinc, and copper rose by 5.3%, 0.6%, and 0.2% respectively. (Ministry of Commerce website)