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An Increase in International Urea Prices Would Push up Domestic Prices

China Agriculture Report By CnAgri2018-09-19 14:13:50China Agriculture Report Print
Keywords:Fertilizer MAP NPK DAP
On September 11th, the bidding results of 0.1 million MT of large granular urea and 0.1 million MT of small granular urea in Bangladesh were released, of which the lowest price of small granular urea was CFR365.87 US dollars/MT, 4.66 US dollars/MT higher than the previous round of prices;the lowest price of large granular urea was CFR365.9 US dollars/MT, 9 US dollars/MT higher than the previous round of prices, namely FOB China reached 310 US dollars/MT. At the current exchange rate and after deduction of the expenses such as freight and port incidental expenses, FOB still was 10-60 RMB/MT higher than ex-factory prices. An increase of international urea prices would push up domestic prices.    
Since middle July, international urea prices have increased, and urea FOB China increases to more 300 US dollars/MT now from 270 US dollars/MT in middle July. In the near future, it would be busy season for consuming fertilizer in Europe and the U.S., etc., of which the buyers in the UK and Ireland have not ordered long-term goods yet. Along with a strong demand in the fourth quarter, international urea prices still would go up.  
International urea prices keep increasing, which is good for domestic urea market. At present, domestic urea producers are producing the goods that will be delivered in one week, the producers and downstream dealers almost have no stocks, and international urea prices keep increasing, so some downstream producers rush to purchase with panic. Although the current operating rate of urea is around 60%, yet, along with the coming of heating season and the influence of environmental protection and a limitation on use of natural gas, the operating rate of urea companies possibly would go down. Under the situation of no obviously busy and off season of demand, domestic urea market would be on a strong run.

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