On the eve of the Spring Festival, the urea market faced some challenges due to heavy rain and snowfall, which disrupted transportation and caused delays in shipments. The coal supply was also tight, leading many companies to halt operations due to power shortages or insufficient raw materials. Moreover, the high export volumes at the end of last year had significantly reduced company inventories, with most having very little stock. As a result, domestic urea prices remained relatively stable, with manufacturers quoting the national maximum price of 1,725 yuan per ton.
However, after the Spring Festival, several factors could push urea prices upward. First, international market prices are expected to remain strong, driven by high costs for crude oil and natural gas—key inputs for fertilizer production. Additionally, rising ocean freight charges will further increase the cost burden on urea exports. Second, the cost of production is likely to rise as many fertilizer companies face energy shortages, with coal, electricity, and gas prices under significant pressure.
Third, transportation costs have increased due to the impact of snow and ice before the holiday, which reduced the capacity of railways and highways. Fourth, many production enterprises have already cut output or shut down, especially in regions like Hunan, Hubei, and Guizhou, where shipping difficulties persisted. This has led to a reduction in available market supplies. Lastly, exports are playing an increasingly important role. With higher domestic prices compared to international markets, Chinese urea is highly competitive, particularly in India, where it has become a major export destination this year. This export demand is further tightening domestic supplies and contributing to price increases.
In general, during the Spring Festival travel season, shipment volumes from manufacturers are expected to remain limited, and downstream dealers are not stocking up much, creating a market gap. Therefore, prices are unlikely to fall. However, the government’s price cap policy means that manufacturers will be cautious about raising prices. That said, there may still be cases of non-compliant price hikes by individual companies. While the price ceiling on urea is not new, the current situation suggests that the market will likely remain stable in the short term, with only minor fluctuations expected.
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Ningbo Maixun International Trade Co., Ltd , https://www.nbmachinery.com