In April, the urea market in China is showing a weakening trend due to a combination of domestic and international factors. According to data from the National Bureau of Statistics, total urea production in January and February 2013 reached 10.488 million tons, up 2.8% year-on-year. With natural gas supply resuming in the southwest and northwest regions, and increased operating rates in Xinjiang, Gansu, and Sichuan, the total urea output for the first quarter is expected to exceed 17 million tons. However, demand from the agricultural sector did not meet expectations. Spring plowing activities were weak, and prices in East and North China fluctuated without clear direction.
The lack of strong demand was partly due to the "cold winter" and changes in fertilizer use patterns. As a result, sales fell short of projections, and the Northeast market remained sluggish. The initial high expectations for nitrogen fertilizer usage were undermined by small compound fertilizer plants that preemptively consumed part of the demand, leaving little support for the broader market. Additionally, some companies opted to collect shipments early but found no buyers at HK$2,150/ton. By the end of the first quarter, there was a slight oversupply, with ex-factory prices in Shandong, Hebei, and Shanxi dropping to RMB 2,030–2,050/ton.
Internationally, the urea market also showed signs of weakness. Despite hopes that exports would help stabilize the domestic market, international demand remained uncertain. Weather disruptions in the U.S., including prolonged cold and wet conditions after heavy snowfall, led to a shift from corn to soybeans, reducing urea demand. Corn prices dropped by 6%, further affecting fertilizer needs. Exporting countries were quoting high FOB prices, which made them less attractive to international buyers, contributing to a general decline in global urea prices over the past two weeks.
Buyers in India, Latin America, and other regions were not rushing to purchase, as they still had inventory from earlier periods. Some may not return until mid-April. Meanwhile, Pakistan’s new tender round also appeared to be a waiting game. Market players are currently cautious, preferring to trade in small quantities and avoid large commitments. For now, the international market remains slow, with traders taking a wait-and-see approach.
Looking ahead, Jigang and agricultural fertilizer sectors may see clearer developments in April. The spring plowing season has been disappointing, prompting some distributors to start preparing for summer fertilizers. This shift in strategy reflects a deeper understanding of how agricultural demand can be adjusted between seasons. If spring applications are reduced, demand could be replenished during the summer or autumn. As a result, dealers are adopting a more conservative approach.
With the low export tariff of 2% on Chinese urea from July to October, and considering the 614,000-ton export volume in January–February, it seems that many exporters are trying to catch up before the tariff increase. Additionally, key markets like India, Latin America, and Pakistan will hold their first bidding rounds this April, potentially clarifying the international price trend. If the offshore price for small grains reaches $365 per ton, China’s ex-factory price could reach around 2,100 yuan/ton, possibly sparking renewed interest in Hong Kong trading.
In summary, urea prices have declined recently due to weak domestic demand and limited export activity. However, with the end of month-end promotions, prices during Qingming (the Tomb-Sweeping Festival) may stabilize. In the coming weeks, attention should focus on international market trends, particularly whether European buyers accept FOB prices of 365–370 yuan/ton. If so, China’s urea prices could rebound in mid-April, creating potential overlap between export catch-up and summer preparations.
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