Recent trends in urea prices

According to the Commodity Analysis System of Business Society, the urea market price in Shandong Province slightly increased this week. The urea price dropped from 2508.33 yuan/ton at the beginning of the week to 2466.67 yuan/ton at the end of the week, a decrease of 1.66%. The weekend price fell by 10.14% year-on-year. On January 15th, the urea commodity index was 114.50, a decrease of 0.23 points from yesterday, a decrease of 24.83% from the highest point in the cycle of 152.33 points (2022-05-15), and an increase of 105.94% from the lowest point of 55.60 points on August 17th, 2016. (Note: The cycle refers to the period from September 1st, 2011 to present)

Insufficient cost support, weakened downstream demand, and sufficient urea supply

From the supply side perspective, the mainstream price of urea in Shandong has slightly declined this week.

From the data of the upstream and downstream industry chains, it can be seen that the urea upstream market has dropped significantly this week: the price of liquefied natural gas has dropped significantly, from 5406 yuan/ton at the beginning of the week to 5202 yuan/ton at the weekend, a decrease of 3.77%, and the weekend price has dropped by 14.94% year-on-year. The price of anthracite coal has stabilized at a low level, with the price of Yangquan anthracite coal (washing medium block) at 960 yuan/ton this weekend; The price of liquid ammonia has dropped significantly, from 3450 yuan/ton at the beginning of the week to 3250 yuan/ton over the weekend, a decrease of 5.80%, and a year-on-year decrease of 22.43% over the weekend. The significant drop in upstream raw material prices has provided insufficient support for urea prices.

From a demand perspective: Agricultural demand has weakened, while industrial demand is average. Agriculture has entered the off-season. Composite fertilizer, board, and melamine enterprises generally start construction, with a focus on procurement for immediate needs. The downstream price of melamine in urea has slightly decreased this week, dropping from 7475 yuan/ton at the beginning of the week to 7450 yuan/ton at the end of the week, a decrease of 0.33%. From the perspective of supply, some enterprises have completed maintenance, resulting in a further increase in daily urea production and sufficient supply.

Slight fluctuation and decline in the future market

In mid to late January, the urea market in Shandong may experience a slight fluctuation and decline. Business Society urea analysts believe that the upstream market of urea has significantly declined, and the cost support for urea is insufficient. Downstream industrial demand is average, while agricultural demand is weakening. The daily production of urea is around 180000 tons, with sufficient supply. In the future, urea may experience a narrow range of fluctuations and decline.