UREA market went through gloomy performance since late July in China

By CnAgri2012-09-07 13:15:35 Print

The producer’s urea price was RMB1,950 ~ 2,150/MT in August, down RMB100 ~ 150/MT from late July. Some producers quoted a price of RMB1,900/MT in the Northwest and Southwest in early September.

BOABC finds the following to blame for the bearish urea price:

First, it was the slack season of urea consumption in August, except a small amount consumed for late paddy in the south and for corn in North China. On expectation of a further price decline, traders were inactive in building up a stock.

Second, since compound fertilizer sales were dull after summer, compound fertilizer producers had a weak demand for urea, purchasing only a small amount of urea each time.

Third, despite low customs duty rate for urea exports in August, urea exports stayed at a low level because of soft international demand. Urea export price was $370 ~ 380/MT in August.

Despite declining urea price, producers can still make some profit. Moreover, coal, power and gas supply is abundant at present. Therefore, producers can afford moderate reduction of urea price.

Considering weak demand in the market, BOABC predicts that urea price may stay at RMB1,950 ~ 2,050/MT in September and move lower afterwards.

From "China Fertilizer Market Weekly Report"