Frbiz.com Analyzes 2009 Urea Market Trend
Frbiz.com, one of China’s leading B2B search platforms, analyzes 2009 urea market trend.
The overall urea market in China is still quite weak; prices have gone down a little. Recently urea’s ex-factory price has been about 1,480 – 1,600 RMB, and the actual low ex-factory price has reached 1,450 RMB, which is close to earlier low prices; wholesale market prices range from 1,500 – 1,680 RMB.
Overall, the September urea market is expected to hit bottom, and the price will not be too volatile. Judging from the current situation, since urea prices have fallen below production costs for most enterprises recently, manufacturers have been a strong driving force in pursuit of stable prices, so there has been strong support for keeping urea prices between 1450 and 1500 RMB. Although the market has fluctuated several times, it has basically remained at this price. On the other hand, dealers also want to lower prices, so that they can reduce the risk of overstocking. This is especially true because after September 16th, urea export tariffs will be restored to 110 percent, so many people think that urea prices will fall once again and that there is no need to stock up on urea now.
Furthermore, the largest factor behind trends in the urea market is the cost of production. Himfr’s statistics show that by the end of August 39 urea enterprises will have ceased production. Annual production capacity accounts for 14 percent of China’s total capacity.
Thirty-five enterprises have cut production, and cut production accounts for seven percent of China’s total capacity and 80 percent of China’s capacity utilization rate. The number of enterprises that have ceased production has increased compared to July, especially for Hebei and Henan provinces. The overall operating rate of the country has also decreased. If urea prices continue to fall, even more companies will be forced to stop production.
In mid-September, exporting urea will become more difficult, which will lead to market supply exceeding demand in the Chinese domestic market.
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