Urea Market Trend: first rose then fell

Time: Nov 03, 2022

Urea is an important chemical raw material, which can be used to synthesize melamine powder. Today, Huafu Factory will share the latest urea market trend.

In 2022, the domestic urea market price rise first, reaching the highest 3210 yuan/ton (about 441 dollars/ton), in the year in June and then fall back to the lowest price 2317 yuan/ton (about 318 dollars/ton) in late August.

China urea market price

Influenced by local production equipment maintenance, industrial production load increase, demand support for light storage and good news of raw material market in September, the downturn market rebounded. In October, the market fluctuated repeatedly and weakened as a whole.

The main factors affecting price drivers are analyzed as follows:

1. The inventory pressure is not big.

As can be seen from the figure below, the inventory level of China's urea production enterprises will be at a low level in 2022, so the market price will also hit a new historical high in the middle of the year. The average inventory of Chinese enterprises in the first three quarters of 2022 is 440000 tons, up 43.8% year on year. In the late third quarter, with the ending of agricultural demand in the market, limited industrial commencement and poor local logistics, the inventory showed an increase.

urea production enterprise

2. Urea production enterprises are willing to start construction.

The average operating load rate of urea in the first three quarters of 2022 is about 72%, an increase of about 2.1 percentage points over the same period last year. In 2022, the operating load rate of urea enterprises will be improved as a whole, and the uncontrollable impact will be greater in different stages. In the first three quarters of 2022, driven by better profits, urea production enterprises have a good overall enthusiasm to start construction.

The Operating Load Rate of Urea Production Enterprises in China

3. The demand is still supported.

According to the tradition of previous years, the demand and consumption of China's urea industry are still obvious in the light and peak seasons. In recent years, due to the price of raw materials, external factors, etc., the demand is not light in the off-season. Based on the stage of purchase of light storage, the demand side is expected to be good.

Prediction of future trend

It is difficult for the market to rise or fall, with large probability of fluctuation.

As October is coming to an end, the domestic urea market is very tight.

Considering the above factors, Huafu Chemicals believes that the domestic market in the fourth quarter has low support but is constrained by the reality of high local inventory, and the progress of light storage is general. Most of the downstream small orders follow up, and the domestic urea price may continue to fluctuate in the range, and there may be differentiation in some regions.

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